2020 (2) TMI 125 - HC - VAT and Sales Tax

Levy of sales tax - inter-state sales or not - Stock Transfer/Branch Transfer made by the Assessee during the relevant period - HELD THAT - The issue decided in the case of M/S. ADVANCE PAINTS (P) LTD. VERSUS THE COMMERCIAL TAX OFFICER, THE SALES TAX APPELLATE TRIBUNAL (ADDL. BENCH) 2019 (12) TMI 540 - MADRAS HIGH COURT where it was held that merely on the assumption or presumption of any such kind of pre-existing contract, the Assessing Authority could not have imposed the tax under the provision of Central Sales Tax Act. Since necessary documents and evidence were already furnished before the Assessing Authority himself, furnishing of the same again before the Appellate Authorities was not at all called for. And therefore, on this premise, the Appellate Authority should not have confirmed the finding of the Assessing Authority that the Assessee is liable to pay tax under the Central Sales Tax Act. There are no merit in the petition - petition dismissed.

Summary

Issues:
1. Determination of turnover as Stock Transfer/Branch Transfer
2. Interpretation of inter-State Sales under Central Sales Tax Act

Issue 1: Determination of turnover as Stock Transfer/Branch Transfer

The High Court analyzed the impugned order where the Tribunal allowed the Petition filed by the Assessee, determining the turnover in question to be Stock Transfer/Branch Transfer, not amounting to inter-State Sales. The Tribunal considered various aspects, including the absence of evidence showing a nexus between orders placed by customers in other States and the movement of goods from Chennai to branches in other States. The Court examined the documentary evidence like stock transfer invoices, Form XXVIII declaration, and lorry way bill, which indicated that the goods were moving only to branch offices. The Court also deliberated on the transport charges incurred, concluding that they did not prove direct movement to customers in other States. The Court emphasized that the burden of proof under section 6-A of the Central Sales Tax Act was discharged by the Assessee, and the turnover represented branch transfer, not inter-State sales as observed by the Assessing Officer.

Issue 2: Interpretation of inter-State Sales under Central Sales Tax Act

In a similar case, the Court referred to a previous judgment where a Writ Petition filed by the Assessee was allowed, setting aside the orders of the Assessing Officer, Appellate Assistant Commissioner, and Sales Tax Appellate Tribunal. The Court highlighted that the mere timing of the sale by agents immediately upon receipt of goods did not establish a pre-existing contract for inter-State sales. The Assessee had provided adequate proof of movement of goods and furnished prescribed Form "F" to support stock transfer/branch transfer. The Court emphasized that the imposition of tax under the Central Sales Tax Act required the movement of goods from one State to another pursuant to a pre-existing contract, which was not proven solely based on the timing of sales. The Court agreed with the previous judgment that timing of sales alone could not lead to the presumption of an inter-State sale, warranting tax under the CST Act. Consequently, the Writ Petition was allowed, and the orders of the lower authorities were quashed.

This detailed analysis of the judgment showcases the Court's thorough examination of the issues related to turnover determination and the interpretation of inter-State sales under the Central Sales Tax Act, providing clarity on the legal aspects involved in the case.