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2020 (1) TMI 938 - HC - VAT and Sales TaxCentral sales tax / CST - Branch transfer or inter-state sales - pre-concluded contract of sale executed with the Agent in Kerala - Central Sales Tax Act - HELD THAT - There are no merit in the submission made by the learned counsel for the Revenue that any pre- existing contract was established by the Revenue to tax the Branch transfers made by the Assessee Principal from the State of Tamil Nadu to the State of Kerala to its Agent M/s. Pandian Agencies. Merely because the sales made by the Agent are immediately on the succeeding day or dates or in the near future, it does not entitle the Revenue to draw any presumption of link between movement of goods to the sale conducted by the Agent in the Kerala as Branch of the Assessee Principal. The essential ingredient of Inter State Sale viz., movement of goods commencing from one State to another in pursuance of the pre-existing contract is not satisfied in the present case also. The concurrent findings of the two Appellate Authorities in favour of the Asessee do not call for any interference by this Court in the Writ jurisdiction. Petition dismissed - decided against Revenue.
Issues Involved:
1. Interpretation of branch transfer of goods under the Central Sales Tax Act. 2. Determining the tax liability on branch transfers from one state to another. 3. Analysis of evidence required to establish a pre-existing contract for inter-state sales. Issue 1: Interpretation of branch transfer of goods under the Central Sales Tax Act: The High Court analyzed a case where the Revenue challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal regarding the nature of branch transfers of goods made by the Assessee to its branch in Kerala. The Tribunal upheld that the transfers were not sales in the course of inter-State sale and thus not liable to tax under the Central Sales Tax Act. The Tribunal's decision was based on the findings that the Assessing Officer disallowed exemption on consignment sales, but the Appellate Assistant Commissioner allowed the exemption and deleted the penalty. The High Court concurred with the Tribunal's decision, emphasizing that the Revenue failed to provide additional evidence to challenge the Appellate Assistant Commissioner's order. Issue 2: Determining the tax liability on branch transfers from one state to another: The Revenue argued that the sequence of transactions between the Assessee's agent and the branch in Kerala implied a pre-concluded contract of sale, making the transfers taxable under the Central Sales Tax Act. The Revenue cited a Supreme Court case where the movement of goods due to a sales contract constituted an inter-state transaction. However, the High Court highlighted that in the absence of evidence establishing a link between the movement of goods and a pre-existing contract, the transfers could not be deemed inter-state sales. The Court referenced a previous judgment and emphasized that the mere timing of sales by the agent did not indicate a pre-existing contract, thus rejecting the Revenue's argument for tax liability. Issue 3: Analysis of evidence required to establish a pre-existing contract for inter-state sales: The High Court reiterated that the essential element for an inter-state sale is the movement of goods from one state to another in pursuance of a pre-existing contract with the seller. The Court emphasized that the Assessing Authority had sufficient proof of the branch transfers from Tamil Nadu to Kerala, supported by Form "F," and no evidence of a pre-concluded contract with the buyer was found. The Court stressed that the presumption of a pre-existing contract without documentary evidence was unfounded and that the Appellate Authority erred in confirming the tax liability based on such presumptions. The High Court dismissed the Revenue's petition, stating that the absence of a proven pre-existing contract meant the transfers were not taxable under the Central Sales Tax Act. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the lack of evidence establishing a pre-existing contract for inter-state sales and dismissing the Revenue's claim for tax liability on the branch transfers from Tamil Nadu to Kerala.
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