AI Drafter 
TaxTMI 
TaxTMI 
2018 (5) TMI 279
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....hennai remanded a portion of the turnover to the tune of Rs. 1,14,94,649/- in respect of consignment transfer to one Tvl. Tulsyan Udyog, Bangalore and dismissed the rest of the turnover. Pursuant to this, the Assessing Authority again levied tax and penalty on the turnover of Rs. 1,14,94,649/-, by treating the same, as interstate taxable sales. In the appeal filed by the assessee, the Appellate Assistant Commissioner (CT), dismissed the appeal. 4. Aggrieved against the above order, the assessee filed a second appeal before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Chennai which went, in favour of the assessee. State has filed the revision case on the following substantial questions of law:- " a) In the facts and circumstances of the case, whether the Tribunal is legally correct in not affirming the order of the first appellate authority even while the goods sent to outside the state had not been sold by the agent in the order state in the same form in which they were received but manufactured into entirely new goods and then sold? b) Whether the order of the Tribunal in deleting the consequential penalty is legally sustainable?" 5. Supp....
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.... tax under such Sales Tax law." (ii) Section 12(3) of the Tamilnadu General Sales Tax Act, 1959, is extracted hereunder:- "Section 12(3) In addition to the tax assessed [under sub-section (1) or (2),] the assessing authority shall, in the same order of assessment passed [under sub-section (1) or (2) or by a separate order, direct the dealer to pay by way of penalty, a sum (a) which shall be, in the case of failure to submit return, one hundred and fifty per cent of the tax assessed on final assessment; and (b) which shall be, in the case of submission of incorrect or incomplete return, (i) twenty-five per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by not more than five per cent; (i-a) fifty per cent of the difference of the tax assessed and the tax paid as per return, if the tax paid as per the return falls short of the tax assessed on final assessment by more than five per cent but not more than fifteen per cent; (ii) seventy-five per cent of the difference of the tax assessed and the tax paid as per return, if ....
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...." 8. Let us also consider as to how the authorities, and the Tribunal have applied the abovesaid rules to the case on hand. On 18.04.2001, the Appellate Assistant Commissioner (CT)-I, Chennai, held as follows:- "At the time of final hearing, the learned Advocate argued that they have sold in the consignment sales and therefore they are eligible for exemption under CST Act and he has produced the assessment order copy of the dealer Tvl. Tulsyan Udyog, No.79-A/New Banboo Bazaar, Bangalore. A perusal of the assessment order of the above dealer shows that they have sold consignment stock receipt of iron and steel for a turnover of Rs. 10,77,67,076.47. However the questions of conversion of M.S.Ingot into CTD Bars etc. remains unanswered. The Advocate is not in a position to produce the proof for payment of tax at the order end with reference to the other remaining five consignment agents. The Assessing Officer is therefore directed to verify the assessment order of Tvl. Tulsyan Udyog, Bangalore and after considering the fact of conversion of M.S. Ingots into CTD bars etc. and to pass fresh orders accordingly. Hence the turnover of Rs. 1,14,94,649/- is remanded back to the A....
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....the proceeds to the Principal, after deducting the expenses, tax, etc., whereas it is not so in this case. 6. Taking into consideration of the above facts, the disallowance of exemption towards consignment sales already made in this office proceedings first cited is restored. Inasmuch as the dealers have suppressed the inter-state sales, by camouflaging the same as consignment sales, the penalty under Sec.9(2-A) of the CST Act, 1956 read with Sec.12(3) of the TNGST Act 59 already levied is also restored. Tax due at 8% on Rs. 1,50,49,148/- Rs.12,03,932/- Paid Nil Balance Rs.12,03,932/- Penalty levied under Sec.9(2-A) of the CST read with Sec.12(3)n at 150% ofthe tax due. Rs.18,05,898/- Form 3 and 54 will be issued." 10. Respondent has filed an appeal before the Appellate Deputy Commissioner (CT)-I, Chennai, who after hearing the learned counsel for the parties and after considering the material on record, passed an order dated 29.08.2002, as hereunder:- "5. I have heard the arguments of both the sides with connected records. The appellants have disputed the assessment made by the Assessing Officer in his revision order ....
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....te a separate class for a series of sales. Therefore, each item is a separate item. In respect of agency sales, the agent merely acts pure services by only selling those goods sent for consignment sales. But in this case, this is not so. The so-called agent produced another commodity. Accordingly to the terms and conditions, the Principal has got dominion over the goods till it is sold and he can call back the goods at any time. But in this case, the term has been violated. Therefore, the transactions are outright inter-state sales. Next coming to the point of payment of tax by the so-called Agent, it is seen from the assessment order of the Sales Tax Authority of Karnataka State, it is seen that the taxable turnover under the KGST Act is Rs. 61,23,399/- and under the CST Act '56 for the relevant year is Rs. Nil. The taxable turnover was out of the inter-state purchases and the stock transfer receipts from their own branches. The goods sold to have been received on consignment basis to other states, which is not permissible. When the goods were entrusted for agency sales, it is the duty of the so-called Agent to sell the goods and remit the proceeds to the Principal af....
