2015 (3) TMI 785 - HC - VAT and Sales Tax

Classification of sale - Whether the Tribunal fell into error in rejecting the assessee s contention that the goods in question were inter state sales within the meaning of Section 3(a) of the Central Sales Tax Act - Held that - assessee was able to substantiate its contention that 20 of the transactions were, in fact, inter state sales. This was because each one of them had the necessary supporting document in the form of GRs. However, in the case of these 6 transactions, there is no material to show that the movement of goods was caused by and was the result of the contract of sale. The assessee counsel contends that this Court must consider the facts in totality of circumstances i.e. 20 out of 26 transactions are undisputed and that given the factual compulsion i.e. the inability to use a formal carrier the assessee should not be prejudiced. Though this submission is attracted, the Court is at the same time aware that there is no presumption either way that an inter state sale claimed by the assessee is one per se - As to whether the transaction itself was covered by an inter state sale or otherwise is a burden that the assessee has to discharge, that it did so in other 20 cases but was unable under these 6 cases precisely underscores or highlights the burden placed upon it - Decided against assessee.

Summary

Issues:
Inter state sales under Section 3(a) of the Central Sales Tax Act.

Analysis:
The case involved the question of whether certain transactions qualified as inter state sales under Section 3(a) of the Central Sales Tax Act. The appellant, a registered dealer trading in cotton yarn, contended that 26 transactions with an UP-based dealer should be considered inter state sales. The VATO rejected 6 transactions, leading to default assessment. The OHA upheld the rejection due to lack of evidence like GRs/RRs. The VAT Tribunal also rejected the appellant's claim, emphasizing the necessity of proof of movement of goods for inter state sales under Section 3. The appellant relied on a Gujarat High Court judgment but failed to provide conclusive evidence of movement in the disputed transactions. The Court highlighted the burden on the appellant to prove inter state sales, which it did for 20 transactions, but not for the remaining 6. The Court concluded that in the absence of evidence of movement, the provisions of Section 3 were not met, and the appeals were dismissed.

The Court extensively analyzed Section 3 of the Central Sales Tax Act, emphasizing the requirement of movement of goods for a sale to be considered inter state. Citing various Supreme Court judgments, the Court clarified that movement of goods must be an incident of the contract of sale to fall within the ambit of Section 3. The Court referred to the Pure Beverages case, where supporting documents were crucial for establishing inter state sales. In the present case, while 20 transactions had supporting GRs, the remaining 6 lacked evidence of movement. The Court acknowledged the burden on the appellant to prove inter state sales, noting that the tender of a C form raises a presumption of the purchasing dealer being registered but does not determine the nature of the transaction itself. Ultimately, the Court held that the burden was not met in the disputed transactions, leading to the dismissal of the appeals.