The Kumaran Mills Limited v. The State of Tamilnad

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 03.12.2009Coram :THE HONOURABLE MR.JUSTICE K.RAVIRAJA PANDIANandTHE HONOURABLE MR.JUSTICE M.M.SUNDRESHW.P.No.27445 of 2004 and WPMP No.33365 of 2004The State of Tamilnadurep. ByThe Deputy Commissioner (CT)Coimbatore Division,Coimbatore.Petitionerv.1. Tvl.The Kumaran Mills Limited 1024, Avinashi Road Coimbatore.2. The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench) Coimbatore. RespondentsWrit petition filed under Article 226 of the Constitutionof India for the issuance of a writ of certiorari to call forthe records on the files of the 2nd respondent pertaining to theorder dated 30.07.2002 made in C.T.A.No.282 of 1996 and quashthe same as illegal.For Petitioner :Mr.Haja Nazirudeen, Spl.G.P.For Respondents: Mr.K.R.Krishnan (R1) JUDGMENT(Judgment of the Court was delivered byM.M.SUNDRESH, J.) The revenue has filed the writ petition being aggrievedagainst the order of the Tribunal in Appeal No.282/96 dated30.07.2002 relating to the assessment year 1992-93, by which theTribunal has allowed the appeal filed by the assessee by holdingthat the transactions involved are consignment sales.2. The brief facts of the case are as follows:- (i) Anorder of assessment was passed by the Assessing Officer dated https://hcservices.ecourts.gov.in/hcservices/

27.01.1995 disallowing the turnover for a sum of Rs.98,53,396/-by treating the same as interstate sale. The Assessing Officerhas passed the said order on the ground that for about fourtransactions, the assessee has received the same amountmentioned in the sale invoice. The Assessing Officer furtherheld that the documents required under Rule 4(3)(a) of the CST(TN) Rules have not been produced. The further ground on whichthe Assessing Officer has rejected the case of the assessee isthat the agreement entered into between the assessee and theagentS does not contain a clause for the return of the goods.(ii) Having aggrieved against the order passed by theAssessing Officer, the assessee preferred an appeal before theAppellate Assistant Commissioner, Commercial Tax, Coimbatore inappeal No.CST 26/95. The first appellate authority in and byhis order dated 10.05.1996 has rejected the appeal filed by theassessee on the very same grounds upon which the AssessingOfficer has disallowed the exemption sought for by the assessee. (iii) The assessee filed a further appeal before theTribunal and the Tribunal in Appeal No.282/96 dated 30.07.2002has allowed the appeal by holding that the records would clearlyprove that the assessee has sent the goods to the other stateagents and commissions have been paid. It was further held thatthe agents in the other States have paid the local sales tax inthe other State. The Tribunal also held that Rule 4(3)(a) ofthe CST (TN) Rules are not mandatory and a mere fact that theassessee has received the amount mentioned in the sale invoiceby itself cannot be a ground to hold that the transactions areinterstate sales. The Tribunal has also held that the mere factthat the agreement does not contain a clause to the effect aboutthe return of the unsold goods by itself cannot be a ground tohold that the transactions are not consignment sales.(iv) Aggrieved against that order of the Tribunal, therevenue has come up with the present writ petition.3. We have heard the argument of the learned counsel oneither side and perused the materials available on record.4. The learned Special Government Pleader submitted thatthe assessee has not complied with the provisions contained inRule 4(3)(a) of the CST (TN)Rules inasmuch as the documentssought for by the Assessing officer have not been produced.Further, in four transactions, the same amount mentioned in thesale invoice was received by the assessee. Moreover, there isno specific clause in the agreement entered into between theassessee being the dealer and the agents of the other State tothe effect that the unsold goods would be returned to theassessee. Therefore, the aforesaid facts would indicate thatthe transactions are interstate sale and not consignment sale. https://hcservices.ecourts.gov.in/hcservices/

5. A reading of the order passed by the Tribunal would showthat the assessee has produced records to show that the goodshave been sent to the other State Agents and commissions havebeen paid. The assessee also filed a declaration under Form F.It is not the case of the revenue that the information givenunder Form F is not true. It s also seen that the agents havepaid the local tax in the other State and the goods were neithermanufactured according to the specifications of a particulargood nor they were meant for a particular customer.6. The mere fact that the same amount mentioned in the saleinvoice has been paid to the assessee by the agents by itselfcannot be a ground to hold that the transactions are interstatesales. The assessee in the present case has produced all thematerial evidence to satisfy that the transactions wereconsignment sales. Non production of the records as required bythe Assessing Officer cannot be a ground to draw adverseinference against the assessee. 7. In the Judgment reported in 1996 STC 98 in the case ofA.Dhandapani vs. State of Tamilnadu, a Division Bench of thisCourt held that the requirements under Rule 4(3)(a) are notmandatory, but only directory. The Tribunal held that theassessee with the available records has clearly proved that thetransactions are consignment sales from the assessee being theprincipal to the place of agents and the agents have receivedthe goods in their own place. 8. The other contention raised by the learned SpecialGovernment Pleader is that there is no clause in the agreementfor the return of the unsold goods and therefore, thetransactions will have to be construed as interstate sale alsowill not hold good. The fact that there is no specific clausein the agreement to the effect that the unsold goods are liableto be sent back to the assessee cannot be a ground to hold thatthe transactions involved are interstate sales. There is nomandatory condition that the agreement entered into between theassessee and the agents should contain such a clause. TheTribunal has taken into consideration all the materialsavailable on record and has given its finding. 9. Therefore, on consideration of the above said facts, wedo not find any interference needs to be called for.Accordingly, the writ petition is dismissed. No costs.Consequently, connected miscellaneous petition is alsodismissed. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.rg https://hcservices.ecourts.gov.in/hcservices/ To 1. The Deputy Commissioner (CT) Coimbatore Division, Coimbatore2. The Secretary, The Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench) Coimbatore.1 cc to Mr.K.R. Krishnn, Advocate, Sr 660611 cc to pl. Government Pleader, (Taxes), Sr. 66146W.P.No.27445 of 2004KK (CO)kk 15/12