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TMI Blog2023 (10) TMI 492X X X X Extracts X X X X X X X X Extracts X X X X ..... and marketing of paints and allied products. It is having its headquarters at Kolkata and its network is spread throughout the entire length and breadth of the country. The appellant is having Sales Tax Registration under DST Act bearing TIN 7520017840. It is claimed that appellant is having its factories outside Delhi and used to send goods for storage to Delhi unit from where sales were made. 3. A team of enforcement officials conducted a survey at the premises of the appellant in Delhi on 03 October 1997 pertaining to the period 1996-97 and certain documents including diaries of sales persons and certain gate passes were seized. The Sales Tax Officer, Enforcement eventually passed an assessment order dated 31 December 1999 under Section 23(3) of the DST Act directing the appellant to pay a sum of Rs. 59,49,503/-, comprising of tax component to the tune of Rs. 32,34,254/- plus interest amounting to Rs. 17,26,249/- and penalty for a sum of Rs. 10,00,000/- for the period 1996-97, primarily based on variations in physical stock in comparison to the stock in record. The demand of DST was computed by increasing the sales value of the goods. 4. The second limb of the grievance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the declarations and Form 'C' & Form 'F' and certificates in Forms 'D', 'E-1' and 'E-2' referred to in the Central Sales Tax (Registration & Turnover) Rules, 1957, pursuant to which the Accounts Officers of the appellant along with an Advocate appeared before the Assessing Authority from time to time. As regards the stock transfers that was adjudged to be inter-State sale, learned DVATT upheld the stand of the Assessing Authority to the effect that the seized gate passes brought out that the goods had been sent to Ghaziabad and Faridabad branches outside Delhi pursuant to the orders received from the customers viz., FEDCO, BGM and NTPC and the plea of the appellant that the gate passes were meant for internal records of the company to maintain track of the stocks was rejected. Thus, the transactions were held to be a case of inter-State sale covered by Section 3(a) of the CST Act. 8. In arriving at such decision, learned DVATT observed that the appellant had failed to produce any gate pass books on the pretext that old records were not available and thus, found justification in the decision of the Assessing Authority that the gate passes, which pertained to September 1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses, which were otherwise meant for internal records. The appellant, therefore, has made a prayer to quash or set aside the impugned orders, both dated 02 May 2022, passed by learned DVATT. CASE OF THE RESPONDENT/REVENUE: 11. A short affidavit has been filed by Mr. Awanish Kumar, Special Commissioner-II, Department of Trade & Taxes, challenging the appeal and relying on documents to the effect that the notings/ proceedings sheets before the Assessment Authority bring out that appellant had duly rebutted the documents put to him during the assessment proceedings on 18 November 1999, 25 November 1999, 29 November 1999, 02 December 1999, 08 December 1999, 16 December 1999, 24 December 1999, 30 December 1999, 31 December 1999, 04 January 2000, 07 January 2000, 20 January 2000, 24 January 2000 and 28 January 2000 and no prejudice had been caused to the appellant. ANALYSIS AND DECISION: 12. Having given our due consideration to the submissions advanced by the learned counsels for the rival parties at the Bar and on meticulous perusal of the record, we firstly deal with the first limb of the demand that pertains to the variations in the physical stock vis-à-vis the quantity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khla Branch. SL No. 51 & 54 are mentioned as bill. The dealer could not produce the record to explain the figures. Similarly pages 62 is the detail of good in value as well as in quantity he could not produce any record to give the satisfactory explanation. Similarly Page No. 87, 12/12 Rangoli Raw Material containing the quantity also remained unexplained. Sl. No. 166 which contains the details of consignment dispatched and Page No. 170 containing the similar details, 171 & 172 of similar nature and page No. 178 also remained unexplained on the ground that his record was with in charge of Spread Coating Unit and he was not available. The visiting team also reported the physical stock position but could not calculate variation at various places since the rates list were hot provided. The dealer was issued ST-32 & 31 and he filed trading accounts on 3.10.96 in terms or quantity and not in value. It was further explained that there has not been any suppression as most of the record has been explained the remaining could not be explained on account of the officer in charge on leave, & the record was with him. The above mentioned record which pertain to sale and purchase stock was neith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales figures as well as physical stock were not explained by the appellant, we find that the assessing authority took a fair, just and reasonable view of the matter in proceeding to carry out a best judgment assessment thereby enhancing sales by 10% of the net GTO after deducting the stock transfer figure of GTO, and accordingly, the levy of tax with interest cannot be said to be unpalatable or an unconscionable exercise of powers. 15. This brings us to the second limb of the demand on account of the purported stock transfer made by the appellant, which has been treated as inter-State sales. Again, it would be relevant to reproduce the reasons assigned by the Assessing Authority, that read as under: "The Officers from the Enforcement Branch visited dealer's premises on 03.10.96 for survey etc. They found certain papers, registers and other documents which the dealer could not explain property and thus the same were surrendered in the visiting Officers at its various places/additional places of business. The dealer was confronted with such material. He produced sales bill, Sales Tax Account Registers, Stock register and other excise record. Some papers were verified from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressions, means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration, and includes,- (i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration; (ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract; (iii) a delivery of goods on hire-purchase or any system of payment by instalments; (iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, but does not include a mortgage or hypothecation of or a char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the declaration relates shall, subject to the provisions of sub-section (3)] be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale. (3) Nothing contained in sub-section (2) shall preclude reassessment by the assessing authority on the ground of discovery of new facts or revision by a higher authority on the ground that the findings of the assessing 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.]" 17. On a conjoint reading of the aforesaid provisions, it is clearly brought out that sale is transfer of property in goods from one person to another for cash or deferred payment or for any other valuable consideration. In other words, sale is transfer of ownership in the goods as per any contract between seller and the buyer, and it is pursuant to a contract of sale that when goods move from one State to another that Section 3 of the CST Act comes into play. Without further ado, we find that in the instant matter learned DVATT failed to appreciate that except for 5 gate passes that showed movement of goods from Delhi to the branches o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a view to evade tax liability. Suffice it to state that the Apex Court interpreting Section 3 of the CST Act held that Clause (b) of Section 3 included "sales in which property in goods passes during the movement of goods from one State to other by transfer of documents of title thereto whereas 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 result of a covenant or incident of the contract of sale, and the property in goods passes in either State". It was held further held that "with a view to find out whether particular transaction is an inter-State sale or not, it is essential to see whether there was movement of goods from one State to another as a result of prior contract of sale or purchase". On a conjoint reading of Section 3 and Section 6A of the CST Act, the legal proposition was explained as under: "18. What follows from a conjoint reading of these provisions is that every dealer is liable to pay tax under the Central Act on the sale of goods effected by him in the course of inter-State trade or commerce during the year of assessment. Where the department takes advantage of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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