Consignment sales exemption requires proof of inter-State movement; unsupported records led to intra-State tax treatment and penalty.

A dealer claiming exemption for consignment sales must prove actual movement of goods from Tamil Nadu to another State. The lorry receipts relied on were denied by the transport operators, the supporting papers were only agent-maintained records outside the State, and no other-State assessment order was produced. On that evidence, inter-State movement was not established, so the turnover was treated as intra-State sales and brought to tax. Once the return was found incomplete and incorrect on the same taxable turnover, the statutory basis for penalty was attracted. The assessment and the penalty were therefore upheld.

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Issues: (i) whether the turnover claimed as consignment sales was proved to have moved from Tamil Nadu to other States and was therefore exempt from tax; (ii) whether the levy of penalty for incomplete and incorrect filing of returns was sustainable.

Issue (i): whether the turnover claimed as consignment sales was proved to have moved from Tamil Nadu to other States and was therefore exempt from tax.

Analysis: The assessee claimed exemption on the footing that the disputed turnover represented inter-State consignment sales. The assessing officer and the Tribunal found that the transport operators whose lorry receipts were relied on by the assessee denied issuance of those receipts. The supporting documents were found to be only papers maintained by agents outside the State, and no assessment order from the other State was produced. On that material, the movement of goods from Tamil Nadu to other States was not established.

Conclusion: The claim of exemption as consignment sales failed, and the turnover was rightly treated as intra-State sales and brought to tax.

Issue (ii): whether the levy of penalty for incomplete and incorrect filing of returns was sustainable.

Analysis: Once the disputed turnover was found to be taxable within the State and the return was held to be incomplete and incorrect, the statutory basis for penalty was attracted. The Tribunal restored the assessing officer's order imposing penalty under the relevant provision.

Conclusion: The penalty was sustainable and was rightly restored.

Final Conclusion: The revision failed on merits because the assessee did not prove the alleged inter-State movement of goods, and the assessment together with the penalty was upheld.

Ratio Decidendi: A dealer claiming exemption for consignment sales must establish actual movement of goods to another State; failing that, the turnover may be treated as intra-State sales, and penalty may follow where the return is incomplete or incorrect.

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