TaxTMI 
TaxTMI 
2017 (7) TMI 463
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....of the concerned assessee were inter state transactions and not local sales, it was open for the applicants to challenge the same before the Gujarat High Court. Having disposed of the clarification applications with the aforesaid observations, the State of Gujarat has come in appeal against the common judgment and order passed in Second Appeal Nos 622 to 624 of 2002 rendered by the Tribunal on 02.04.2011. 2 By an order dated 29.11.2013, the appeals were admitted to consider the following substantial question of law: " Whether on the facts and circumstances of the case, the tribunal has rightly held that the transaction in question are consignments or interstate transactions and thereby the opponent is entitled to exemption under Section 6A of the Central Sales Tax Act?" 3 Before the question is answered it would be necessary to appreciate the facts involved in the present appeals. 3.1 'Ahmedabad Zilla Sahakari Doodh Utpadak Sangh', the respondent in this appeal (also known as 'Uttam Dairy') was carrying on dairy business. It sold milk, Ghee and Butter. The sale was on a consignment basis through various commission agents / consignees. Through these consignme....
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...., based its opinion on certain factors namely: (A) that a Ghee Deposit Account was opened by the assessee in its books. The assessee would take the entire amount of sale proceeds in advance from the consignee agent and only after receipt of sale notes from the consignee agent his sale account would be credited by obtaining necessary adjustment entry in the Ghee deposit account. This foundation of the Assessing Authority was based on clause 4 of the Consignment Agreement, which the assessee entered into with its consignee. Clause 4 of such agreement provided that the consignee shall remit the sale proceeds to the union immediately after effecting the sales along with account sales. The consignee can sell the goods on cash or credit basis at his own risk. (B) Based on (A) above the Assessing Authority was of the opinion that since the consignment agent lifted the goods from the dairy itself, the "sale" in fact took place at the outlet itself as the delivery was taken by the consignee at his own risk. Therefore the transaction of sale was complete at the dairy and therefore it was in the opinion of the Assessing Authority a local sale and not inter State sale. ....
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....showing actual transportation of Ghee and Butter to Silvassa to substantiate inter State movement, production of sale notes to show that the ghee deposit account would not tantamount to acceptance of full sale price of goods by the dairy merely because of such full payment. Further evidence in the form of proforma invoices 'F' forms and details of vehicles through which such goods were in fact inter State transactions were produced. The Appellate Authority also did not agree to the assessee's transactions based on the consignment agreement which provided that the consignee shall remit the sale proceeds in advance. The Appellate Authority also held that the sale in fact took place at the dairy. It was therefore a local sale. Details of the lorry receipts in proof of the fact of actual movement of goods to Silvassa and form 'F' to substantiate inter State movement as envisaged under Section 6A of the Central Sales Tax Act, did not convince the Appellate Authority and the appeal was dismissed by its order dated 24.06.2002. 6 Aggrieved by this order of the Authorities below, the assessee dairy approached the Gujarat Value Added Tax Tribunal by filing Second Appeals, the judgments of....
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....f the case, it would be in the fitness of things, to briefly refer to the contentions raised by the revenue in the appeal before the Tribunal and reiterated by the learned Assistant Government Appeal Shri Pranav Trivedi in these appeals. The contentions of the appellant/ revenue are as under: A) By virtue of the consignment agreement's clause 4 which required the consignee to remit the sale proceeds to the union immediately after affecting the sales and that the consignee can sell the goods on cash or credit basis at his own risk, the sale in fact occurred at the dairy and was therefore a local sale, and assessable to tax and not exempt as contended by the assessee. B) The fact that the entire payment of the sale proceed was made in advance by the principal was a circumstance against the assessee to contend that the sale was in the nature of inter State transaction. C) Further it was contended that in absence of any accounts produced to substantiate the nature of sale by the consignee agents it should be presumed that the sale took place at a local level and not inter State. There was nothing on record to show at the hands of the consignee agent through t....
