Consignment transfer exemption cannot be denied merely because goods were converted before sale by the out-of-State agent.

Form F declarations and transport records supported the movement of goods under consignment, and exemption could not be denied merely because the out-of-State agent later converted the ingots into CTD bars and sold them. The governing provisions required proof of dispatch on consignment, not proof that the agent sold the goods in the same form or that tax was paid in the other State, unless the statute specifically imposed that requirement. Once the consignment exemption was accepted, the consequential penalty under the Central Sales Tax Act and the Tamil Nadu General Sales Tax Act had no independent and was deleted.

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Issues: (i) Whether exemption on consignment transfer could be denied merely because the goods sent to the out-of-State agent were converted into a different commodity and sold. (ii) Whether the consequential penalty imposed under the Central Sales Tax Act and the Tamil Nadu General Sales Tax Act was sustainable.

Issue (i): Whether exemption on consignment transfer could be denied merely because the goods sent to the out-of-State agent were converted into a different commodity and sold.

Analysis: The disputed turnover was supported by Form F declarations and transport particulars, and those materials were accepted in the assessment record. The Court noted that the governing provisions required proof of movement of goods on consignment and did not insist on proof that the agent must sell the very same goods in the identical form or furnish evidence of tax paid in the other State. The agreement between the principal and the agent also permitted conversion of the ingots into CTD bars for onward sale on behalf of the principal. On these facts, conversion after dispatch did not alter the character of the consignment transaction so as to convert it into an inter-State sale.

Conclusion: The denial of exemption on the consignment turnover was not justified; the issue was decided in favour of the assessee.

Issue (ii): Whether the consequential penalty imposed under the Central Sales Tax Act and the Tamil Nadu General Sales Tax Act was sustainable.

Analysis: Once the claim of exemption on consignment transfer was held to be valid and the assessment was found not to be a best judgment assessment on the relevant turnover, the basis for the penalty disappeared. The penalty was therefore dependent on a disallowance that could not be sustained on the facts and law applied by the Tribunal and affirmed by the Court.

Conclusion: The penalty was rightly deleted; the issue was decided in favour of the assessee.

Final Conclusion: The revision failed because the Tribunal's view on consignment transfer exemption and deletion of penalty was upheld, leaving no ground to interfere.

Ratio Decidendi: Where the assessee proves movement of goods under consignment by Form F and transport records, exemption cannot be denied merely because the agent subsequently converts the goods before sale or because tax payment in the other State is not shown, unless the statute specifically requires such proof.

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