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TMI Blog2018 (5) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... t is a manufacturer of MS ingots, an assessee on the file of the Commercial Tax Officer, Harbour-II Assessment Circle, Chennai. For the assessment year 1992-93, the Assessing Authority disallowed exemption claimed on the entire consignment transactions and levied penalty under Section 9(2A) of the Central Sales Tax Act, 1956 read with Section 12(3) of the Tamil Nadu General Sales Tax Act, 1959. 3. In the appeal by the assessee, the Appellate Assistant Commissioner (CT)-I, Chennai remanded a portion of the turnover to the tune of ₹ 1,14,94,649/- in respect of consignment transfer to one Tvl. Tulsyan Udyog, Bangalore and dismissed the rest of the turnover. Pursuant to this, the Assessing Authority again levied tax and penalty on the turnover of ₹ 1,14,94,649/-, by treating the same, as interstate taxable sales. In the appeal filed by the assessee, the Appellate Assistant Commissioner (CT), dismissed the appeal. 4. Aggrieved against the above order, the assessee filed a second appeal before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai which went, in favour of the assessee. State has filed the revision case on the following substantial quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions relating to matters provided for in Sections 10 and 10-A) of the General Sales Tax law of each State shall, with necessary modifications, apply in relation to the assessment, reassessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, re-assessment, collection or enforcement of payment as if the tax under this Act were a tax under such Sales Tax law. (ii) Section 12(3) of the Tamilnadu General Sales Tax Act, 1959, is extracted hereunder:- Section 12(3) In addition to the tax assessed [under sub-section (1) or (2),] the assessing authority shall, in the same order of assessment passed [under sub-section (1) or (2) or by a separate order, direct the dealer to pay by way of penalty, a sum (a) which shall be, in the case of failure to submit return, one hundred and fifty per cent of the tax assessed on final assessment; and (b) which shall be, in the case of submission of incorrect or incomplete return, (i) twenty-five per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Sub-Rule 3-A(d) of Rule 4 of the Central Sales Tax (Tamilnadu) Rules, 1957, extracted hereunder: 3-A. Every principal, who claims exemption on the sale of goods on consignment account through agents outside the State, shall maintain the following records, namely:- (a) ......... (b) .......... (c) ........... (d) copies of bills issued by the agents to the purchasers. 8. Let us also consider as to how the authorities, and the Tribunal have applied the abovesaid rules to the case on hand. On 18.04.2001, the Appellate Assistant Commissioner (CT)-I, Chennai, held as follows:- At the time of final hearing, the learned Advocate argued that they have sold in the consignment sales and therefore they are eligible for exemption under CST Act and he has produced the assessment order copy of the dealer Tvl. Tulsyan Udyog, No.79-A/New Banboo Bazaar, Bangalore. A perusal of the assessment order of the above dealer shows that they have sold consignment stock receipt of iron and steel for a turnover of ₹ 10,77,67,076.47. However the questions of conversion of M.S.Ingot into CTD Bars etc. remains unanswered. The Advocate is not in a position to produce t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil. The taxable turnover was out of the inter-state purchases and stock transfer receipts from their own branches. The goods said to have been received on consignment basis have been again sent for another consignment basis to other States, which is not permissible. When the goods were entrusted for agency sales, it is the duty of the so called Agent to sell the goods and remit the proceeds to the Principal, after deducting the expenses, tax, etc., whereas it is not so in this case. 6. Taking into consideration of the above facts, the disallowance of exemption towards consignment sales already made in this office proceedings first cited is restored. Inasmuch as the dealers have suppressed the inter-state sales, by camouflaging the same as consignment sales, the penalty under Sec.9(2-A) of the CST Act, 1956 read with Sec.12(3) of the TNGST Act 59 already levied is also restored. Tax due at 8% on ₹ 1,50,49,148/- Rs.12,03,932/- Paid Nil Balance Rs.12,03,932/- Penalty levied under Sec.9(2-A) of the CST read with Sec.12(3)n at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her States for consignment sales, without the Authority of the Principal. Hence the disallowance of exemption is in order . The argument of the Dept. Representative is reasonable and justifiable. The