TaxTMI 
TaxTMI 
2000 (1) TMI 971
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.... learned counsel for both the parties heard and both these issues are dealt separately: Following five questions have been raised: (1) Whether, on the facts and in the circumstances of the case, the Karnataka Appellate Tribunal is right in law in allowing the appeals filed by the respondentcompany? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in treating the interState sales as branch transfer? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in treating the turnover of interState sales as branch transfers on the ground of test of reasonableness? (4) Whether, on the facts and in the circumstances of the case, the impugned order is sustainable in law? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not considering all the documents produced by the department?" 3.. (a) Whether there is suppression: Learned counsel for the department has drawn our attention to annexure "C" letter dated March 23, 1991 written by M/s. Arya Central Transport Ltd., Bangalore, to their Delhi office, in which, it was mentioned that the consign....
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....ts covering them are for 1 to 2 tonnes. (d) that the freight charges has been collected by cash, departing from the regular practice of collecting by cheques. (e) that the said challans No. at (b) above were asked to be treated as consignment note numbers by the Bangalore ACTL office. (iii) in a statement made before the ACCT (CV) S.Z. Bangalore Shri Kamlesh N. Gaind has confirmed that the contents of this letter are true and correct. (iv) Further Shri G.D. Agarwal, Administration incharge of ACTL, New Delhi, in his statement made before the Central Excise authorities, at Delhi, on July 26, 1994 has also confirmed that the said six consignments were assessee's goods and that they were transported without any documents." 4.. The assessing authority has estimated the suppressed turn over from 199091 to 199394 and has also taken into consideration all these documents. 5.. Assessing authority came to conclusion that, assessee was despatching two loads with identical quantities by mentioning one and the same consignment number and accounting only one load. This conclusion was arrived on the basis of annexure "B". In respect of one consignment, different lorry number....
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....as per balance sheet. If that produc tion figure is considered the consumption per unit works out to 509 MT." Tribunal's finding on this point are: "It was explained that the technical people exercising super vision over production of aluminium extrusions account for the entire production including the defectives which are reprocessed for conver sion into aluminium extrusions. Aluminium extrusions derived from the reprocessing are also taken to account by the technical people as production. In consequence, one and the same quantity of aluminium extrusions first derived as defective and on reprocessing derived as marketable quality extrusions, gets accounted twice. It is such a difference between the net and actual production taken to balance sheet and the total production accounted by the technical people that was narrated in the note of the then company Secretary, Sri R.S. Bajaj." It was also observed by applying test of reasonableness, the assessee could not have camouflaged alleged few transactions of sales. 5A. So far as the finding on question of suppression is concerned, basically, it is a question of fact and in revision, it has to be seen as to whether the view ....
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....re not made to order and hence are stock transferred. Whereas, for the specific sections, the manufacturing unit receives prior order with specifica tions after which the company manufactures dies as per specifications and the specific sections are manufactured and sold in the course of interState trade by collecting four per cent Central sales tax. The interState sales are effected to dealers of Delhi, Bombay and Hyderabad though the company has branch offices in those places. (c) The manufacturing activity of general sections and despatches of general sections to the branches on stock transfers are in the usual course of business and are as part of daily routine. Hence, goods are stock transferred as and when manufactured in full truck loads. (d) The branches at Delhi, Bombay and Hyderabad are registered in the respective States and are having sufficient storing facilities (godown available). The copies of the registration certificates mentioning godown facilities are filed by the appellant which are taken on records. The proof of payment of rent for branches and godown are also filed. (e) The branches at Delhi, Bombay and Hyderabad, after receipt of the goods from Banga....
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.... transfer voucher of head office to tally the quantity and the price at which the goods are sold by the branches. Hence, the branches in order to link, do not undertake unpacking of material." Following negative facts were found: (a) Receipt of advance by the manufacturing units or its communication to manufacturing unit. (b) Payment of freight upto the destination of the ultimate buyer. (c) Obtaining of insurance and the destination upto which transit insurance has been covered by the despatching unit. (d) Extent of presence of stock and pattern of stocking at branch. (e) Delivery instructions to the transporters. (f) Existence or nonexistence of branch. (g) Possibility of indication of ultimate buyer in the delivery challan. (h) Presence of packing indicating the ultimate consignee thereby disabling the branch from diverting goods. Assessing authority relied on the decision reported in Mehta Group of Industries v. State of Haryana [1989] 75 STC 428 (P&H) and Haryana Iron and Steel Rolling Mills v. State of Haryana [1990] 77 STC 211 (P&H) which was distinguished by the assessee as under: Sl. No. Mehta Group case Appellant's case 1. Goods despatc....
