The High Court dismissed revisions filed by a milk producer cooperative challenging Sales Tax Appellate Tribunal orders. The court upheld the revenue's view that inter-state sales were disguised as consignment sales to evade tax.
Revisions dismissed at the stage of admission. No costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
THE HON’BLE SRI JUSTICE GODA RAGHURAM AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO
TREVC Nos.97 and 98 of 2012
Order : ( Per Sri MSR, J )
These revisions are filed under Section 22 of the Andhra Pradesh General Sales Tax, 1957 ( for short “the Act”) by M/s.Guntur District Milk Producers Mutually Aided Co-operative Union Ltd, Sangam Dairy, Vadlamudi, Guntur District ( herein after called “the assessee”) assailing the orders dated 28.2.2011 of the Sales Tax Appellate Tribunal, Visakhapatnam Bench, Andhra Pradesh in TA No.1001 of 2002 and TA No.1002 of 2002 respectively. The TREVC No.97 of 2012 relates to the assessment year 1998-99 and TREVC No.98 of 2012 relates to the assessment year 1999-2000.
The assessee is engaged in the business of milk and milk products including butter and ghee. It is a registered dealer on the rolls of the then Commercial Tax Officer, Gandhi Chowk Circle, Tenali and is presently on the rolls of the Assistant Commissioner (CT), LTU, Guntur Division, both under the A.P. VAT Act, 2005 and the Central Sales Tax Act, 1956 ( for short “the Act”).
For the assessment year 1998-99 and for the assessment year 1999-2000, the Assessing
Authority completed the assessment by orders dated 22.3.2002 and 23.3.2002 respectively on the basis of a report of the Vigilance and Enforcement Wing, Guntur and disallowed the claim of the assessee on consignment sales holding that they were in fact inter-state sales of white butter and ghee amounting to Rs.1,53,21,326/and Rs.45,76,800/- respectively. He held that although the consignment batches of butter and ghee covering the said turnovers were dispatched to M/s. Rajesh Dairy Products, Daman purportedly as consignment sales, they did not reach Daman though the way bills contained the destination of Daman, that the goods were delivered at Anand, Gujarat, that the assessee had received the value of goods from M/s. Rajesh Dairy Products, Daman on the date of the dispatch itself of goods from Vadlamudi and that there is no evidence that the said transactions were consignment sales only and not inter-state sales.
The assessee filed appeals to the Appellate Deputy Commissioner, Guntur Division under Section 19 of the A.P. General Sales Tax Act, 1957 read with Section 9 (2) of the Act, inter alia, contending that the findings of the Assessing Officer were erroneous as the payment was made by the said M/s. Rajesh Dairy Products, Daman as an
agent of the assessee as advance subject to adjustment after furnishing sale patties to the assessee and that cannot lead to a conclusion that the assessee had camouflaged the inter-state sales as consignment sales to avoid payment of tax due in the State of Andhra Pradesh. It also contended that there is no evidence that the assessee had directed the said agent at Daman to sell the goods to a dealer at Anand in Gujarat State.
By order dated 6.7.2002 and 26.7.2002, the Appellate Deputy Commissioner(CT), Guntur dismissed the appeals and held that the assessee could not explain how the goods which were dispatched to Daman went to Anand, Gujarat State and had failed to discharge the burden cast on it to prove that the transfer of goods was otherwise than by way of sale as the assessee was claiming exemption from payment of tax on the ground that there was in fact no sale. He also held that the payment to the assessee on the same day of the dispatch of goods is indicative of a sale; that if M/s Rajesh Dairy Products, Daman was only an agent, the agent should pay to the principle all sums received on his account subject to such deductions as may be specified; that in the present case the agent paid the amount to the assessee on the same
date of dispatch even without effecting sale of the said goods; that the value of goods is same both in the way bill and commission patti, that an agent would sell goods depending upon the prevailing market conditions and the principal cannot fix the sale value of the goods before hand and even without making the necessary deductions; that these factors point out that it was a direct interstate sale and not a consignment sale.
