TMI Blog2017 (7) TMI 463X X X X Extracts X X X X X X X X Extracts X X X X ..... place? - Held that: - the State did not produce any other statements and the Tribunal was therefore right in holding that in probability if other statements were produced it could have disclosed the true nature of transactions of consignment. Since the inquiries visavis these transporters was held behind the back of the assessee, such facts cannot be relied upon by the Revenue. Moreover all such statements related only to one transporter / consignee Bandish Trading Co. In accordance with Rule 12(5) of the Central Sales Tax Rules, 1957, the declaration by a dealer, that the goods did move from one State to another, has to be given in the prescribed form ‘F’. The assessing authority disregarded the claim of such movement of the dealer, though such form ‘F’ were produced, on the ground that they were not complete. The assessee, according to the Revenue’s stand, had not discharged the burden of proof to show that the transfer of goods was in course of interState sale. From the facts on record, that forms ‘F’ for the assessment periods in question were produced, is not disputed. The claim was not disallowed by the assessing authority on the ground that such ‘F’ forms were not produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question is answered it would be necessary to appreciate the facts involved in the present appeals. 3.1 Ahmedabad Zilla Sahakari Doodh Utpadak Sangh , the respondent in this appeal (also known as Uttam Dairy ) was carrying on dairy business. It sold milk, Ghee and Butter. The sale was on a consignment basis through various commission agents / consignees. Through these consignment agents, Ghee and Butter was transported and sold at Silvassa and / or Daman. It was the case of the assessee that such consignee agents, swould lift the goods from the factory premises of the principal (the dairy) for the purposes of sale to Silvassa / Daman. These consignee agents would on lifting such goods would deposit an advance popularly known as Ghee deposit or butter deposit in the principal s favour. On the receipt of sale notes from the consignee agent, who would sell such goods by transporting them to Silvassa and Daman, the sales account of such consignee would be credited by adjustment entries in the deposit accounts. 3.2 The consignee agents would transport these goods through various modes of transportation to their sellers in Silvassa / Daman, outside the State of Gujarat obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Authority was of the opinion that since the consignment agent lifted the goods from the dairy itself, the sale in fact took place at the outlet itself as the delivery was taken by the consignee at his own risk. Therefore the transaction of sale was complete at the dairy and therefore it was in the opinion of the Assessing Authority a local sale and not inter State sale. (C) It was the case of the Assessing Authority also that the transportation of goods like dairy products i.e. Butter and Ghee by such consignee agents through the four commission agents in question revealed that in fact such goods were never transported to the ultimate seller at Silvassa or Daman. This opinion of the authority was based on the Assesing Authority s visit to one of the commission agents namely Bandish Trading Company. A statement was recorded on 25.09.1998 of one Narsinhbhai Lallubhai Damania, the owner of the Company. In such statement, the owner of the trading company stated that the godown of the agency was never used for transportation of goods as a consignee agent for transportation of the assessee s products to Daman and that the agency had never operated as a consignee agent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to Silvassa and form F to substantiate inter State movement as envisaged under Section 6A of the Central Sales Tax Act, did not convince the Appellate Authority and the appeal was dismissed by its order dated 24.06.2002. 6 Aggrieved by this order of the Authorities below, the assessee dairy approached the Gujarat Value Added Tax Tribunal by filing Second Appeals, the judgments of which, are under challenge in these Tax Appeals. The Tribunal in the impugned judgment accepted the contention of the assessee holding that the dairy through its consignee agents sold goods to sellers in Silvassa / Daman. The goods in question namely butter and Ghee were transported to the sellers in Daman and Silvassa and hence there was movement of goods inter State. Consignments by virtue of agreement between the inter se principal and the agent through consignment agreements, which provided remission of sales proceed by the consignee immediately after assigning sales, would not lead to a conclusion that the relationship between the assessee and the agent was that of vendor and vendee. The transaction would not merely become local sales transaction by virtue of this clause in the agreement. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the sale was in the nature of inter State transaction. C) Further it was contended that in absence of any accounts produced to substantiate the nature of sale by the consignee agents it should be presumed that the sale took place at a local level and not inter State. There was nothing on record to show at the hands of the consignee agent through their accounts to say that the incident of sale occurred at Silvassa or Daman. D) The vehicles which transported the goods had no insurance nor did the consignee agents show any over head expenses to suggest that such sales were in the nature of inter State movement. E) Through the discussion in the judgment of the Tribunal, Mr Pranav Trivedi, learned AGP invited the attention to the details, which were produced at pages (831 to 841 of the paper book before the original authority). In the body of the judgment of the Tribunal statements have been reproduced relating to five vehicles belonging to one of the commission agents namely Bandish Trading Company. Attention is invited of this Court of such statement made by the owners of such transport vehicles recorded during the period of