Assessing Officer in his revision order dated 28.09.2001 has stated as follows: The Supreme Court in the decision reported in 37 STC 319 in the case of State of Tamil Nadu - Vs - Pyaralal Malhotra held that each item mentioned in several sub-clauses in item 4 of second schedule to the TNGST Act '59 would constitute a separate class for a series of sales. Therefore, each item is a separate item. In respect of agency sales, the agent merely acts pure services by only selling those goods sent for consignment sales. But in this case, this is not so. The so-called agent produced another commodity. Accordingly to the terms and conditions, the Principal has got dominion over the goods till it is sold and he can call back the goods at any time. But in this case, the term has been violated. Therefore, the transactions are outright inter-state sales. Next coming to the point of payment of tax by the so-called Agent, it is seen from the assessment order of the Sales Tax Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;56 read with Section 12(3) of the TNGST Act '59 already levied is also, restored . The Assessing Officer has assessed the appellants on a total and taxable turnover of ₹ 1,76,12,022.00 and 1,50,49,148/- respectively against the reported total and taxable turnover of ₹ 1,49,27,378/- and Rs.Nil respectively. Thus the Assessing Officer has assessed the appellants to the best of his judgment under Section 12(2) of the TNGST Act'59 which is in order. In fine, the appeal stands dismissed. 11. The Tamilnadu Sales Tax Appellate Tribunal, (Additional Bench), Chennai, has considered the submissions of the parties as hereunder:- 3.Appellant case (T.A.No.891/2001) The assessment year relates to 1992-93 under the Central Sales Tax Act 1956. The appellants/assesses had claimed consignment transfer exemption for a turnover of ₹ 1,49,27,378/- with all necessary particulars. But the assessing authority had disallowed the claim made by the appellant/assesses for the reasons that the assesses had not produced any evidence for the payment of tax by the agent in the other states. The appellants have reported a turnover of ₹ 1,49,27,378/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal before the Appellate Assistant Commissioner (CT)-I. Hence, the order of the first appellate authority is right in sustaining the order of the assessing officer. Therefore, the contention of the appellants are not acceptable. Hence, the T.A. preferred by the appellant be dismissed and CROSS OBJECTION PETITION may be allowed. T.A.No.1446/2002 The assessment for the year 1992-93 under the CENTRAL SALES TAX Act, 1956 was passed by the Commercial Tax Officer, disallowing the entire consignment transactions and levied tax at 8% and maximum penalty of ₹ 18,05,893/- was levied. On appeal, the first appellate authority had remanded a portion of the turnover of ₹ 1,14,94,649/- in connection with the Agent M/s. Tulsyan Udyog, Bangalore. The rest of the turnover was dismissed by the first appellate authority. The remanded case was heard by the Commercial Tax Officer and the turnover is again assessed to 8% tax stating that the agent has converted the ingot into CTD Bars and sold the goods. The Commercial Tax Officer further stated that the agents are not to convert the material and sell but to sell as it is without making any changes. Once again on appeal, the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed them, to convert the M.S.Ingot into CTD Bars in case of realization of little bit more profit. 8. The Commercial Tax Officer further stated that the goods were again sent by our Agent to some other Agents in some other State. Once the goods leave the Tamil Nadu Territory under Agency transaction, which is covered under Form F. It is up to the Karnataka Government to allow exemption or to levy tax. The Tamil Nadu Government does not get any jurisdiction, over the goods moved out of the State Territory under branch transfer or transfer to Agents. 9. When Karnataka Commercial Taxes Department has passed the assessment order accepting the further transfer to the other agents, the Tamil Nadu Commercial Taxes Department has no legal right to dispute the assessment of the Karnataka Commercial Taxes Department and levy tax at 8% and maximum penalty under the law of the land on the Principal in Chennai and cause huge financial loss to the Company which remains closed for the past 5 years due to bad marketing condition and huge accumulated loss. Therefore, the appellant prayed to set-aside the order of the first appellate authority and the appeal may be allowed. 