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....such goods at his own risk would not render such a sale in one as a local sale. B) Merely because the accounts of the dairy showed an advance payment as Ghee deposits / butter deposit such advance receipt would not tantamount to payment of consideration in advance. Sale notes were produced by the consigne based on which the Ghee deposit account would be debited against such advance deposit. Such a deposit and the adjustment entries in the deposit account was only in the nature of an advance deposit and cannot tantamout to payment of sale price to attract the provisions of the local sale transaction. C) Proforma invoices were produced sales notes were produced so as to substantiate the fact that the consignment agents had in fact lifted such goods on behalf of the principal, for sale at Silvassa / Daman. D) The fact that no insurance was taken for such goods was not relevant for the purposes of coming to the conclusion that the sale was not inter State sale. E) Substantial evidence has been produced by way of lorry receipts to show that the assessee transported goods from Ahmedabad to Silvassa through the consignment agents which were carried thro....
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....goods actually move to Silvassa / Daman and whether even when form F was produced by the Union to prove such movement, on facts and on the face of some transporters denying such movement was such movement genuine? And, therefore the case of the Revenue to tax them as local sale was correct. The Tribunal recorded the following findings: "46 In this case, admittedly, the goods were dispatched in other State through regular transport carriers, the L/R shows the name of the appellant as the 'consignor of the goods'. The commission agent is shown as consignee and when the transporters deliver the goods to them, the commission agent put their signatures on the transport receipts for having received thegoods. Therefore, it is incorrect to say that the goods have been delivered to the consignee as agent at the appellant's factory. In the Tribunal's view, details of the transport company receipts through which goods were consigned were already furnished to the Assistant Commissioner along with the name of the consignee agents appointed by the appellant. The said material and relevant evidence have been ignored by both the authorities below. 47 In the books of account of th....
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....o considered following admitted facts which have been stated by the appellant. The Tribunal has also accepted the said facts as correct because they are based on documentary evidence produced by the appellant on the record of the case. The appellant has also produced proof by way of affidavits of the parties who had issued such transport receipts as well as copies of agreements with the selling commissionagents with their reply dated 20.09.1999 (page 119 of the paper book). The deponent had even in response to the summons issued by the Assistant Commissioner personally accepted the fact that the goods have been transported to the destination outside the State and signatures have been obtained when the goods were so delivered to the said commission agents. Even the sale notes issued by the commission agents as well as the extracts from the books of accounts of the said commission agents were produced to show that they had sold the goods as selling commission agents. It is also admitted that the said parties are registered outside the State in the Union Territory and they are also assessed in respect of those transactions in their respective territory. Even visits were paid and it wa....
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....vidence of the transport receipts supported by the affidavit of the said parties through whom the goods were transported and also the evidence of the Government authorities of the other State in the form of registration certificates, forms, assessment order etc by those authorities. 53 In the Tribunal's view, the conclusion of the authorities below are vitiated and arrived at without properly appreciating the evidence produced by the appellant and, therefore, the conclusions reached on facts as well as on law to the effect that M/s. Bandish Trading Company has not acted as selling commission agent and that he had taken delivery of the goods locally and the goods have bot been dispatched to the other State are wholly erroneous. There is no specific denial about the transaction of consignment sales effected through the other commission agents M/s. Patel Enterprises, M/s. Gujarat Coop Milk Produce and Investment Pvt Ltd. The entire branch transfer claims have been disallowed by applying the analogy of the discussion relating to M/s. Bandish Trading Company and the same has been wrongly subjected to local tax through the sales through other commission agents are also made in U....
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....r, the State Government agent has produced only five statements of owners of vehicles. 62 In Tribunal's view, after production of forms in 1999 by the appellant at assessment stage, for the first time after the lapse of about 15 years, it is sought to be contended on behalf of the revenue in the Second Appeal in 2010 (Before Tribunal stage for the first time) that the said forms were defective and, therefore, consignment transactions should not be allowed. Both the authorities below had not disallowed the claim of consignment on theground of forms being defective and, therefore, such contention raised for the first time cannot be entertained at such a belated stage. It may be observed that it is now settled principle laid down in the case of E.V.Mathai and sons (129 STC 503, paper book page 125) that if forms are defective, then, opportunity of correction has to be provided to the dealer. In the Tribunal's view, it is now not possible to cure the defect in the forms after about 15 years as the business of consignment agent is closed down since long. The claim of consignment sales cannot be disallowed as production of Form F was not mandatory during the years 1996-97, 1997-....
