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TMI Blog2024 (12) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order is correct and proper and needs to be upheld. The alternative prayer of the appellant is that if the demand of CST is upheld, an order may be issued under section 22 (1B) of the CST Act directing the State of Kerala to transfer the refundable amount which the appellant had paid as sales tax on the disputed transactions to the State of Tamil Nadu - In this case, while the amount of Central Sales Tax payable to the state of Tamil Nadu is Rs. 1,44,069/- (for Assessment Year 1996-1997) on the goods transferred from Tamil Nadu to Kerala, details of the sales tax claimed to have been paid in Kerala are not available. Therefore, it is not possible to pass an order under section 22(1B). The impugned order is upheld - appeal dismissed. - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri N.L. Ganpathi and Amogh S. Rao, Advocates for the appellant. Shri C. Kranthi Kumar and Shri Sabarish Subramanian, Advocates for the State of Tamil Nadu Shri Alim Anwar, Advocate for the State of Kerala. ORDER M/s Ansa Consmochems [the assessee] filed this appeal to assail the final order dated 20.12.2011[impugned order] passed by the Tamil Nadu Sales Tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CST for the period 29.08.1996 to 31.03.1997 but upholding the demand for the period 01.04.1996 to 28.08.1996. 9. According to the learned counsel, the appellant had transferred the goods to its own depot in Palakkad in Kerala from its manufacturing facility in Coimbatore, Tamil Nadu. Therefore, no Central Sales Tax could be levied on these transfers under the Central Sales Tax Act and the appellant paid sales tax in the State of Kerala when it sold the goods from its depot in Palakkad to its customers in Kerala. 10. According to the learned counsel for the State of Tamil Nadu, the appellant had an agreement with Argus as per which Argus placed orders on the appellant for supply of goods in Kerala. In pursuance of these orders the appellant had transferred the goods to its own depot in Palakkad and from there, supplied to Argus. Since the purchase orders placed by Argus occasioned the movement of goods from Tamil Nadu to Kerala, even though they were first sent to the appellant s own depot in Palakkad, this transfer amounts to inter-state sale and central sales tax had to be paid to the State of Tamil Nadu. 11. In the impugned order, the Tamil Nadu Sales Tax Appellate Tribunal e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raph 8) that payments made to the appellant s office at Coimbatore for the consignments sold to Argus Cosmetics within and outside Tamil Nadu was not very material, TNSTAT has treated such payments as material. However, there is no finding by TNSTAT that any payments had been made in advance to the appellant in Coimbatore and dispatches had been made thereafter to Palakkad and deliveries had been effected at Arnakulam against such payment. (v) The finding of TNSTAT that the Palakkad Branch of the appellant was a conduit pipe is contrary to the record. The Assessing Authority in Kerala had passed the assessment orders based on the Day Book, Ledger, Purchase Bills, Stock Register etc. produced by the Palakkad Branch Office of the appellant. This, coupled with the fact that the Palakkad Branch Office had independently fled GST and CST returns in Kerala, established that the Palakkad Branch office of the appellant was very much in existence. Further, as observed by this Hon ble Authority (@ page 159), the appellant would gain nothing by manipulating the interstate sales as local sales. (vi) In light of the principles laid down by this Hon ble Authority in Siddhartha Apparels case (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to principal basis. Clause 4 of the contract states that the product should be customized, made as per the specifications of the buyer, bearing the brand name of the buyer Z ELLE for which the buyer had inclusive marketing rights. Therefore the appellant could not have sold the goods to anybody else. Clause 8 of the contract states that the transactions between the appellant and the buyer will be on principal to principal basis. (iii) When the products are made by the appellant as per the specifications in the contract and supplied through the branch in Palakkad, they can only be treated as inter-state sales. The Branch office of the appellant at Palakkad was only conduit with the goods sold. (iv) The Tamil Nadu Sales Tax Appellate Authority has only rejected the forms F in respect of which sales there was evidence in the D-7 records that they were inter-state sales and not mere branch transfers. 15. In view of the above, learned counsel for Tamil Nadu prayed that the appeal may be dismissed and the impugned order may be upheld. Submissions on behalf of the State of Kerala 16. Shri Alim Anwar, Advocate for the State of Kerala adopted the submissions made by the appellant and assert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnakulam in respect of the assessment year 199697 upto the period of inspection. (iv) File marked B containing 70 slips. It contains the similar records as in book marked A relating to the year 1996-97. 