Madras High Court
State Of Tamil Nadu vs Van Vanaspathy Udyog on 24 January, 1995
Author: T. Jayarama Chouta
Bench: T. Jayarama Chouta
JUDGMENT Thanikkachalam, J.
1. The department is the petitioner herein. In the place of business of the assessee there was an inspection by the Enforcement Wing on September 25, 1980. A verification of the records reveals that exemption was claimed to an extent of Rs. 1,84,336.80 on the following transactions as sales under Section 6(2) of the Central Sales Tax Act, 1956. E. 1 sales is not in order. The first transaction relates to invoice No. VVU/MDS/58, dated July 17, 1980, for Rs. 31,039.10. The assessee had clear the goods through the clearing agent and delivered locally as per the delivery challan No. 58 dated July 17, 1980, issued and the direction given to the clearing agent in accordance with their letter dated July 18, 1980 and the payment receipt obtained from the clearing agent. It has been specifically stated in the letter to clear the consignment, arrange to deliver the same at their godown at Royapuram as usual. The second addition of Rs. 1,53,297.70 relates to invoice No. VVU/MDS/68, dated August 8, 1980. According to the assessing officer, in this case, the goods were delivered locally as per the delivery challan No. 68/8-8-1980. According to the assessing officer goods sold is not the same as mentioned in the purchase bill. In the purchase bill the grade of the goods has been noted as "opague" whereas in the sale bill it has been noted as K.H.D. On the basis of these abovesaid two invoices, the assessing officer made the above two additions. On appeal, the Appellate Assistant Commissioner confirmed the order of the assessing officer since according to the Appellate Assistant Commissioner both the transactions relate to local sale and not sale in transit.
2. Aggrieved, the assessee filed appeal before the Appellate Tribunal. The Appellate Tribunal considered that both these items of sales are not local sales but sales in transit. Therefore, the Tribunal deleted both the additions relating to the abovesaid transactions. It is against this order, the department is in revision before this Court. The principle of law that has to be followed in a matter like this has been stated by this Court in the decision reported in the case of State of Tamil Nadu v. N. Ramu Bros. (Electricals) [1993] 89 STC 481. In [1993] 89 STC 481 [State of Tamil Nadu v. Ramu Bros. (Electricals)] cited supra it has been stated as under :
"It is only if a subsequent inter-State sale is effected by transfer of documents of title to the goods during the movement of the goods from one State to another pursuant to an earlier inter-State sale that such subsequent inter-State sale would be exempt under section 6(2) of the Central Sales Tax Act, 1956. If the subsequent sale is effected by any mode other than transfer of documents of title to goods exemption under section 6(2) cannot be granted at all."
3. So far as the addition of Rs. 31,039 in relation to invoice No. 58, dated July 17, 1980 is concerned, the learned Additional Government Pleader for Taxes submitted that the goods were cleared by the agent of the assessee, after the goods reached the destination. Therefore, according to the learned Additional Government Pleader for Taxes, there is no sale in the transit so as to grant exemption under section 6(2) of the Central Sales Tax Act. Learned Additional Government Pleader for Taxes pointed out that no document was shown by the assessee to prove that the sale took place during transit. It was further submitted that the assessee's clearing agent cleared the goods and the clearing charges were paid by the assessee. For all these reasons the learned Additional Government Pleader for Taxes submitted that in so far as this item is concerned, the sale did not take place in transit and hence, exemption under section 6(2) of the Central Sales Tax Act cannot be granted.
4. On the other hand the learned counsel appearing for the assessee submitted that the sale took place during transit. The goods were cleared even though by the agent of the assessee, but it was cleared on behalf of the purchaser. According to the learned counsel for the assessee this is a common practice prevalent in this line of trade. Hence it was submitted that the Tribunal was correct in holding that the sale took place during transit and exemption under section 6(2) of the Central Sales Tax Act would be applicable.
5. It remains to be seen that the goods were cleared after it reached the destination. The goods were cleared by the agent of the assessee. According to the assessee, the goods were cleared by his agent on behalf of the purchaser. There is no evidence on record to show that the agent of the assessee acted on behalf of the purchaser. The assessee paid the clearing charges. There is also no document to show that the goods were sold during transit. In the absence of the transfer of documents, it is not possible to accept the contention put forward by the assessee that the sale took place during transit and the agent of the assessee acted on behalf of the purchaser. Accordingly, we hold that the Tribunal was not correct in deleting the addition of Rs. 31,039 relating to invoice No. 58.
6. Inasmuch as the assessee is not entitled to exemption under section 6(2) of the Central Sales Tax Act, with regard to the addition of Rs. 31,039 we restore the order passed by the Appellate Assistant Commissioner in confirming the addition made by the assessing officer.
7. So far as invoice No. 68 is concerned, the assessee produced transfer of documents to show that the goods were sold in transit. Even though, the descriptions of the goods are different, the assessee established that the goods were sold during transit and hence, entitled to the benefit under section 6(2) of the Central Sales Tax Act. The descriptions of the goods were stated differently since the assessee followed description of goods classified by the Indian Standard Classification. Since this item of sale is second inter-State sale it is exempted under section 6(2) of the Central Sales Tax Act. In view of the fact that the railway itself has issued a certificate in favour of the second purchaser, there is no difficulty in coming to the conclusion that the second sale took place during transit. In view of the foregoing facts, we consider that there is no infirmity in the order passed by the Tribunal by deleting the addition of Rs. 1,53,297.70 since it is exempted under section 6(2) of the Central Sales Tax Act. Accordingly, we consider that there is no infirmity in the order passed by the Tribunal in deleting the abovesaid addition in view of the provisions contained under section 6(2) of the Central Sales Tax Act. In that view of the matter revision filed by the department is allowed in part. However, there will be no order as to costs.
8. Petition partly allowed.