2022 (5) TMI 642 - HC - VAT and Sales Tax

Levy of Tax - Inter-State sales - whether Gold Bullian Bars send by the revisionist bank to its Branch at Jaipur was not a stock transfer as such was an Inter-State sales, without recording any finding of its own? - HELD THAT - Admittedly, the revisionist is a nationalized bank of Government of India, which has to adhere to the policy so framed by Reserve Bank of India. It has specifically been mentioned in the grounds of appeal that the T.T. gold bars, on receipt, if not sold within ten days, the intimation has to be sent to the Head Office at Delhi for further instructions. Upon receiving the instructions, the goods were sent to Jaipur Branch. The said transfer was treated as central sales under the Central Sales Tax Act. On submission of Form-F, the assessing authority has treated the stock transfer as inter-State sale, on perusal of the stock register maintained by the revisionist Branch office at Jaipur, that the goods were sold to one party namely R.P. Gatta Jewelers and there was a pre-existing contract, but the revisionist failed to bring on record any other material to prove otherwise - The Tribunal being the last court of fact has failed to consider the fact that the revisionist is a nationalized bank and the nature of transaction is not a regular transaction. The revisionist has sent the gold bars as stock transfer to be sold at Jaipur. The Department has failed to bring on record any contract or pre-existing order of any of the parties at Jaipur. Merely the goods have been sold to one party namely R.P. Gatta Jewelers cannot be a ground for presuming that there was a pre-existing contract. The Department has miserably failed to bring on record any material, whatsoever, except the disclosure by way of showing the stock register maintained at Jaipur Branch. Merely goods have been sold on the date of receipt or within 2- 3 days of receipt at the branch cannot be a ground for treating the pre-existing contract in existence of prior order of contract. In absence of material on record with regard to existence of prior order of contract and the movement of goods to Jaipur Branch was in pursuance of those orders, the same cannot be treated as inter-State sale - this revision is allowed.

Summary

Issues:
1. Whether the Tribunal was justified in confirming the orders imposing tax on the revisionist for treating the transaction as Inter-State sales?
2. Whether the Tribunal was correct in holding that the transfer of Gold Bullion Bars by the revisionist bank to its Branch at Jaipur was not a stock transfer but an Inter-State sale?
3. Whether the Tribunal was correct in disbelieving the material evidence and submissions regarding the stock transfer by the revisionist bank to its branch under the guidance of the Reserve Bank of India and the Gold Scheme Policy of the Government of India?
4. Whether the orders confirmed by the Tribunal, treating the stock transfer by the revisionist as an inter-state sale without a cogent finding, are justified?
5. Whether the impugned order of the Tribunal and the orders passed by the authorities below can sustain in the eyes of law?

Analysis:

Issue 1:
The revisionist, a nationalized bank of the Government of India, adheres to policies set by the Reserve Bank of India. The revision was filed against the order treating the transfer of T.T. gold bars to Jaipur Branch as an Inter-State sale. The revisionist argued that the transfer was part of stock transfer policy and not a regular transaction. The assessing authority treated it as an Inter-State sale based on a pre-existing contract. However, the revisionist failed to provide evidence to the contrary. The Tribunal upheld the decision without considering the unique nature of the transaction by the nationalized bank.

Issue 2:
The Department failed to present any contract or evidence of a pre-existing order at Jaipur. Merely selling goods to one party does not establish a pre-existing contract. The revisionist sent the gold bars as a stock transfer to be sold at Jaipur, not as an Inter-State sale. Citing a previous case, the court emphasized the need for evidence of a prior order of contract for a transaction to be considered an Inter-State sale. Since no such evidence was presented, the transfer cannot be treated as an Inter-State sale.

Issue 3:
The revisionist's adherence to the Reserve Bank of India's policy regarding the sale of T.T. gold bars is crucial. The assessing authority and the Tribunal failed to consider the specific conditions and procedures followed by the revisionist in transferring the gold bars to Jaipur. Without evidence of a pre-existing contract or order, the transaction cannot be classified as an Inter-State sale.

Conclusion:
The High Court allowed the revision, setting aside the Tribunal's order. The court emphasized the lack of evidence regarding a pre-existing contract for the transfer to Jaipur to be considered an Inter-State sale. The judgment highlighted the importance of considering the unique circumstances of transactions involving nationalized banks and the necessity of concrete evidence to establish the nature of the transaction.