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TMI Blog1990 (4) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... n order dated February 7, 1978, did not accept that contention in respect of a turnover of Rs. 80,221. Regarding the balance of Rs. 10,98,329, the Appellate Assistant Commissioner held that the assessing authority did not give sufficient time to the assessee to prove the claim of sales returns, and on that ground, remanded the matter for reconsideration and for passing orders according to law. On remand, the assessing authority entertained the claim towards sales returns in a sum of Rs. 11,07,794.31 and ultimately allowed the same holding that the turnover was not includible in the taxable turnover by an order dated November 15, 1978. 3.. The orders of the Appellate Assistant Commissioner and the assessing authority (after remand) were not acceptable to the Board of Revenue. Hence, a notice was issued to the appellant requiring it to show cause why the order of the Appellate Assistant Commissioner and the order of the assessing authority (after remand) should not be set aside, and the original order of the assessing authority be restored. A detailed reply was sent to the Board of Revenue on behalf of the appellant, supporting the order of the assessing authority, after remand. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant, contended that even though the appellant's case can be successfully fought on the basis of "sales return", he would prefer to contend that the disputed turnover would fall only under "unfructified sales". In elaborating this submission, Mr. Natarajan referred to the facts pertaining to the transactions. The appellant was submitting the monthly returns. As soon as the goods are consigned to the customer, invoices are raised, the sales tax payable on such transactions are included in the taxable turnover of the monthly returns and the taxes are paid by the appellant. However, the invoices are forwarded to the appellant's banker with an advice to the customer to retire the invoices and take delivery of the goods from the carrier. In that process, if the customer fails to retire the document (invoices), it results in the goods being returned back to the appellant, and consequently there will be neither a completed sale nor even transfer of property in goods. Therefore, in such cases, there cannot be a claim on the basis of sales returns. In such cases, there can only be a claim for a refund of the tax paid on the basis of "unfructified sales". The modus operandi, as mentioned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed to sales tax on the ground that they are in the same position as sale price". 10.. In Kuppuswami Mudaliar Sons v. State of Madras reported in [1974] 34 STC 6, a Division Bench of this Court has held as follows: "In this case, as the assessee has retained the right of disposal, he cannot be said to have parted with the title to the goods before the goods were actually taken delivery of by the purchasers. Admittedly, in this case, the out-of-State dealers took delivery of the goods only after 2nd April, 1964. Therefore, the sale by the assessee to the out-of-State dealers can be said to have been completed only after 2nd April, 1964, when the purchasing dealers had registered themselves under the Act." 11.. In G.A. Galiakotwala Co. (P.) Ltd. v. State of Madras reported in [1976] 37 STC 536, the Supreme Court, accepting the view taken by a Division Bench of this Court in Tax Case Nos. 197 of 1968 and 225 of 1969 in judgment dated November 7, 1972*, has held as follows: "The principal question in this appeal is whether the sales of cotton by the appellant to the mills at Tirunelveli and Karur were inter-State sales *See [1976] 37 STC 536 at 537-541. under section 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o such delivery. Rejection of goods, on the other hand, is a unilateral transaction governed by the provisions of the Contract Act or the Sale of Goods Act, open only to the purchaser. Section 8A(1)(b) of the Central Sales Tax Act, 1956, inserted in the Act with retrospective effect by section 5 of the Central Sales Tax (Amendment) Act, 1969, has application only when the goods are returned by the purchaser. Therefore, the time-limit mentioned in that section has no application in the case of rejection of goods because the very act of rejection gave a go-by to the transactions which were in furtherance of a supposed sale." 13.. Section 25(3) of the Sale of Goods Act, 1930, reads as follows: "Where the seller of goods draws on the buyer for the price and transmits the bill of exchange and bill of lading to the buyer together to secure acceptance or payment of the bill of exchange, the buyer is bound to return the bill of lading if he does not honour the bill of exchange and if he wrongfully retains the bill of lading the property in the goods does not pass to him." 14.. Section 2(n) and explanation (3) to section 2(n) of the State Act, at the relevant time, read as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort its order. In that case, no doubt, a Division Bench of this Court has observed as follows: "........where the description of the goods is clear and where such goods have been sent in conformity with such description and where such goods have also been accepted on the basis that they conformed to the said description it would follow that there was ascertainment and appropriation of the goods to the contract. Where the goods are ascertainable and the goods of that description are despatched then the goods so despatched could be taken as appropriated to the contract unconditionally. The circumstance that the purchaser had a right of rejection did not postpone the transfer of property in the goods." Those observations were made in the context of finding out the situs of the sale and not with reference to the time of the sale which is the relevant criterion in this case. Further, it is seen from the decision that the learned Judges, construing the terms of contract, have observed as follows: "...From a construction of the terms of this letter, it is clear that the intention was the property in the goods passed to the purchaser as soon as the endorsement was made. There is noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appearing for the appellant. However, that was not squarely met by the Board of Revenue in its order, except stating that the assessee has to be blamed for the same. In any event, the Revenue is not entitled to get the tax collected twice on the same goods while the goods are exigible to tax on a single point But we may make it clear that we are not basing our decision on this ground alone. We are satisfied that in the facts and circumstances of the case and in the light of the principles laid down by this Court and the Supreme Court, the turnover in question represents the unfructified sales and, therefore, the tax paid on those "unfructified sales" is liable to be returned, and the rejection on the ground that the claim was not made in time treating the same as "sales returns", cannot be sustained. 18.. In the result, the appeal is allowed, and the order of the Board of Revenue is set aside. Consequently, the order of the assessing officer dated November 15, 1978 (after remand), is restored subject to factual mistakes if there are any, as pointed in paragraph 7 of the Board's Order. However, there will be no order as to costs. Appeal allowed. - - TaxTMI - TMITax - CST ..... X X X X Extracts X X X X X X X X Extracts X X X X
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