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....d in their godown from Delhi to other States. for which entries were made in the "goods inward" register maintained at the godown and subsequently goods were sold to the dealers/customers under a delivery challan. Proper ack nowledgement was taken from the dealers/customers in the copy of the challan for having delivered the material. The lorry receipts of the transporter also clearly show that the freight charges are inclusive of the unloading charges at the branch godown. 10. The assessee despatched goods to The goods were despatched in full the branches in small consignments truck loads from the factory to the of 15 kg/20kg and sold the same to branches and in most of the cases two different customers in two goods have been sold to more than different lots even though received one buyer. on same day. There were even two consignments of small quantities on one day. 11. Goods have been sold to one customer In more than 90 per cent of the only and in two cases goods have been cases goods have been sold to sold to two customers. more than one customer. Sl. Haryana Iron & Steel Rolling Appellant's case No. Mills case 1. Goods were despatched to branch Goods are take....
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.... are sold. 5. This case relates to the assessment Provisions of section 6A of the CST Act year 197273 when the provisions of is applicable in this case. As assessee, section 6A of the CST Act was not company has discharged its burden of in existence. Provisions of section proof that the transfer of goods was made 6A of the CST Act was inserted otherwise than by way of sale by furnishing with effect from April 1, 1973 only. before the assessing authority, particulars Hence, based on the above facts, the in form F, along with evidence of despatch High Court has decided the matter. of such goods. The particulars and evidence have been accepted by department and appellant's assessments have been comple ted by assessing authority. 6. Delhi to Hisar is only four hours In our case, it takes 4 to 8 days, documents journey. Material reach the branch and details reach the branch next day by along with the details itself. courier, i.e., much before the receipt of material at branches giving enough time to contact customers and obtain orders." 8.. Observations of the following para of the decision of this Court in Bhoruka Steel Rolling Mills Ltd. v. State of Karnataka S.T.A. No....
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....tiving this stand, the honourable High Court of Madras held that there was no establish ment of any direct link or nexus between the sale and the movement of goods to supply to the Andhra Pradesh buyers, especially when the goods despatched by the appellant were moved by it in the ordinary course of business. The mere fact that the mark of the Andhra Pradesh buyer's name was found on the goods would not necessarily lead to the conclusion that there was a completed transaction of sale by the appellant in Madras by appropriation of goods towards any contract. Therefore, the transaction was not to be regarded as representing interState sales effected by the assessee. (ii) Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629 (SC): M/s. Kelvinator of India Ltd. had its factory in Haryana State, where it manufactured refrigerators, deep freezers, etc. The company operated its registered office and sales office at Delhi and it had entered into three distribution agreements with three different dealers. The three different dealers placed their purchase orders only after the goods reached the head office in Delhi. The honourable Supreme Court of India held that the three distri....
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....ant Commissioner of Commercial Taxes, Jamshedpur [1970] 26 STC 354. The judgment of honourable High Court of Punjab and Haryana in the cases of Mehta Group of Industries [1989] 75 STC 428 and Haryana Iron and Steel Rolling Mills v. State of Haryana [1990] 77 STC 211 do not have any applicability to the facts in the case of the appellant. Except to have pressed into service the judg ment of the honourable High Court of Punjab and Haryana in the aforesaid two cases, no material evidences whatsoever have been brought on record of the reassessment orders to establish existence of any nexus between the despatches accounted as stock transfers and sales effected by the branches. It is now wellsettled by consis tent judgments of honourable High Courts and honourable Supreme Court of India that merely by reason of identicalities in respect of de scription of goods, quantity and value between the despatches made to branches and sales effected by the branches even on the same day of receipt of goods at branches, it cannot be held that the despatches constitute transactions of interState sales liable to Central sales tax. We have no hesitation therefore, in reaching the conclusion that the cas....