22. In the impugned order, the Sales Tax Appellate Tribunal examined these records to ascertain the nature of transactions and whether the movement of goods is occasioned by the sale or transfer of goods other than by way of sale and recorded as follows: First, we have examined the file marked A containing 40 slips which contains mainly correspondence letters between the dealer-appellants and Tvl. Argus Cosmetics Limited, Chennai. Out of 40 slips, 8 (Slip Nos. 1, 2, 12, 15, 23, 25, 29 and 39) slips are relating to correspondence letters sent by the dealer-appellants to Tvl. Argus Cosmetics Limited, Chennai enclosing the invoices raised in Palakkad Branch Office to Ernakulam Branch of Tvl. Argus Cosmetics Limited from Coimbatore Head Office for dispatch of goods. The Slip No. 1 is extracted as below : AN/PKR/2500 2ndApril, 1996 To M/s Argus Cosmetics (P) Limited, 114, Luz Church Road, Mylapore, Madras. KIND ATTN : Mr. Ashwin Anand Dear Sir, Kindly find enclosed our Invoice No. Br 001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease find enclosed Demand Draft No. 409799 dated 30.4.96 for Rs. 2,98,429.20 towards payment of your Invoice No. Br. 003 dated 10.4.96 for Rs. 3,68,323.20 The balance amount which has been deducted by the bank as discounting charges will be sent to you shortly. Kindly acknowledge receipt of the above payment and arrange to send us your official stamped receipt at the earliest. Yours Sincerely, For Argus Cosmetics Ltd., Sreelakshmi S. Executive Sourcing 11. In the same manner, the dealer-appellants had received the consideration from Tvl. Argus Cosmetics Limited, Chennai for goods said to be sold from Palakkad Branch as below : Slip No. Branch Invoice No./Date Value Received Rs. Invoice Value Rs. 13 Br. 003/10.04.96 2,98,429.20 3,68,323.20 14 Br. 005/21.04.96 3,70,927.87 3,70,927.87 17 Br. 006/22.04.96 Br. 006/26.04.96 7,28,018.96 (For both invoices) 4,19,186.88 34 Br. 019/21.06.96 2,72,814.20 --- 12. On examination of the above records clearly proved that based on the requirement of Tvl. Argus Cosmetics Limited, Chennai to its Ernakulam Branch at Kerala, orders have been placed well in advance in the form of dispatch instructions. Even the date on which goods to be dispatched, pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as detailed below: S. No. In. No. Date No. of 100 gms. Cartons 200 gms. Erna- Kulam desti- nation Amount (Rs.) Pay- ment (Rs.) L.R. No. Amount Recei- ved DD Details Balance 1. Br 001/ 03.04. 96 --- 205 C/s -do- 2,53,306.20 30 Days 523980 2,41,488. 00 016787/ 18.4.96 11,818.00 2. Br 002/ 06.04. 96 --- 200 C/s -do- 2,47,128.00 30 Days 523924 2,36,004. 00 016787/ 17.4.96 11,124.00 3. Br 003/ 10.04. 96 210 C/s --- -do- 3,68,323.20 30 Days 523982 2,98,429. 20 409799/ 30.4.96 69,894. 00 4. Br 004/ 11.04. 96 --- 6 C/s -do- 7,413.84 30 Days 523983 --- --- --- 5. Br 005/ 21.04. 96 211 C/s --- -do- 3,70,927.87 30 Days 523989 3,70,927. 87 000695/ 03.5.96 Nil 6. Br 006/ 22.04. 96 239 C/s --- -do- 4,19,186.88 30 Days 523990 4,19,186. 88 020178/ 15.5.96 Nil 7. Br 007/ 30.04. 96 200 C/s 200 C/s -do- 5,97,912.00 30 Days 523993 4,76,360. 00 745018/ 28.5.96 1,21,552.0 8. Br 008/ 07.05. 96 200 C/s --- -do- 3,45,945.60 30 Days 523930 2,50,000. 00 --- --- 9. Br 009/ 18.05. 96 --- 250 C/s -do- 3,05,340.10 30 Days 524101 --- --- --- 10. Br 010/ 18.05. 96 150 C/s --- -do- 2,59,459.20 30 Days 524102 3,50,000. 00 Ch. No. 745476 of 04.6.96 --- 11. Br 011/ 20.05. 96 --- 150 -do- 1,83,204.00 30 Days 524103 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants finally destined to Ernakulam Branch of Tvl. Argus cosmetics Limited, Chennai. From the above, it is very clear that the Palakkad Branch was used only as conduit pipe in order to sell the goods to Ernakulam Branch of Tvl. Argus Cosmetics Limited. 16. As observed by the Hon ble CSTAA, New Delhi the nature of the documents recovered by the Enforcement Wing Officers at the time of inspection have been examined and analysed as above and convinced that the above records clearly established that the dealer-appellant camouflaged the direct inter-state sales as stock transfer. In this connection, it is necessary to go through the judicial decisions rendered by the various courts, in similar circumstances. . 25. .. In view of the above fact, we hold that the assessment made on the turnover over and above Rs. 90,39,554/- to tax is arbitrary and not sustainable and therefore we sustain only the turnover of Rs. 90,39,554/- and deleted the remaining turnover of Rs. 66,07,846/-. 23. Based on the above records, Sales Tax Appellate Tribunal recorded in the impugned order a finding that sales had occasioned the inter-state movement of goods and for that reason, central sales tax was payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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