2017 (7) TMI 463 - HC - VAT and Sales Tax

Whether on facts and circumstances of the case, the Tribunal has rightly held that the transactions in question are consignments or interState transactions and thereby the opponent is entitled to exemption under Section 6A of the Central Sales Tax Act? Held that - Consignment Agreement s clause 4 was pressed into service to contend that since the entire sales proceeds were paid immediately and the risk in goods was entirely that of the agent sale was a local sale. Moreover, the Ghee / Butter deposit advance when seen in light of this and deduction and set off of expenses showed / suggested local sale - The Tribunal, on facts found that, in the book of commission agents stock transfers are shown and when sold at Silvasa sales are shown in the returns submitted to the Sales Tax Office at Silvasa / Daman. Further, on receipt of a sale note from such consignment agent necessary adjustments are made. Advance receipts, according to the Tribunal, in such consignment transactions are permissible. Whether the actual movement of goods did take place? - Held that - the State did not produce any other statements and the Tribunal was therefore right in holding that in probability if other statements were produced it could have disclosed the true nature of transactions of consignment. Since the inquiries visavis these transporters was held behind the back of the assessee, such facts cannot be relied upon by the Revenue. Moreover all such statements related only to one transporter / consignee Bandish Trading Co. In accordance with Rule 12(5) of the Central Sales Tax Rules, 1957, the declaration by a dealer, that the goods did move from one State to another, has to be given in the prescribed form F . The assessing authority disregarded the claim of such movement of the dealer, though such form F were produced, on the ground that they were not complete. The assessee, according to the Revenue s stand, had not discharged the burden of proof to show that the transfer of goods was in course of interState sale. From the facts on record, that forms F for the assessment periods in question were produced, is not disputed. The claim was not disallowed by the assessing authority on the ground that such F forms were not produced. The contention that the forms were defective was also taken at the stage of the Second Appeal. The Tribunal, in such circumstances recorded a finding of fact that, 15 years after the transactions having taken place, the plea of production of defective F forms cannot be entertained. Tribunal held that all three essential ingredients of interState namely that (1) there was an implied stipulation in the contract regarding interState movement of goods (ii) the goods did actually move from one State to another, (iii) and the sale concluded in another State, were satisfied - appeal allowed - decided in favor of assessee.

Summary

Issues Involved:
1. Whether the transactions in question are consignments or interstate transactions.
2. Whether the opponent is entitled to exemption under Section 6A of the Central Sales Tax Act.

Detailed Analysis:

1. Whether the transactions in question are consignments or interstate transactions:

The Tribunal examined whether the sales through consignment agreements were local or inter-state transactions. The assessee, a dairy business, sold products like Ghee and Butter through consignee agents who lifted goods from the dairy premises for sale in Silvassa and Daman. The Assessing Authority initially opined these were local sales, as the consignee agents took delivery at the dairy and bore the risk, suggesting the sale was complete locally. The Tribunal, however, found that the goods were indeed transported out of state, supported by lorry receipts, sale notes, and form F submissions. The Tribunal concluded that the relationship between the assessee and consignee agents was not that of vendor and vendee but principal and agent, making the transactions inter-state.

2. Whether the opponent is entitled to exemption under Section 6A of the Central Sales Tax Act:

The Tribunal held that the assessee had complied with Section 6A by producing form F and other evidence like lorry receipts and sale notes. The Tribunal rejected the Revenue's contention that the sales were local due to advance payments and risk transfer to consignee agents. The Tribunal also dismissed the Revenue's late introduction of transporter statements, which were not cross-examined and only related to one consignee agent. The Tribunal emphasized that the burden of proof was met by the assessee, and the transactions were inter-state, thus exempt from local sales tax.

Conclusion:

The Tribunal's findings were upheld, confirming the transactions as inter-state and exempt under Section 6A. The appeals were dismissed, and the question was answered in favor of the assessee, validating the Tribunal's decision based on the presented evidence and compliance with legal requirements.