The State of Tamilnadu, rep. by the Deputy Commissioner (CT) Coimbatore Division, Coimbatore v. Tvl. Sujani Textiles Private Limited No.89, Venkitasamy Road, Coimbatore-2 & Ors

In the High Court of Judicature at Madras02.12.2009The Honourable Mr.Justice K.RAVIRAJA PANDIANandThe Honourable Mr.Justice M.M.SUNDRESHWRIT PETITION NO.13542 OF 2001The State of Tamilnadu, rep.by theDeputy Commissioner (CT)Coimbatore Division, Coimbatore.…PetitionerVs1. Tvl.Sujani Textiles Private Limited No.89, Venkitasamy Road, Coimbatore-2.2. The Secretary, the Tamilnadu State Tax Appellate Tribunal (AB ), Coimbatore. …RespondentsPETITION under Article 226 of The Constitution of India prayingfor the issuance of a Writ of Certiorari to call for the records ofthe second respondent pertaining to the order dated 1.2.2000 made inCTA No.94 of 1996 on the file of the Sales Tax Appellate Tribunal,Additional Bench, Coimbatore and quash the same as illegal.For Petitioner : Mr.Haja Nazirudeen, SGP For Respondent-1 : Mr.InbarajanR2- Tribunal O R D E R(ORDER OF THE COURT WAS MADE BY K.RAVIRAJA PANDIAN,J)The Department filed the present writ petition not satisfied withthe order of the Sales Tax Appellate Tribunal, Additional Bench,Coimbatore made in CTA.No.94 of 1996 dated 1.2.2000 granting therelief in favour of the assessee in respect of the turnover ofRs.4,41,68,207/- as consignment sale and deleting the penalty in asum of Rs.4,41,682/- in respect of the assessment year 1992-93. 2.The facts leading to filing of the writ petition are as follows :The assessee – M/s.Sujani Textiles is engaged in the manufactureof cotton yarn and is assessee under Mettupalayam Road Assessment https://hcservices.ecourts.gov.in/hcservices/ Circle, Coimbatore-18. The account of the assessee under the CentralSales Tax Act was checked and it was found that the claim ofexemption of turn over for Rs.4,41,68,207/- as consignment sale toother States was inadmissible. The Assessing Officer, therefore,issued a pre-assessment notice dated 30.9.1994 and after consideringthe objections filed by the assessee, passed a final order on31.3.1995 disallowing the consignment sale to the tune ofRs.4,41,68,207/- and levying tax at 2% by treating the same as directinterstate sale and penalty of Rs.13,25,046/- at 150% under Section 9(2)(A) of the Central Sales Tax Act read with Section 12(3)(b) of theTamilnadu General Sales Tax Act. 3.On appeal, the Appellate Assistant Commissioner confirmed theassessment, but reduced the penalty from 150% to 100%. The assesseeagain filed a further appeal to the Sales Tax Appellate Tribunal,which, by reason of the order impugned in this writ petition dated1.2.2000, allowed the appeal by setting aside the assessment andpenalty in respect of the above said turnover. The correctness of thesaid order is canvassed in this writ petition. 4.Mr.Haja Nazirudeen, learned Special Government Pleader for theRevenue submitted that the order of the Tribunal is erroneous on twogrounds; the first one is that the requirement of Rule 4(3-A) of theCentral Sales Tax (Tamilnadu) Rules has not been complied with; andthe other one is that in the agreement entered into with the agents,there is no clause for return of goods i.e sales returns. On theother hand, learned counsel for the first respondent argued forsustaining the order impugned. 5.We have heard the learned counsel on either side and perused thematerials on record. It is on record that the assessee filed aregister in Form 16 showing the particulars of goods consigned oneach occasion agent-wise. The original of the written contract hasalso been filed. The statutory requirement of details as providedunder Rule 4(3-A) of the Central Sales Tax (Tamilnadu) Rules has alsobeen complied with and Form F as required under Rule 12(5) of theCentral Sales Tax (Registration and Turnover) Rules has also beenfiled. If the statutory requirements are complied with, the Authoritycannot stretch their jurisdiction beyond it and make enquiry, whichis extraneous to the statutory provisions. Usual reference can bemade to the decision in rendered in A.Dandapani’s case (reported in96 STC 98). In this case, all the details have been furnished. Thedocuments so produced have not been doubted by any of the Authoritiesbelow. The documents also covered transactions of the year claimed asconsignment sale. The non-availability of clause pertaining to salesreturn in the agency agreement would not, ipso facto, a reason fordenying the benefit or make the transaction something other than theone of consignment sale. In A.Dandapani’s case (cited supra), theCourt has observed that the consignment sale can be proved by theassessee by any manner by producing all the other details from the https://hcservices.ecourts.gov.in/hcservices/ agents and not necessarily by producing the documents, which havebeen stated under Rule 4(3A) of the Central Sales Tax (Tamilnadu)Rules. So, the non-production of the authorisation letter, which isstated as one of the point to non-suit the assessee for claiming thebenefit, also cannot be regarded as a conclusive one. The question asto whether the sale is to be regarded as a consignment sale woulddepend on the merit manner in which the sale is effected. If the saleis effected to the agent buyers by remaining outside the State andthe property in the goods does not pass on to the agent, buttransferred by the agent acting on behalf of the consignor only tothe ultimate buyer by whom the sale is effected, such a sale isnormally described as sale on consignment basis. The sale is completeonly when the sale is effected by the agent after the consignment isdelivered. The fact that on the strength of the bills the consignor’sbankers are willing to trust the consignor and extend to him crediton the strength of the bills produced by him to the bank will have nobearing on the question as to whether the sale effected is aconsignment sale or local sale. For the purpose of determining thecharacter of the sale, the ability of the consignor to obtain creditfrom its bankers on the strength of the bills can have no impact. Thedocuments produced before the Appellate Authority were examined andaccepted as genuine and cover the all the transactions for the yearclaimed as consignment sale. They cannot cease to be consignmentsales merely because the authorisation letter has not been producedor merely because the agreement does not contain the clause withregard to sales return. Therefore, we are of the view that the twogrounds taken by the Revenue to contend that the order of theTribunal is erroneous cannot be accepted as valid grounds nor can beaccepted as grounds based on the statutory requirements. 6.For the above stated reasons, the writ petition is dismissed asdevoid of any merits. No costs. Sd/Asst.Registrar/true copy/Sub Asst.RegistrarToThe Sales Tax Appellate Tribunal,Additional Bench, Coimbatore-18. 1 cc To Mr.N.Inbarajan, Advocate, SR.655881 CC to the Special Government Pleader(Taxes)SR NO.66140WP.NO.13542 OF 2001gg(co)sra 18.12.2009