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TMI Blog2009 (1) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... sales. The applicant also claimed to have transferred yarn to their consignment agents in the States of Andhra Pradesh, West Bengal and Rajasthan, who according to appellant, sold the goods in those States on behalf of the appellant, paid the local sales tax applicable in those States and rendered account to the appellant (principal). In respect of such transfers for sale through the consignment agents in other States, the appellant claimed exemption under CST Act. The details pertaining to the branch transfers and consignments to the agents are as follows: Assessment year Branch transfers Transfers to the consignment agents 1993-94 Rs. 13,60,22,643 Rs. 1,36,68,927 1994-95 Rs. 17,24,71,140 Rs. 58,02,105 It is not in dispute that the branches and the agents of the appellant who are registered dealers in the respective States paid taxes on the value of goods transferred from Tamil Nadu. The appellant also obtained F forms from the depot in-charge/consignment agent and filed the same before the assessing aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order bring out the legal position clearly: (at page 228) ...Clause (a) of section 3 was explained thus in the leading case of Tata Iron Steel Co. Ltd. v. S.R. Sarkar [1960] 11 STC 655 (SC): '...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 goods passes in either State.' ... It was clarified by the Supreme Court in the case of Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629' ...that a movement of goods which takes place independently of a contract of sale would not fall within the ambit of clause (a) of section 3'. In other words, the inter-State movement of goods should have been caused by and be the result of an antecedent contract of sale. If the movement of goods from one State to another is attributable to and the direct result of a contract of sale entered into by the branch or head office of a company, it would be an inter-State sale notwithstanding the fact that the goods are sent not directly to the buyer but to the branch or head office which ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses. In other words, the depots in-charge were virtually in the position of agents, as per the appellant's version. The stock registers were being maintained by the dealers running the depots and they effected the sales in the normal course of business to the local parties and sent the sale proceeds to the appellant along with the accounts statement The two depots at Bombay and Ichalakaranji were registered as dealers and the depot incharge used to obtain F forms (as required by the rules framed under section 6A of CST Act) and furnish the same to the appellant. The existence of branches/depots was recognized by the assessing authority during the previous and subsequent years. This, in short, is the case of the appellant. The formal agreements entered into with the depots in-charge/ agents were produced before the assessing authority. It is also the case of the appellant that it engaged the brokers, namely, M/s. Sri Suryodaya Agencies, for Bombay and M/s. Bangalore Yarn Agencies, for Ichalakaranji to liaison with the appellant and the depots in-charge. The appellant states that it was the duty of the brokers to contact different parties, ascertain prevailing market price an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patched to Maharashtra agents. The advance payment of Rs. 25 lakhs sent by the alleged depot in-charge before the dispatch of goods showed that the transactions were direct inter-State sales them (depot in-charge). The said amount was not reflected in the books of account. (3) The payment of brokerage to the alleged brokers is not believable for certain reasons. The appellant has given his explanation with reference to each one of the points put against it by the assessing authority in the pre-assessment notice. As regards the functioning of branches under the aegis of the two dealers who were characterized as depot-in-charge, we have already noted the version of the appellant. The appellant contended that running the branches through agents-dealers to whom it paid the commission for meeting all the expenses, etc., does not legally rule out the existence of the branch. In regard to the conditions in the agreement, it was pointed out that none of them go against the concept of agency. It was pointed out that the conditions referred to by the assessing authority were only to safeguard the interests of the assessee. The goods in the depot were always treated as the appellant' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the detailed explanation filed. The assessing authority even declined to grant personal hearing to the appellant. Now let us see how the Tribunal dealt with the matter in the second appeal. In paragraph 15, the Tribunal having referred to the assessee's version and the statement recorded at the time of inspection which confirms the assessee's version stated thus: But these sales depots do not appear to have functioned as independent business entities, fully controlled by the appellants. May be, for the sake of convenience, the appellants had appointed managers/ agents to exercise control over the operations of these sales depots. But once it is accepted that the sales depots were not under the absolute control of the appellants and they were not managed by the principal company, it would automatically follow that the goods moved to the managers/agents in the other States could be construed as those sent to the assessees' branches. Still, they would be covered under section 6A of the Central Sales Tax Act as consignments sent to the agents. It is difficult to understand whether the above observation is for or against the appellant. The assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been created on this account. (Emphasis Here italicised. supplied) The learned counsel Mr. K.J. Chandran has stated before us and he had also sworn to an affidavit that he never made the statement that the assessee received an advance of Rs. 25 lakhs from the managers of the interState branches towards insurance expenses. In fact, the alleged statement attributed to the counsel goes against the clear stand taken by the assessee from the beginning that Rs. 25 lakhs was not an advance amount, but only insurance coverage amount. We find no clarity in the underlined passage. Nothing has been mentioned as to what are the real facts that escaped the eyes of all the authorities below and also the learned counsel for the appellant . Instead of testing the correctness of the explanation given by the appellant, a wrong twist has been given to the appellant's version by attributing a concession which could not have been made by any reasonable person. At paragraph 20, the Tribunal made a comment that the assessing authority failed to analyze the transactions and the claim of the appellant in order to arrive at the conclusion and then observed that the assessing authority f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessing authority for passing a fresh order in view of the unsatisfactory nature of disposal by the assessing and appellate authority. The Tribunal, in all fairness, should have refrained from expressing any views while remanding the matter to the assessing authority for de novo examination, that too without considering the explanation of the assessee. In the face of such observations, the assessing authority will be handicapped to reach an appropriate conclusion on facts. In a case of remand, what is expected of the appellate authority is either to lay down the legal principles to the extent necessary and then direct the assessing authority to examine the facts in the light of such legal principles or in the alternative, the assessing authority should have been left free to decide the factual issues after objective consideration of the material on record including the party's explanation. This elementary principle has not been kept in view by the Tribunal. Secondly, even the observations/comments made are not based on concrete reasons. The observations/comments are too sweeping and bald. Then, as regards the existence of branches, the observations of the Tribunal are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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