TMI Blog2008 (10) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER:- K.K. SASIDHARAN J. This writ petition is directed against the order dated July 20, 1999 in T.A. No. 560 of 1997 on the file of the Sales Tax Appellate Tribunal, Chennai confirming the assessment order dated December 8, 1995 on the file of the second respondent. The factual details as culled out from the affidavit filed in support of the writ petition are as under: The petitioner is a dealer in electrical goods, wet grinders, pumpsets, etc., carrying on business at Door No. 40, Sembudoss Street, Madras-1. During the assessment year 1994-95 the petitioner submitted accounts and reported nil total and taxable turnover under the Central Sales Tax Act, 1956. The accounts were subjected to check by the assessing officer and the second respondent assessed a total and taxable turnover of Rs. 68,825 as per proceedings dated December 8, 1995 and levied tax and penalty. The nil return submitted by the petitioner was rejected for the reason that in the bills issued by the petitioner for sale of articles to different purchasers, it was found that the sale was in the course of inter-State trade. The said order was taken up by the petitioner before the Appellate Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order passed by the Tamil Nadu Sales Tax Appellate Tribunal. The assessment in question relates to the year 1994-95 and the petitioner reported nil taxable turnover for the said year claiming exemption for the entire turnover of Rs. 68,825 as second sales. The accounts of the petitioner for the said year was called for by the assessing officer and on verification of the accounts, the assessing officer found that the assessee had made inter-State sale to the tune of Rs. 68,825 and the sale was in favour of the purchasers from Kerala, Karnataka and Andhra Pradesh and the same was not shown in the accounts. Accordingly, the assessing authority considered those sales as inter-State sales and completed the assessment accordingly. The assessing officer also imposed penalty as evidenced by the assessment order dated December 8, 1995. The matter was taken up before the Appellate Assistant Commissioner, Chennai and the appellate authority was of the opinion that as the bills were raised in the name of the purchasers from the other States, the burden of proof regarding the alleged delivery at Chennai lies on the assessee and as he failed to discharge the said burden, the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -State sale is the contract as well as the movement of goods. The assessment order shows that the petitioner has done fourteen sales in favour of the purchasers from Andhra Pradesh, two sales in favour of the purchasers from Kerala and six sales in favour of the purchasers from Karnataka. These are all found to be stray sales and not bulk sales effected in favour of outsiders. In case the purchasers from the neighbouring States come to Chennai and make purchases from the assessee and takes articles to their home State on their own, it cannot be said that there was an element of inter-State sale in the transaction. There was no evidence to show that the assessee himself had despatched the goods through lorry service to the State of Karnataka, Kerala and Andhra Pradesh. While considering the bona fides of the assessee in such matters, volume of sales is also significant. Purchase bills show that no substantial part of the sale was effected in the name of the purchasers from outside the State. Even though the assessing authority has stated in the assessment order that the despatch of goods through lorry service was made by the assessee himself, no evidence is found in the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay tax under section 8 of the Central Sales Tax Act. In such factual situation, the Division Bench considered the law on the subject of inter-State sales and by making reference to a catena of decisions on the point held thus: (at page 120) In our opinion, the sales in question in the present bunch of cases cannot be regarded as inter-State sales. No doubt, it is not necessary that the contract of sale must expressly provide for the movement of the goods to another State, as held in Co-operative Sugars (Chittur) Ltd. v. State of Tamil Nadu [1993] 90 STC 1 (SC). However, as held in the Constitution Bench decision of the Supreme Court in State of A.P. v. National Thermal Power Corporation Ltd. [2002] 127 STC 280 (vide para 25); [2002] 5 SCC 203 (vide para 24) the contract of sale must at least impliedly provide for the movement of the goods from one State to another. In the aforesaid Constitutional Bench decision the Supreme Court has observed: 'It is well-settled by a catena of decisions of this court that a sale in the course of inter-State trade has three essential ingredients: (i) there must be a contract of sale, incorporating a stipulation, express or implied, regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le takes place these goods have come into actual existence'. The sales made by the petitioner in the name of the purchasers from other States were assessed to Central sales tax for the sole reason that they hail from other States. The individual articles though sold by the petitioner to the purchasers from the other States at his premises there was no obligation on the part of the petitioner to transport those articles to the actual place of the purchasers. There was nothing to indicate that the petitioner took up the task of transporting the goods to the State of Karnataka, Kerala and Andhra Pradesh. There was no prohibition to the residents of neighbouring States to come to Chennai for making purchases. The provisions of the Tamil Nadu General Sales Tax Act or the Central Sales Tax Act do not put a bar on the assessee of this State from selling articles to the purchasers of other States. Therefore unless and until it was proved that the products were actually delivered by the assessee in the respective States as shown in the bills, it cannot be said that the transaction was an inter-State trade. However there was nothing to indicate in the present case to show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii) if the return submitted by him appears to be incomplete or incorrect. Sub-section (3) empowers the assessing authority to levy the penalty only when it makes an assessment under sub-section (2). In other words, when the assessing authority has made the assessment to the best of its judgment, it can levy a penalty. It is well known that the best judgment assessment has to be on an estimate which the assessing authority has to make not capriciously but on settled and recognised principles of justice. An element of guess-work is bound to be present in best judgment assessment but it must have a reasonable nexus to the available material and the circumstances of each case. [See State of Kerala v. C. Velukutty [1966] 17 STC 465 (SC)]. Where account books are accepted along with other records there can be no ground for making a best judgment assessment. In the result, the writ petition is allowed and the assessment order dated December 8, 1995 on the file of the second respondent as confirmed by the order of the first respondent dated July 20, 1998 in T.A. No. 560 of 1997 treating the transaction as inter-State sale is set aside. No costs. - - TaxTMI - TMITax - CST, V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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