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TMI Blog2004 (12) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Division 1, Ahmedabad, for the relevant period. Since the dues as assessed exceeded Rs. 25,000, the respondent-assessee objected to the provisional assessment and the Assistant Commissioner of Sales Tax (Appeals-5), Range 3/9 framed the assessment under section 41(3) read with section 46A of the State Act. The case of the assessee was that it had made inter-State sales to the tune of Rs. 8,58,343, but the said claim was not accepted and it was disallowed treating the said sales as local sales. 3.. The assessee preferred first appeal before the Deputy Commissioner, Ahmedabad Division, Ahmedabad, who for the reasons stated in his order dated June 13, 1984 confirmed the action of the assessing officer. The assessee carried the matter in revision before the Gujarat Sales Tax Tribunal ("the Tribunal") and the said revision application was registered as R.A. No. 53 of 1984. The Tribunal for the reasons stated in its order dated August 8, 1986 accepted the stand of the assessee, and hence, the present reference. 4.. Mr. Uday R. Bhatt, learned Additional Government Pleader appearing on behalf of the applicant, submitted that the Tribunal had erred in accepting the claim made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice went to show that any likely dispute between the purchaser and the seller was required to be resolved within the jurisdiction of Ahmedabad courts only. Referring to the submission on behalf of the assessee before the Tribunal regarding declaration before excise authorities, Mr. Bhatt submitted that the same was a voluntary act and even if the said documents, namely, the form submitted to the excise authorities, the gate pass issued by the excise authorities carried the details regarding the purchaser, i.e., the name and the out of State address, etc., it would not conclude the issue in favour of the assessee. Thus, according to Mr. Bhatt, the Tribunal had committed an error of law in reading the requirement of provisions of section 3(a) of the Central Act, and once it was shown that the assessee had failed to establish inter-State movement of goods, nothing more was required to be done so far as the department was concerned and the transaction in question was liable to be treated as a local sale. 5.. Though served, there is no appearance on behalf of the respondent-assessee. 6.. The Tribunal has accepted the stand of the assessee and found that, "we, therefore, hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne State to another. Explanation 1. Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2. Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State." 10.. In the case of Tata Iron and Steel Co. Ltd., Bombay v. S.R. Sarkar [1960] 11 STC 655 (SC); AIR 1961 SC 65, the honourable apex Court has observed as follows: "In our view, therefore, within clause (b) of section 3 are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto: clause (a) of section 3 covers sales, other than those included in clause (b), in which the movement of goods from one State to another is the result of a covenant or incident of the contract of sale, and property in the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the sale may be deemed to have occasioned such movement. It is also not necessary for a sale to be deemed to have taken place in the course of inter-State trade or commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale." 10.4 The observations in the case of Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207 (SC); (1976) 2 SCC 44 have been explained by a later decision of the apex Court in the case of Commissioner of Sales Tax, U.P. v. Bakhtawar Lal Kailash Chand Arhti [1992] 87 STC 196 in the following words wherein similar contention raised on behalf of the sales tax department was repelled in the following words: "Relying upon these statements, the learned counsel contends that a concluded sale must necessarily take place in the other State and not in the State from which the goods emanate. According to him, a concluded or a completed sale must follow the movement of goods and should not precede. If a purchase or sale is complete in the State from which the goods emanate, he says, it can never be an inter-State purchase or sale. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint reading of clauses (a) and (b) of the said section, namely, section 3 of the Central Act, it becomes apparent that the movement of goods from one State to another has to be occasioned by the contract between the parties and it is not necessary that the movement of the goods has to be only at the behest of the seller. That interpretation canvassed by the Revenue is not borne out from a plain reading of the provision. Even where the goods are delivered to the purchaser or his agent in the first State, if there is a movement of goods to the other State and same is occasioned or incident of contract of sale conditions specified in section 3 of the Central Act stand fulfilled. 13.. Section 8 of the Central Act provides for rates of tax on sales in the course of inter-State trade or commerce. In sub-section (4) of section 8 of the Central Act, it is specified that provisions of sub-section (1) which prescribe the concessional rates will not apply to any sale in the course of inter-State trade unless the selling dealer furnishes to the prescribed authority in the prescribed manner, a declaration duly filled up and signed by the registered dealer to whom the goods are sold containin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.] The reason why the C form requires several particulars to be stated is to ensure that the concessional rate prescribed by section 8(1)(b) is not misused or abused. With the help of those particulars, the appropriate authority or authorities can verify the truth and correctness of the transaction. Both the selling dealer and purchasing dealer are under an obligation to abide by the said requirements of law; otherwise the very scheme underlying the said provisions breaks down. This crucial significance of the C form needs to be kept in mind." 15.. Therefore, the tender of form "C" by the selling dealer raises a fundamental presumption that the purchasing dealer is a registered dealer and in such circumstances, it is possible for the assessing officer to undertake an exercise to verify the genuineness of the transaction. In the case at hand, admittedly, the assessee has produced "C" form in relation to the transactions with the five out of State purchasing dealers but the true import of the same has been lost on the authority. 16.. The entire case put up by the sales tax department proceeds on the footing that the only contract between the parties is governed by the terms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivery memo issued by the transporter or octroi receipts showing payment of octroi by the purchaser at the destination, etc., proceeds on the presumption that there is no movement of goods and discards the version of the assessee that both the sale and the movement of goods are part of the same transaction and there is a conceivable link between the sale and the movement of goods. In other words, the Revenue would like the court to raise a presumption that the purchaser must have diverted the goods after having taken delivery of the same at the factory gate. Not only does the Revenue fail in discharging the onus which is on it, but the presumption that it wants to draw is far-fetched in absence of any evidence to show that such an exercise had been undertaken by the purchaser. The assessee herein, namely, the selling dealer had submitted "C" forms. It was open to the department to verify the genuineness of the transaction; call upon the purchasers, who are registered dealers, and seek evidence to satisfy itself as to whether goods had in fact moved or not from this State to State of Rajasthan. The department does not undertake the requisite exercise, ignores the evidence produced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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