2008 (10) TMI 605

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....r 8, 1995 and levied tax and penalty. The nil return submitted by the petitioner was rejected for the reason that in the bills issued by the petitioner for sale of articles to different purchasers, it was found that the sale was in the course of inter-State trade. The said order was taken up by the petitioner before the Appellate Assistant Commissioner and the said appeal was dismissed as per order dated February 17, 1997. The Appellate Assistant Commissioner confirmed the assessment on the ground that the goods were sold to the customers, who reside in other States and as such it was only a case of inter-State sale and not a second sale as claimed by the petitioner. The order dated February 17, 1997 of the Appellate Assistant Commissioner was taken up in appeal before the Sales Tax Appellate Tribunal in T.A. No. 560 of 1997. The Appellate Tribunal was also of the opinion that the bills were raised in the name of the consumers from other States and as such it was only an interState sale liable for payment of tax under the Central Sales Tax Act and accordingly confirmed the order of the authorities below and dismissed the appeal as per order dated July 20, 1998. Aggrieved by the sai....

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....tter was taken up before the Appellate Assistant Commissioner, Chennai and the appellate authority was of the opinion that as the bills were raised in the name of the purchasers from the other States, the burden of proof regarding the alleged delivery at Chennai lies on the assessee and as he failed to discharge the said burden, the assessing authority was perfectly justified in assessing the sale as inter-State sale. Therefore the appellate authority negatived the contention of the petitioner that the sale was only a local sale. The levy of penalty was also confirmed by the appellate authority as the said authority was of the opinion that the assessment falls under section 12(2) of the Act and as such the levy of penalty was automatic. The order dated February 17, 1997 was challenged by the assessee before the Sales Tax Appellate Tribunal in T.A. No. 560 of 1997. The Tribunal was also of the opinion that no attempt was made by the petitioner to prove that there was no movement of goods from Chennai to Kerala, Karnataka and Andhra Pradesh as shown in the respective bills and as such the only possible conclusion was the one arrived at by the assessing authority and accordingly th....

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....of sales is also significant. Purchase bills show that no substantial part of the sale was effected in the name of the purchasers from outside the State. Even though the assessing authority has stated in the assessment order that the despatch of goods through lorry service was made by the assessee himself, no evidence is found in the assessment order to show such despatch by the assessee. It was the consistent case of the assessee that the goods were delivered at Chennai only, though the purchasers were from the neighbouring States. In case the assessee was having the idea to evade the Central sales tax there was no necessity for them to show the name of the consumers in the bills and they could have very well made the bills in the name of local purchasers. This shows that the sales were made to the purchasers from Chennai only and the goods were also delivered to the purchasers at Chennai. The assessing authority failed to substantiate its contention that there was movement of goods from Chennai to Andhra Pradesh, Karnataka and Kerala accompanied by such sale and at the instance of the petitioner. In such circumstances, it cannot be said that the petitioner was indulged in inte....

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....from one State to another. In the aforesaid Constitutional Bench decision the Supreme Court has observed: 'It is well-settled by a catena of decisions of this court that a sale in the course of inter-State trade has three essential ingredients: (i) there must be a contract of sale, incorporating a stipulation, express or implied, regarding inter-State movement of goods, (ii) the goods must actually move from one State to another, pursuant to such contract of sale, the sale being the proximate cause of movement; and (iii) such movement of goods must be from one State to another State where the sale concludes. It follows as a necessary corollary of these principles that a movement of goods which takes place independently of a contract of sale would not fall within the meaning of inter-State sale. In other words, if there is no contract of sale preceding the movement of goods, obviously the movement cannot be attributed to the contract of sale. Similarly, if the transaction of sale stands completed within the State and the movement of goods takes place thereafter, it would obviously be independently of the contract of sale and necessarily by or on behalf of the purchaser alone ....

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....e from selling articles to the purchasers of other States. Therefore unless and until it was proved that the products were actually delivered by the assessee in the respective States as shown in the bills, it cannot be said that the transaction was an inter-State trade. However there was nothing to indicate in the present case to show that there was movement of goods from Chennai to Karnataka, Kerala and Andhra Pradesh and the petitioner was instrumental in such movement and the transportation was also arranged by the petitioner. In the absence of any such positive materials evidencing interState sale, the stray sales as found in the assessment order cannot be termed to be a sale in the course of inter-State trade warranting payment of tax under the Central Sales Tax Act. Therefore the assessing authority clearly erred in assessing the transaction as an inter-State sale and as such the said finding is liable to be set aside. The assessing officer has also imposed penalty on the petitioner on the ground that the returns filed by the petitioner was incorrect and incomplete. It is no doubt true that the petitioner has claimed exemption from payment of sales tax claiming the transac....