2021 (5) TMI 526 - HC - VAT and Sales Tax

Suo motu revisional power - restoration of order of assessment passed by the first respondent - CST Act - assessment year 1994-95 - whether the goods were sold in the other States/UTP in the same transport carrier and would it tantamount to a case of inter-state sales and not that of a branch transfer? - HELD THAT - An identical issue was considered by the Hon'ble Division Bench of this Court in the case of STATE OF TAMIL NADU VERSUS PMP. IRON AND STEEL INDIA LIMITED AND ANOTHER 2009 (11) TMI 856 - MADRAS HIGH COURT wherein it was held that the mere fact that the goods dispatched by the assessee and received by the agents have been sold on the very same date after their arrival or the next day itself could not be a reason to hold that the transactions were interstate sales. In the said case, the assessee produced before the Appellate Authority the copies of sale pattials, invoices rendered by the agents as well as the excise gate pass and the above said documents clearly proved that the transactions were consignment sales as held by the Appellate Authority. The order passed by the First Appellate Authority dated 25.7.1997 is restored - Petition allowed.

Summary

Issues:
Challenge to order under Central Sales Tax Act, 1956 for assessment year 1994-95; Revisional power exercised by Joint Commissioner; Interpretation of delivery note in Form XX; Determination of inter-state sales versus branch transfer.

Analysis:
The writ petition challenged an order under the Central Sales Tax Act, 1956 for the assessment year 1994-95, where the petitioner, a registered dealer, contested the decision of the Assessing Officer regarding transactions to other states and the Union Territory of Puducherry. The First Appellate Authority allowed the petitioner's appeal, emphasizing the documents and delivery note in Form XX, which indicated local sales rather than inter-state transactions. The Revenue did not appeal this decision. However, the Joint Commissioner, through revisional powers, sought to overturn the First Appellate Authority's order, arguing that the goods were sold in other states/UTP, not merely transferred between branches.

The High Court considered the documents presented, particularly the delivery note in Form XX, which was not questioned by the Assessing Officer or the Joint Commissioner. The key issue was whether the goods sold in the same transport carrier to other states constituted inter-state sales or branch transfers. Referring to a previous case, the Court highlighted that the mere dispatch and sale of goods on the same or next day did not automatically signify inter-state sales. The burden of proof rested on the assessee to demonstrate the transactions were consignment sales, supported by genuine documentation. This principle was upheld in subsequent cases, emphasizing the need for the assessee to substantiate the authenticity of the transactions.

Based on the precedents and the evidence presented, the Court concluded that the impugned order was legally unsustainable. Consequently, the writ petition was allowed, setting aside the Joint Commissioner's order and reinstating the First Appellate Authority's decision from 25.7.1997. No costs were awarded, and the connected WPMP was closed, bringing closure to the legal dispute.