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....ation, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of sale.] (2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under subsection (1) [are true and that no interState sale has been effected, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall, subject to the provisions of subsection (3),] be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale. [(3) Nothing contained in subsection (2) shall preclude reassessment by the assessing authority on the ground of discovery of new facts or revision by a higher authority on the ground that the findings of the assessing authority are contrary to law, and such reassessment or revision may be done in accordance with the provisions of general sales tax law of the State.]" 11.1 Consignment Agreement's clause 4 was pressed into service to conten....
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....he assessee received only an approximated amount towards these transactions. 29 From this discussion it follows that thereis nothing to show that the property in the goods despatched by the assessee to its Delhi constituents passed to these constituents. On the contrary those facts show that the Delhi constituents had rendered themselves liable to the assessee to show that the goods were sold by them in the market at the best available market price and to account for the receipt and expenditure relating to despatched goods. This therefore brings us to the other aspect of the matter, namely accountability of the Delhi constituents of the assessee. As already noted above if the Delhi constituents of the assessee had become the owners of the goods despatched to them they would have surely not considered themselves liable to account for any of the expenditure incurred by them after taking delivery of the goods in question. It is however found that these Delhi constituents have made the following expenditures after taking the delivery of the goods and have debited this expenditure to the account of the assessee and have also sent the account relating thereto to the assessee in ....
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....rt its stand that merely provision in the contract would not determine the sale, when in fact there was movement of goods. In the case before it the Supreme Court, held that in order to hold a sale to be inter30 38 State sale, the contract may not provide for such movement but if such movement is incidental then such sale would be interState sale. The Supreme Court in the case of Union of India and Another vs. M/s. K G Khosla & Co. Ltd., and others (Supra) held as under: "15 It is true that in the instant case the contracts of sales did not require or provide that goods should be moved from Faridabad to Delhi. But it is not true to say that for the purposes of Section 3(a) of the Act it is necessary that the contract of sale must itself provide for and cause the movement of goods or that the movement of goods must be occasioned specifically in accordance with the terms of the contract of sale. The true position in law is as stated in Tata Iron and Steel Co.Ltd., Bomabay vs. S R Sarkar, wherein Shah, J. speaking for the majority observed that clauses(a) and (b) of Section 3 of the Act are mutually exclusive and that Section 3(a) covers sales in which the movement of goods f....
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.... movement of goods in the instant case was occasioned as a result of or in pursuance of the contract of sale. It is true that the contract of sale itself is not shown to have provided for the movement of goods and that the movement of goods is not shown to have been occasioned in accordance with the specific terms of such contract. For the purposes of section 3(a) of the Central Act, however, that is not essential. It is sufficient if the movement was an incident of such contract. The facts cumulatively indicate that the movement of goods herein satisfies the said test. The buyer, who carried on business in another State and for whom the instant transaction was a sole business venture within the territory of this State, had instructed the vendor after the conclusion of the contract of sale, but before the title to the goods passed, to despatch the goods toBombay. Pursuant to such instructions, the goods were separated by the vendors as consignors. The buyer, who was the consignee, had to pay merely the transport charges. These facts cumulatively indicate that there was a conceivable linkbetween the contract of sale and the movement of goods and the nexus is not otherwise explained.....
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.... time, after 15 years, that such statements were produced during the course of hearing before the Tribunal. As rightly observed by the Tribunal, not only were these cases produced for the first time and copies thereof were not given to the assessee. Such statements, as the Tribunal had rightly held, could not have been relied upon at the stage of Second Appeal without affording any opportunity of crossexamination. Moreover, except these five sample statements the State did not produce any other statements and the Tribunal was therefore right in holding that in probability if other statements were produced it could have disclosed the true nature of transactions of consignment. Since the inquiries visavis these transporters was held behind the back of the assessee, such facts cannot be relied upon by the Revenue. Moreover all such statements related only to one transporter / consignee Bandish Trading Co. 12 The consequential question that the Tribunal answered in favour of the assessee was regarding submission of form 'F' to substantiate the fact that the goods were in fact sold at Silvassa / Daman. Did the assessee discharge the burden of proof by producing such form 'F'. In acco....