assessment. These vehicle owners have throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for such goods was not relevant for the purposes of coming to the conclusion that the sale was not inter State sale. E) Substantial evidence has been produced by way of lorry receipts to show that the assessee transported goods from Ahmedabad to Silvassa through the consignment agents which were carried through the vehicles. Detail of the vehicles which carried such goods according to Shri Patel has been produced extensively in the paper book and has been reproduced by the Tribunal. According to Mr Patel, the statements which are sought to be relied upon, five in number of the vehicle owners have been sought to be produced by the Government for the first time before the Tribunal, though such statements were recorded at the assessment stage. No opportunity to cross examine the transporters whose statements are so recorded has been given. Merely because such five statements are on record, the fact that there was no inter State movements of goods cannot be held against the assessee. F) The assessee has by producing form F sufficiently discharged the burden of proof and in accordance with Section 6A of the Central Sales Tax Act have proved that the sales were in fact inter Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were consigned were already furnished to the Assistant Commissioner along with the name of the consignee agents appointed by the appellant. The said material and relevant evidence have been ignored by both the authorities below. 47 In the books of account of the commission agent, the stock transfers are only shown as the good received on consignment and when the goods are sold by them the sales are shown in their returns submitted to the sales tax office of Silvasa or Daman. They have sold the goods on their own account and their books as well as income tax returns only disclosed the earning of commission as the selling commission agents of the appellant. 48 Based on such sale notes, the net realization shown therein has been credited by the appellant to the Ghee sale account . Butter sale account. Thus, all these expenses are reflected in sale account. They are borne by the appellant. Whatever expenses including telephone and postage, incurred by the agent are shown deducted in their sales notes. The appellant has already furnished form F obtained from the said commission agents as prescribed under Section 6A. 49 In the Tribunal s view, the authority has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods as selling commission agents. It is also admitted that the said parties are registered outside the State in the Union Territory and they are also assessed in respect of those transactions in their respective territory. Even visits were paid and it was found that the parties do have their places of business at the respectiveplaces. Therefore, on facts, the conclusion that those parties at Daman and Silvasa have not acted as selling commission agents of the appellant is unjustified and unwarranted. Therefore, the entire assessment made under theGST Act(i.e. Local Act) in respect of such consignment sales (outside sales) is not tenable in the eye of law. In this behalf, Tribunal has gone through the reply filed by the appellant on 20.2.1999 before the department (page 119 to 133 of the paper book) and annexures produced therewith and also ledger account of the appellant for the year 1996-97 which givesdetails of transportation charges and others expenses in that behalf. 51 The Tribunal is of the view that the lower authorities have also incorrectly equated the amount advance payment as the sale price of the goods. The lower authorities have also been wrongly impressed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... branch transfer claims have been disallowed by applying the analogy of the discussion relating to M/s. Bandish Trading Company and the same has been wrongly subjected to local tax through the sales through other commission agents are also made in Unions Territories. 58 The appellant had produced copies of the bills of consignment agent who sold the goods in Daman / Silvasa as per Rules 3(C), 7 and 8 of CST (Gujarat) Rules, 1970 along with form F which were obtained from prescribed authority of that State. Not only that, but it is proved that all the four consignment agents were assessed in Daman /Silvasa by the sales tax authority. In that view of the matter, the conclusion and reasoning to treat local sales by agent are against the evidence. 58.1 In this connection, the revenue has produced statement of owner of five vehicles to prove that goods did not move from Ahmedabad to Silvasa and, therefore, all the consignment sales made in all the three years assessment are required to be considered as local sales. In Tribunal s view, the assessing authority had made some inquiries behind the back of the appellant and without disclosing any information or giving copies of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the defect in the forms after about 15 years as the business of consignment agent is closed down since long. The claim of consignment sales cannot be disallowed as production of Form F was not mandatory during the years 1996-97, 1997-98 and part of year 1998-99 i.e. from 1.4.1998 to 30.9.1998. The production of form F is now mandatory as per amendment in section 6A w.e.f 11.5.2002. In that view of the matter, the contention of the revenue is not accepted regarding production of form F and it is held that the transaction carried out by the appellant during 199697, 199798, and from 1.4.1998 to 30.9.1998 were consignment transaction. 63 In the premises aforesaid, it is held that consignment sales made by the appellant through four consignment agents are not local sales but same are covered by section 6A of the CST Act and, therefore, not liable to tax under Local Act in the facts and circumstances of the case. They are interState sales u/s. 3(a) of CST Act and as such, are not liable to tax under the Local Act in the facts and circumstances of the case. 10 Analysis of the evidence on record, in the facts of the case had led the Tribunal to arrive at a conclusion that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority are contrary to law, and such reassessment or revision may be done in accordance with the provisions of general sales tax law of the State.] 