2019 (1) TMI 164 - HC - VAT and Sales Tax

Whether the Tribunal was right in confirming the assessment which estimated the sale price by the C&F Agent of the assesse-manufacturer to the distributor on the mere ground that the stock transfer value was higher than the sale value? - Held that - The transaction was at a time when there was a single point levy of tax and there could not be a sale price fixed lower to that shown in the stock transfer forms. In such circumstances, the question is answered against the assessee and in favour of the revenue. Whether the Tribunal was correct in having rejected the proof produced by the assessee showing stock transfer, for reason only of absence of F forms, since in the subject assessment year there a requirement to prove the movement of the goods from one State to another and F form was not mandatory? - Held that - In fact, there is absolutely no sustainable evidence seen produced by the assessee as we see from the extract of the objection in the assessment order itself. The assessee s case before the Assessing Officer itself was that the transfer invoices, copy of Form 27B declaration and the communications issued to the check post are available with the assessee. However, these are all documents generated by the assessee and this alone without a proper authentication of the same by the Department or by seal of the check post authorities can be relied on to prove the movement of goods - the F Forms were not mandatory in the said year, the same having been made so from February 2002 onwards. But that is of no consequence, when the movement of goods by other mode of evidence has not been proved. The position is not different insofar as the proof required for the movement of goods. Revision dismissed - decided against assessee.

Summary

Issues:
1. Confirmation of assessment based on estimated sale price by C&F Agent.
2. Rejection of proof of stock transfer due to absence of F forms.

Issue 1: Confirmation of assessment based on estimated sale price by C&F Agent

The judgment discusses the Tribunal's confirmation of the assessment estimating the sale price by the C&F Agent to the distributor. The first issue questions the correctness of this confirmation based on the discrepancy between stock transfer value and sale value. Referring to a previous Division Bench judgment, the court notes a similar case where the value of goods transferred by the Head Office was fixed, leading to a conclusion that a sale at a lower value than the stock transfer was improper. The court upholds the estimation due to the single point levy of tax and the inability to fix a sale price lower than the stock transfer value. Consequently, the first issue is decided against the assessee and in favor of the revenue.

Issue 2: Rejection of proof of stock transfer due to absence of F forms

The second issue pertains to the rejection of the proof of stock transfer by the Tribunal due to the absence of F forms. The court observes that no F Form was submitted to support the claimed stock transfer. Despite the assessee's assertion of possessing transfer invoices, Form 27B declaration copies, and communications with check post authorities, the court finds these documents insufficient as they lack proper authentication by the Department or check post authorities. Although F Forms were not mandatory during the relevant period, the absence of alternative evidence for the movement of goods renders the proof inadequate. The court emphasizes the necessity of valid evidence to establish the movement of goods, irrespective of the specific documentation requirements. Consequently, the second issue is resolved in favor of the Revenue and against the assessee, leading to the rejection of the revision with no costs awarded.

This detailed analysis of the judgment from the Kerala High Court addresses the issues raised, the legal reasoning applied, and the ultimate decisions rendered on each issue.