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....missed." 11. The Tamilnadu Sales Tax Appellate Tribunal, (Additional Bench), Chennai, has considered the submissions of the parties as hereunder:- "3.Appellant case (T.A.No.891/2001) The assessment year relates to 1992-93 under the Central Sales Tax Act 1956. The appellants/assesses had claimed consignment transfer exemption for a turnover of Rs. 1,49,27,378/- with all necessary particulars. But the assessing authority had disallowed the claim made by the appellant/assesses for the reasons that the assesses had not produced any evidence for the payment of tax by the agent in the other states. The appellants have reported a turnover of Rs. 1,49,27,378/- only. But contrary to this report, the authorities below have determined the total and taxable turnover of Rs. 1,50,49,148/- which was not correct. There was a difference of Rs. 1,21,770/-. Though the appellant had agitated the issue before the authorities below, the authorities below have not considered and have not recorded any evidence to this effect also. The rule No.4 of TNGST Rules of CENTRAL SALES TAX Act does not put a condition that the proof for the payment of tax should be furnished. Because the condit....
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....transactions and levied tax at 8% and maximum penalty of Rs. 18,05,893/- was levied. On appeal, the first appellate authority had remanded a portion of the turnover of Rs. 1,14,94,649/- in connection with the Agent M/s. Tulsyan Udyog, Bangalore. The rest of the turnover was dismissed by the first appellate authority. The remanded case was heard by the Commercial Tax Officer and the turnover is again assessed to 8% tax stating that the agent has converted the ingot into CTD Bars and sold the goods. The Commercial Tax Officer further stated that the agents are not to convert the material and sell but to sell as it is without making any changes. Once again on appeal, the first appellate authority had dismissed the appellant's case and sustained the assessment made by the authorities below. Therefore, this appeal has been emanated; 1. The M.S.Ingot manufactured by the principal cannot be used for construction of Buildings unless the same is further re-rolled int CTD Bars. CTD Bars cannot be manufactured while pouring from the furnace. First the ingot is made by pouring into the moulds at the melting plant. Then the second stage of process take place by re-rolling into CTD ....
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....s moved out of the State Territory under branch transfer or transfer to Agents. 9. When Karnataka Commercial Taxes Department has passed the assessment order accepting the further transfer to the other agents, the Tamil Nadu Commercial Taxes Department has no legal right to dispute the assessment of the Karnataka Commercial Taxes Department and levy tax at 8% and maximum penalty under the law of the land on the Principal in Chennai and cause huge financial loss to the Company which remains closed for the past 5 years due to bad marketing condition and huge accumulated loss. Therefore, the appellant prayed to set-aside the order of the first appellate authority and the appeal may be allowed. 10. The following issue is framed for consideration whether the 1st appellants only are valid in law? 11. Tvl. Madanlal Steel Industries Limited, manufacturers of M.S.Ingots at 218 Linghi Chetty Street, Chennai-1 are the appellants herein. The appellants have reported a total and taxable turnover of Rs. 1,49,27,378/- and Nil respectively for the assessment year 1992-93 under the CENTRAL SALES TAX Act, 1956. The appellant/assessee had claimed exemption under consignment....
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....ir claim of exemption on consignment transfer and also the goods sent by the appellants was not sold as it is by the agent in other States and the agent had converted the goods as a new commodity and therefore, exemption cannot be granted. As against the first appellate authority's order the present appeal in A.P.No.1446/2002 have been preferred by the appellants herein. Therefore, since the issue and parties are one and the same, Common order has been necessitated. 12. At the first instance, the learned Authorised Representative for the appellant, would argue that the appellant/assessee as per books of accounts reported a turnover of Rs. 1,49,27,378/- only under the consignment transfer whereas without facts and figures, the assessing authority had fixed a turnover of Rs. 1,50,49,148/- under the consignment transfer thereby leaving a difference of Rs. 1,21,720/- was added for which the Revenue has not relied upon documentary evidence. Therefore, without facts and figures, the determination of the disputed turnover as Rs. 1,50,49,148/- is not correct instead of Rs. 1,49,27,378/-. Therefore, the difference of Rs. 1,21,770/- has to be deleted from the disputed turnover. ....
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....ities below is without any basis. Therefore, considering the above circumstances we are of the considered opinion to delete the excess turnover of Rs. 1,21,770/- for want of particulars from the taxable turnover. Therefore, the turnover which was dealt with by the appellant under the consignment transfer is only Rs. 1,49,27,378/-. Therefore the contention raised in the cross objection petition is hereby rejected for want of evidence. 16. The next contention raised by the learned Authorised Representative for the appellant is that the appellants have claimed exemption for a disputed turnover of Rs. 1,49,27,378/- for which as per law and rules, the appellants had produced the entire requisite form F with transport particulars. Therefore, the burden of proving the claim of exemption under consignment transfer was discharged as per the decision rendered in 96 STC 98 in the case of P.DHANDAPANI & CO. Therefore, the assessing authority as well as first appellate authority have failed to appreciate the facts and law and have disallowed the claim of exemption made by the appellant / assessee without any sound reasons which cannot be sustainable under law. The reasons given by the ....
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....du and another wherein it was filed that the assessing authority had to verify the form-F and transfer records and pass suitable orders on the basis of F forms and transfer records produced by the assessing authority. Nothing more is required to verify by the assessing authority". The production of Form F and transport records and other particulars by the appellants have not been disputed by the Revenue. These documentary evidence have not been rejected by the assessing authority. Therefore, the requisite form F and documents for dispatch of goods were admitted by the assessing authority. The alleged instance for disallowing the claim of consignment transfer by the assessing authority was as follows: "(1) The dealers have not denied, but accepted that the goods viz.M.S.Ingots sent for sales on consignment sales and the goods viz. CTD Bars sold are two different commodities. (2) The dealers have failed to furnish the details of tax paid in other states, even after a month's time requested by them, was given. In the absence of the above details, the claim of exemption is disallowed. These two reasons are not sustainable under law to reject the claim of ....