10. The fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority in A.P. Central Sales Tax 178/98, the appellant/assessee preferred an appeal before this Tribunal in TA No.891/2001. Aggrieved against the revised assessment order passed as per the remand order, the appellant/assessee has preferred first appeal before the Appellate Assistant Commissioner in AP. Central Sales Tax 73/2001. The learned first appellate authority in Ap.No. Central Sales Tax 73/2001 dated 29-08-2002 had dismissed the appeal for the reasons that the appellants had not proved their claim of exemption on consignment transfer and also the goods sent by the appellants was not sold as it is by the agent in other States and the agent had converted the goods as a new commodity and therefore, exemption cannot be granted. As against the first appellate authority's order the present appeal in A.P.No.1446/2002 have been preferred by the appellants herein. Therefore, since the issue and parties are one and the same, Common order has been necessitated. 12. At the first instance, the learned Authorised Representative for the appellant, would argue that the appellant/assessee as per books of accounts reported a turnover of ₹ 1,49,27,378/- only under the consignm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken this excess turnover for which no evidence was adduced by the Revenue. Therefore, considering the above facts, it is decided that the appellants had dealt with only for a turnover of ₹ 1,49,27,378/-. Further more to emphasize this, it si admitted fact of both sides for the entire consignment transfer, the appellant had produced requisite form-F and transport particulars. No other turnovers under consignment transfer was not left over. Therefore, the excess turnover of ₹ 1,21,770/- discussed by the authorities below is without any basis. Therefore, considering the above circumstances we are of the considered opinion to delete the excess turnover of ₹ 1,21,770/- for want of particulars from the taxable turnover. Therefore, the turnover which was dealt with by the appellant under the consignment transfer is only ₹ 1,49,27,378/-. Therefore the contention raised in the cross objection petition is hereby rejected for want of evidence. 16. The next contention raised by the learned Authorised Representative for the appellant is that the appellants have claimed exemption for a disputed turnover of ₹ 1,49,27,378/- for which as per law and rules, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm-F along with transport particulars. Equally, it is admitted facts that the entire form-F and transport particulars were verified and accepted by the Revenue. Therefore, under the above admitted facts, we have to look into the case laws referred by the learned Authorised Representative. These F forms and transport particulars is available in the assessment file. But the facts are not disputed. At this juncture, it is worth while to refer the decision reported in 96 STC 98 in the case of P.DHANDAPAI VS. State of Tamil Nadu and another wherein it was filed that the assessing authority had to verify the form-F and transfer records and pass suitable orders on the basis of F forms and transfer records produced by the assessing authority. Nothing more is required to verify by the assessing authority . The production of Form F and transport records and other particulars by the appellants have not been disputed by the Revenue. These documentary evidence have not been rejected by the assessing authority. Therefore, the requisite form F and documents for dispatch of goods were admitted by the assessing authority. The alleged instance for disallowing the claim of consignment transfer by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions the facts of the case and by following the decision rendered in the case of P.Dhandapani vs. State of Tamil Nadu and Another reported in 96 STC 98 the appellant had discharged his burden of proof so as to claim exemption on the consignment transfer. Therefore, for the reasons assigned by the authorities below, the claim of exemption on consignment transfer cannot be rejected. Such rejection cannot be sustainable under the law. 20. The next dispute is with regard to the penalty under Sec.9(2) of CENTRAL SALES TAX Act 1956 amounting to ₹ 18,05,898/- as per the original assessment order passed for the assessment year 1992-93. the facts of the case would also appear that it was not a best judgment assessment. The exemption claimed by the appellant was disallowed without disturbing the total turnover reported. Under these circumstances, when the total turnover is assessed is based on the books of accounts and in view of the Hon'ble High Court in the case of Appollo Saline Pharmaceuticals Limited reported in 125 STC 505, this is not a best judgment and hence, the penalty portion will not be attracted. The penalty levied under Sec.9(2) of the CENTRAL SALES TAX Act 195 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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