https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=425819 https://www.taxtmi.com/caselaws?id=425819 Interstate sale or Stock transfer - evidence of prior contract of sale having occasioned the movement of goods from Bareilly to Delhi - HELD THAT:- There is no dispute to the fact that the assessee s factory is situated at Bareilly. Also, there is no dispute to the Franchise Agreement executed between the parties, wherein the assessee was obligated to make supplies of camphor and camphor products both for the purposes of processing and trading. Again, it is not in dispute, the Franchise had its place of business in Delhi. The movement of goods from factory premises of the assessee located in the State of U.P. to the Delhi is also not disputed. Any sale or purchase may be deemed to be an inter-State sale, if such sale or purchase occasions the movement of goods from one State to another. The consequence of such fiction arising would be the charge of tax being created under the Central Act and rights being governed accordingly. Therefore, in each case, a critical link to be established is, whether the movement of goods from one State to another occasioned by an identifiable or visible contract of sale or purchase of goods. If yes, the deeming fiction would attach with full force. If however, that contract of sale or purchase is not visible, suspicions howsoever strong may not lead to levy of central sales tax. Though, under the Franchise Agreement quantities of camphor and camphor products were to be supplied by the assessee to the Franchise at Delhi yet, there was no firm order in existence as may have been placed on the assessee on the date of transfer of camphor and camphor products made by it from its factory at Bareilly to Delhi. Besides strong suspicion expressed by the revenue authorities, no credible material or evidence could be gathered by them to establish existence of a single contract of sale that may have occasioned the movement of goods from Bareilly to Delhi. In fact, undisputed statement of account as has been noted, reveals only part quantity of camphor and camphor products transferred by the assessee to its branch at Delhi were sold to the franchise at Delhi. The remaining quantities were sold to other persons. The fact that the assessee s branch was found situated within the factory premises of the Franchise would also not create a presumption of existence of prior contract of sale. Letting of premises and setting up of businesses is governed by separate set of laws. Those laws do not create any presumption of single identity or presumption of sale. That material considered by the revenue authorities may have raised a suspicion, that may have only warranted an enquiry - Merely because quantities of camphor may have been transferred in entirety or soon after receipt at the branch also did not create any presumption of prior contract of sale. Further, the fact that tax may not have been paid by the assessee at Delhi would remain a matter outside the jurisdictional sphere of the taxing authority in the State of U.P. Non payment of tax in one State does not create liability to pay tax in another State. In any case, in the context of inter-State sale, existence of prior contract of sale was mandatory as may have occasioned the movement of goods from UP to Delhi was necessary to be established - After that remand orders made by this Court, the authorities have yet not been able to unearth any material as may lead to that finding. In fact, in the first remand order, the Court had required the authorities to make a proper reading of Clause 6 of the Franchise agreement. Plainly, that clause is in favour of the assessee s case. It indicates, the parties had agreed not to perform inter- State sale from Bareilly to Delhi. Whatever it may be worth, it was for the revenue to lead evidence of prior contract of sale as may have caused movement of goods. That burden remained undischarged in face of other findings of fact recorded by the Tribunal. Answered in the negative i.e. in favour of the assessee against the revenue - the present revision is allowed. Case-Laws VAT and Sales Tax Tue, 26 Jul 2022 00:00:00 +0530