2009 (11) TMI 856 - HC - VAT and Sales Tax

Disallowance of turnover in a sum of 3, 57, 41, 932.63 as the consignment sale which claim was rejected by the assessing officer and whether treating the transaction as inter-State sale falling under section 3(a) of the Central Sales Tax Act 1956 is correct or not? Held that - The issues raised by the Revenue in the present writ petition being questions of fact which were thoroughly considered by the lower authorities they do not warrant any interference. W.P. dismissed.

Summary

Issues:
- Disallowance of turnover as consignment sale under Central Sales Tax Act, 1956.
- Assessment of penalty under section 12(3) of the Tamil Nadu General Sales Tax Act.
- Appeal against the order passed by the Appellate Assistant Commissioner.
- Dispute regarding the nature of transactions: consignment sales vs. inter-State sales.
- Burden of proof on the assessee to substantiate consignment sales.
- Legal interpretation of Section 6A of the CST Act, 1956 and Rule 4(3A) of the CST (Tamil Nadu) Rules.
- Analysis of relevant case laws: Sri Ganesan Traders v. Union of India, A. Dhandapani v. State of Tamil Nadu, Delhi Iron & Steel Co. Ltd. v. Commissioner of Sales Tax, U.P., State of Karnataka v. Jindal Aluminium Limited.
- Judicial review of lower authorities' decisions under Article 226 of the Constitution of India.
- Application of certiorari jurisdiction in correcting judgments.
- Scope of High Court's supervisory jurisdiction under Article 227 of the Constitution.

Detailed Analysis:
The High Court of Madras addressed a case involving the disallowance of turnover as a consignment sale under the Central Sales Tax Act, 1956. The dispute arose when the assessing officer rejected the claim of the assessee regarding consignment sales, treating the transactions as inter-State sales falling under section 3(a) of the Act. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal ruled in favor of the assessee, emphasizing the documentary evidence provided, including sale pattials, invoices, and excise gate pass-cum-consignment sale notes. The authorities highlighted the absence of evidence supporting the Revenue's contention that the transactions were inter-State sales based solely on the timing of sales by agents.

The court delved into the burden of proof on the assessee to establish consignment sales, citing Section 6A of the CST Act, 1956, and Rule 4(3A) of the CST (Tamil Nadu) Rules. It referenced legal precedents such as Sri Ganesan Traders and A. Dhandapani to emphasize the assessee's obligation to prove the veracity of declarations made in form F. The judgment also drew parallels with decisions from other High Courts, like Delhi Iron & Steel Co. Ltd. v. Commissioner of Sales Tax, U.P., and State of Karnataka v. Jindal Aluminium Limited, to underscore that immediate sales by agents do not automatically classify transactions as inter-State sales.

Regarding judicial review, the court cited relevant case laws to establish the limitations of interference under Article 226 of the Constitution of India. It highlighted the necessity for errors to be self-evident for correction through certiorari jurisdiction, as outlined in Ranjeet Singh v. Ravi Prakash and Surya Dev Rai v. Ram Chander Rai. The judgment emphasized that factual issues, thoroughly examined by lower authorities, do not warrant intervention unless findings are entirely perverse or unsupported by evidence.

In conclusion, the High Court dismissed the writ petition, upholding the decisions of the lower authorities based on the available records and legal principles. No costs were awarded, emphasizing the adherence to established legal interpretations and the limited scope of judicial review in matters of fact.