11.1 Consignment Agreement s clause 4 was pressed into service to contend that since the entire sales proceeds were paid immediately and the risk in goods was entirely that of the agent sale was a local sale. Moreover, the Ghee / Butter deposit advance when seen in light of this and deduction and set off of expenses showed / suggested local sale. The Tribunal, on facts found that, in the book of commission agents stock transfers are shown and when sold at Silvasa sales are shown in the returns submitted to the Sales Tax Office at Silvasa / Daman. Further, on receipt of a sale note from such consignment agent necessary adjustments are made. Advance receipts, according to the Tribunal, in such consignment transactions are permissible. In arriving at such a finding, the Tribunal relied upon a judgement of this Court in the case of The Commissioner of Sales Tax, Gujarat vs. M/s. Mohanlal Gokaldas and CO. reported in 197/GSTB/HC Vol.227(292) , wherein the following question of law was preferred by the Tribunal for its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi constituents have made the following expenditures after taking the delivery of the goods and have debited this expenditure to the account of the assessee and have also sent the account relating thereto to the assessee in different statements of accounts. This expenditure is found to be of the following categories: ( a) All expenses from station to godown. ( b) Brokerage paid to the brokers at Delhi at the time of effecting the sales in favour of the ultimate buyers and ( c) Expenditure incurred by these Delhi constituents of the assessee in paying thebunding charges for the empty tins. S That this expenditure is incurred by the Delhi constituents after taking the delivery of the consigned goods is apparent from the various statements of accounts sent by these constituents to the assessee at different times. One of such statements is found at the page 177 of the paper book. Apart from showing that these Delhi constituents of the assessee had notbecome the owners of the goods despatched to them these items of the expenditure further reveal the fact that that these Delhi constituents were considering themselves liable to render the account of this expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el Co.Ltd., Bomabay vs. S R Sarkar, wherein Shah, J. speaking for the majority observed that clauses(a) and (b) of Section 3 of the Act are mutually exclusive and that Section 3(a) covers sales 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 (page 391). Sarkar,J. Speaking for himself and on behalf of Das Gupta, J. agreed with the majority that clauses (a) and (b) of Section 3 are mutually exclusive but differed from it and held that a sale can occasion the movement of the goods sold only when the terms of the sale provide that the goods would be moved; in other words; a sale occasions a movement of goods when the contract of sale so provides (page 407). The view of the majority was approved by this Court in theCement Marketing Co. of India vs. State of Mysore; State Trading Corporation of India v. State of Mysore and Singareni Collieries Co. vs.State of Andhra Pradesh. In K G Khosla Co. vs. Deputy Commissioner of Taxes, counsel for the Revenue invited the court to reconsider thequestion but the Court declined to do so. In a recent decision of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o was the consignee, had to pay merely the transport charges. These facts cumulatively indicate that there was a conceivable linkbetween the contract of sale and the movement of goods and the nexus is not otherwise explained. For the purpose of Section 3(a), it is immaterial where the property in the goods passed. Against the aforesaid background, the only conclusion possible is that the purchase of goods in the instant case was in the course of interState trade and that it is not exigible to purchase tax under Section 15 of the Act. 11.2 The other question that the Tribunal addressed is on the question whether the actual movement of goods did take place? It is the case of the assessee that movement of goods from one State to another State did take place. Such transfer was occasioned through his consignee agents. In order to substantiate the facts of movement of goods and to show that the goods were in fact dispatched through regular transport carriers, Lorry receipts were produced to show movement of goods. Copies of the bills of consignment who sold the goods at Daman / Silvassa along with form F together with the fact that the sales tax authority at Daman / Silvassa a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... five sample statements the State did not produce any other statements and the Tribunal was therefore right in holding that in probability if other statements were produced it could have disclosed the true nature of transactions of consignment. Since the inquiries visavis these transporters was held behind the back of the assessee, such facts cannot be relied upon by the Revenue. Moreover all such statements related only to one transporter / consignee Bandish Trading Co. 12 The consequential question that the Tribunal answered in favour of the assessee was regarding submission of form F to substantiate the fact that the goods were in fact sold at Silvassa / Daman. Did the assessee discharge the burden of proof by producing such form F . In accordance with Rule 12(5) of the Central Sales Tax Rules, 1957, the declaration by a dealer, that the goods did move from one State to another, has to be given in the prescribed form F . The assessing authority disregarded the claim of such movement of the dealer, though such form F were produced, on the ground that they were not complete. The assessee, according to the Revenue s stand, had not discharged the burden of proof to show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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