2010 (4) TMI 1019 - HC - VAT and Sales Tax

Whether the assessee had no place of business, which was engaged in selling or purchasing in Agra? Held that - Considering the fact that the Tribunal has also not recorded any finding that the assessee had any storage space or store or any manufacturing unit in Agra from where it could have sent the beverages from Agra in U.P. to Rajasthan. The conclusion drawn that the assessee had made inter-State sales from Agra to Rajasthan is not justified. It makes no sense that the assessee which has no manufacturing unit would first get the goods in Agra and then send it to Rajasthan when it has available to do the beverage in Rajasthan itself, which is sent by sisters concern as stock transfer. In view of the above, the imposition made to the extent of a turnover of ₹ 6 lacs is bad and not justified. The order of the Tribunal to this extent is set aside.

Summary

Issues:
Assessment of Central sales turnover for the years 1992-93 to 1994-95 based on parchas apprehended during a survey, imposition of Central sales tax on a turnover of Rs. 6 lacs from the State of U.P., justification for the imposition of tax, conclusiveness of parchas in establishing inter-State sales, acceptance of stock transfers by the Department, absence of storage space or manufacturing unit in Agra by the assessee.

Analysis:
The High Court considered three revisions concerning the assessment of Central sales turnover for the years 1992-93 to 1994-95. The assessee, a private limited company, challenged the imposition of Central sales tax on a turnover of Rs. 6 lacs from the State of U.P. The controversy revolved around parchas apprehended during a survey, indicating transactions between the assessee and other parties. The Tribunal partly allowed the appeal but confirmed the turnover and tax liability based on the parchas.

The learned counsel for the assessee argued that the Tribunal's findings did not conclusively establish inter-State sales from Agra to Rajasthan and M.P. The counsel contended that the parchas did not prove any movement of goods from U.P. to outside U.P. The Department had accepted stock transfers by the assessee to its branches, supporting the argument against the imposition of Central sales tax.

Conversely, the standing counsel argued that the parchas indicated the movement of goods from Agra to Rajasthan, supported by the exchange of money between Agra Beverages and Rajasthan Beverages. After hearing both sides and examining the parchas, the Court found that the parchas did not prove any prior orders for goods to move from U.P. to Rajasthan. The Tribunal's findings and the absence of storage or manufacturing units in Agra by the assessee further supported the Court's decision.

The Court concluded that the imposition of tax on a turnover of Rs. 6 lacs was unjustified and set aside the Tribunal's order to that extent. Consequently, the three revisions were allowed, and no costs were imposed. The judgment clarified the lack of justification for imposing Central sales tax based on the evidence presented, ultimately ruling in favor of the assessee based on the lack of conclusive proof of inter-State sales from Agra to Rajasthan.