TaxTMI 
TaxTMI 
2017 (7) TMI 463
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....e 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 consignment agents, Ghee and Butter was transported and sold at Sil....
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....posit 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. (C) It was the case of the Assessing Authority also that the transportation of goods ....
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....ovement, 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 which, are under challenge in these Tax Appeals. The Tribunal in the impugned judgment acce....
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....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 their accounts to say that the incident of sale occurred at Silvassa or Daman. D) The vehicles which transported the goods had n....
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.... 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 through the vehicles. Detail of the vehicles which carried such goods according to Shri Patel has been produced extensively in the paper book and has been reproduced by the Tribunal. Accordin....
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....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 the commission agent, the stock transfers are only shown as the good received on consignment and when the goods are sold by them the sales are shown in their returns submitted to the sales tax office of Silvasa or Daman. They have sold the goods on....
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....oof 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 was found that the parties do have their places of business at the respectiveplaces. Therefore, on facts, the conclusion that those parties at Daman and Silvasa have not acted as selling commission agents of the appellant is unjustified and unwarranted. Therefore, the ent....
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..... 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 Unions Territories. 58 The appellant had produced copies of the bills of consignment agent who sold the goods in Daman / Silvasa as per Rules 3(C), 7 and 8 of CST (Gujarat) Rules, 1970 along with form F which were obtained from prescribed authority of that State. Not only that, but it ....
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.... 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, 1997-98 and part of year 1998-99 i.e. from 1.4.1998 to 30.9.1998. The production of form F is now mandatory as per amendment in section 6A w.e.f 11.5.2002. In that view of the matter, the contention of the revenue is not accepted regarding production of form F and it is held that the transaction carried out by the a....
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....rue 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 contend that since the entire sales proceeds were paid immediately and the risk in goods was entirely that of the agent sale was a local sale. Moreover, the Ghee / Butter deposit advance when seen in light of this and deduction and set off of expenses showed / suggested local sale. The Tribunal, on facts found that, in the book of commission ag....
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....see 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 different statements of accounts. This expenditure is found to be of the following categories: (a) All expenses from station to godown. (b) Brokerage paid to the brokers at Delhi at the time of effecting the sales in favour of the ultimate buyers and (c) Expenditure incurred by these Delhi constituents of the assessee in paying thebunding charges for the em....
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....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 from one State to another "is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State" (page 391). Sarkar,J. Speaking for himself and on behalf of Das Gupta, J. agreed with the majority that clauses (a) and (b) of Section 3 are mutually exclusive but differed from it and held that " a sale can occasion the movement of the goods sold only when the te....
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.... 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. For the purpose of Section 3(a), it is immaterial where the property in the goods passed. Against the aforesaid background, the only conclusion possible is that the purchase of goods in the instant case was in the course of interState trade and that it is not exigible to purchase tax under Section 15 of the Act." 11.2 The other question that the Tribunal addressed is on the question whether the actual movement o....