2014 (3) TMI 340 - HC - VAT and Sales Tax

Classification of sale - Local sale or Inter state sale - movement of goods outside the state but delivery of goods in the same state i.e. Chennai - Penalty u/s 16(2) - Whether in the facts and circumstances of the case, the Sales Tax Appellate Tribunal erred in stating that in the absence of a specific order, there cannot be an inter-State sale as contemplated under Section 3(a) of the Act - Held that - A perusal of the order of the Tribunal shows that there are no materials to support the case of the assessee that the sales was an inter-state-sale. The Tribunal pointed out that the authorised representative of the assessee conceded that there was no agreement providing for movement of goods to Andaman pursuant to the sale or as an incident of sale. In the absence of any agreement as well as in the absence of material to show that the movement of goods to Andaman without any break for anyone to take delivery in Chennai, the sales had to be treated as local sales - turnover was assessable under the Tamil Nadu General Sales Tax Act. Except for revising the assessment for the assessment years relating to 1988-89 and 1989-90, there are no materials to show that there was wilful non disclosure to invoke Section 16(2) of the Tamil Nadu General Sales Tax Act. In fact, the order of the Appellate Assistant Commissioner records the finding that the turnover is found in the books of accounts and there was no mala fide intention on the part of the assessee - Decided partly in favour of assessee.

Summary

Issues:
1. Interpretation of sales as local or inter-state.
2. Validity of penalty under Section 16 of the Act.

Interpretation of sales as local or inter-state:
The case involved the assessment years of 1989-90, 1988-89, and 1990-91 under the Tamil Nadu General Sales Tax Act. The petitioner, a dealer in Vanaspathi and Edible oil, had sales to Andaman Customers, with goods delivered to an agent in Madras for shipment. The Assessing Authority sought to re-open the assessment, proposing to assess the turnover under the Tamil Nadu General Sales Tax Act. The petitioner contended that the sales were inter-state as the purchasers in Andaman had no office in Madras and goods were moved from Madras to Andamans. The Appellate Authority confirmed the assessment, stating that goods were taken delivery by the out-of-state buyers' representatives. The Sales Tax Appellate Tribunal upheld the assessment, concluding that the sales were local as they were concluded in Madras. The High Court affirmed the Tribunal's decision, finding no evidence of an inter-state sale agreement or movement of goods from Chennai to Andaman without interruption for delivery in Chennai.

Validity of penalty under Section 16 of the Act:
Regarding the penalty under Section 16(2) of the Act, the Appellate Assistant Commissioner found no willful non-disclosure or malafide intention by the assessee. Thus, the penalty for the assessment years 1988-89 and 1989-90 was deleted. However, for the assessment year 1990-91, where there was a difference between the assessed turnover and the turnover returned under the Act, the penalty at 50% was upheld. The High Court dismissed the appeal against the penalty for the assessment year 1990-91, as there was no acceptable reason to interfere with the penalty levy.

In conclusion, the High Court upheld the Sales Tax Appellate Tribunal's decision that the sales were local and not inter-state. The penalty under Section 16(2) of the Act was deleted for the assessment years 1988-89 and 1989-90 but upheld at 50% for the assessment year 1990-91 due to a difference in the assessed turnover.