Challenging the same, the assessee filed TA No.1001 of 2002 and TA No.1002 of 2002 to the Sales Tax Appellate Tribunal, Visakhapatnam.
By order dated 28.2.2011, the Tribunal rejected the appeals confirming the findings of the Appellate Deputy Commissioner. The Tribunal held that there was enquiry and verification by the department; that the Vigilance authority had inspected the business premises of the assessee and such inspection had revealed the facts noted in the order of the Appellate Deputy Commissioner mentioned supra; that on the above facts, a conclusion was reached that the transactions which were inter-state sales were manipulated by the assessee into consignment sales with a view to evade payment of Central Sales Tax; that no explanation was offered by the assessee as to why the goods that were dispatched to Daman, ( which
was the destination in the way bills and delivery challans ) were sent to Anand, Gujarat State and therefore the assessee failed to discharge the burden cast on it to prove that the transfer of the goods is otherwise than by way of sale. It also held that the explanation given by the assessee as to why the value of the goods was received by it from its agent on the date of dispatch of goods itself is not convincing; that the copy of the Commission Agreement produced by the assessee stated that the agent should dispose of the stock at the price informed by the principal from time to time; that the said agreement did not contain any terms requiring the agent to make a security deposit; that the agent was made responsible for collection of amounts from the debtors if the stocks were sold on credit; that the terms of the agreement were contrary to the explanation offered by the assessee as regards advance payment of the sale price of goods by the agent to the assessee; and that the amount already paid by the agent and received by the assessee is exactly the value of the goods as furnished in the way bills and also the price of the goods as furnished in the sale patties.
Heard Sri Shaik Jeelani Basha, learned counsel for the petitioner in these two revisions.
He contended that the orders of the Tribunal confirming the orders of the Appellate Deputy Commissioner and the Assessing Officer are erroneous; that the Tribunal erred in dismissing the appeals on transactions of consignment sales exempt from tax under Section 6-A of the Act; that the Tribunal ought not to have held that the turnovers in question relate to direct inter-state sales; and that there is no difference whether the goods had gone to Daman or Anand, Gujarat as long as the destination is outside the State of Andhra Pradesh as once the goods are entrusted to agent for sale, he may have choice to sell them in any State.
We are not convinced with the above submissions.
We are of the opinion that the Tribunal had rightly held that the goods dispatched from Vadlamudi to Daman, were sent to Anand, Gujarat State; that the assessee had failed to explain how this could happen when the way bills and delivery challans showed Daman as the destination; that the assessee had received the value of goods from its agent on the date of dispatch of goods itself from the State of Andhra Pradesh; that the explanation offered by the assessee for the receipt of the money
in advance from the agent was rightly found to be unconvincing and contrary to the commission agreement between the assessee and its agent; that the value of the goods is same both in the way bill and commission patti; that normally an agent sells goods depending upon the prevailing market conditions and the principal cannot fix the sale value of the goods before hand; and all these facts cumulatively show that the transactions were only direct inter-state sale and not consignment sales and that the assessee was attempting to evade Sales Tax under the Act by trying to pass-off the transactions as consignment sales under Section 6A of the Act. These concurrent findings of fact are recorded on the basis of appreciation of the evidence on record and do not warrant any interference under Section 22 of the A.P. General Sales Tax Act, 1957.
Accordingly, the Revisions are dismissed at the stage of admission. No costs.
JUSTICE GODA RAGHURAM
JUSTICE M.S. RAMACHANDRA RAO
Dt: 18-12-2012 kk
THE HON’BLE SRI JUSTICE GODA RAGHURAM AND
THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO
TREVC No.97 and 98 of 2012
18 -12-2012
2 provisions across 1 enactments
M/s. Guntur District Milk Producers Mutually Aided Co-operative Union Ltd, Sangam Dairy, Vadlamudi
State of Andhra Pradesh
Goda Raghuram
M. S. Ramachandra Rao
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
