2019 (12) TMI 540 - HC - VAT and Sales Tax

Levy of sales tax - Stock/ Branch Transfer of goods - inter-state sales or not - CST Act - HELD THAT - Admittedly, before the Assessing Authority himself adequate proof of movement of goods from Tamil Nadu to Kerala had been produced by the Assessee. In support of the branch transfer/ stock transfer made by the Assessee, the prescribed Form F were also furnished by the Assessee. No pre-concluded contract with the buyer was found in the record of the Assessing Authority. The mere presumption of the Assessing Authority without any documentary evidence that the goods have moved from Tamil Nadu to Kerala and Bangalore pursuant to some pre-existing contract is unfounded. Merely because the agent happened to sell the goods received from the Principal in Tamil Nadu on the same date of receipt of goods or on the very next day or any day immediately thereafter, it is not a ground to treat the stock transfer/ branch transfer as an inter-state sale. Therefore, 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. Petition allowed.

Summary

Issues:
1. Stock/Branch Transfer of goods treated as interstate sales under Central Sales Tax Act.
2. Disallowance of exemption on stock transfer.
3. Dispute regarding levy of higher rate of tax for want of C forms.
4. Assumption by Assessing Authority of pre-existing contracts for inter-state sales.
5. Justification of assessment order by Revenue due to lack of relevant documents.
6. Whether the orders of all three authorities concurrently should be set aside.

Analysis:
1. The writ petition filed by the Assessee was against the order of the Sales Tax Appellate Tribunal, which upheld the decision that Stock/Branch Transfers to branches in Bangalore and Kerala were interstate sales under the Central Sales Tax Act. The Tribunal disallowed exemption on stock transfer due to lack of necessary documentary evidence, transport documents, and proof of arrival of goods at other states. The Appellate Assistant Commissioner also confirmed this decision, leading to the Assessee's appeal to the High Court.

2. The Assessing Authority rejected the Assessee's claim of stock transfer, assuming pre-existing contracts for sales in Kerala. Despite the Assessee providing proof of movement of goods, arrival, and submission of Form "F" for branch transfers, the Authority held the transactions as inter-state sales. The High Court noted a similar case precedent where immediate sales after goods' arrival did not signify inter-state sales, emphasizing the need for documentary evidence to support the nature of transactions.

3. The dispute over the levy of a higher tax rate due to the absence of C forms was also addressed. The Assessee's failure to provide these forms led to the confirmation of the higher tax rate, as stated by the Assessing Officer and Appellate Assistant Commissioner. The High Court considered this aspect in conjunction with the overall assessment of the case.

4. The High Court highlighted that the mere timing of sales by agents after receiving goods did not establish pre-existing contracts for inter-state sales. The Assessing Authority's presumption without concrete evidence was deemed unfounded. The Court emphasized that the movement of goods from one state to another based on pre-existing contracts is crucial for imposing tax under the Central Sales Tax Act.

5. The Revenue justified the assessment order and its confirmation by Appellate Authorities due to the Assessee's alleged failure to furnish relevant documents. However, the High Court found that the necessary evidence had been presented before the Assessing Authority, making re-submission unnecessary. The lack of pre-concluded contracts and the presumption of inter-state sales without substantial proof were key factors in the Court's decision.

6. After thorough consideration, the High Court concluded that the writ petition deserved allowance. It set aside the orders of all three authorities, emphasizing the importance of concrete evidence and dismissing assumptions of pre-existing contracts for inter-state sales. The judgment favored the Assessee, quashing the decision of the Sales Tax Appellate Tribunal.