2019 (7) TMI 321 - HC - VAT and Sales Tax

Rejection of commission purchase claimed by the assessee for or on behalf of ex U.P. principals - whether there were pre-existing contract (either written or oral), between the present assessee to make purchases of food grains for or on behalf of its ex U.P. principals? - HELD THAT - The payments that have been received by the assessee against the single draft covering the value of goods, expenses and the commission charges could itself never form the basis for rejection of the claim as it is in no manner prescribed by law that commission charges should be paid separately and there is no prohibition operating on the ex U.P. principals from making such payment in a composite manner. What was of relevance was for the authorities to examine whether there was commission agency in existence viz-a-viz the transactions. The absence of the octroi receipts is again of little consequence. If the finding of facts were to be reached by the authority that there existed a commission agency that was operated by the present assessee whereunder it had purchased and dispatched goods to ex U.P. principals and if the goods had actually been dispatched in the manner claimed by the assessee, the absence of octroi receipts would not mitigate against the claim made by the assessee. The question framed above is answered in affirmative i.e. in favour of the assessee and against the revenue

Summary

Issues:
Challenge to Trade Tax Tribunal order affirming rejection of commission purchase claimed by the assessee for ex U.P. principals.

Analysis:
The applicant-assessee filed a revision against the Trade Tax Tribunal's order affirming the rejection of commission purchase claimed for ex U.P. principals. The main question of law revolved around whether the rejection of dispatch of goods to ex U.P. principals on commission basis was correct. The assessee provided evidence such as original bills, books of accounts, transportation bilty, written purchase orders, Mandi Samiti receipts, and proof of payments to establish purchases made for ex U.P. principals. The Tribunal erred in making observations beyond the scope of the dispute, questioning the delivery of goods outside U.P. from ex U.P. principals.

The assessee argued that the Assessing Authority applied the wrong test by disregarding evidence and failing to follow the Supreme Court's rule in a specific case. The burden was on the assessee to prove purchases made on commission basis for ex U.P. principals, but the Tribunal dismissed the appeal based on lack of evidence regarding dispatch and separate commission payment. The Tribunal's observations on the delivery of goods outside U.P. were deemed irrelevant and beyond the authority's scope.

The High Court analyzed the evidence and emphasized the importance of pre-existing contracts between the assessee and ex U.P. principals. The existence of written contracts, original bills reconciled with accounts, and payment received through a single draft were considered. The absence of octroi receipts was deemed inconsequential if the commission agency's existence and goods dispatch were proven. The Tribunal's focus on goods delivery outside U.P. was deemed extraneous and a misdirection.

In conclusion, the High Court ruled in favor of the assessee, remitting the matter to the Tribunal to apply the Supreme Court's test strictly based on the available material and evidence. The revision was allowed, highlighting the importance of following legal precedents and considering relevant evidence in such cases.