State of Andhra Pradesh vs Andhra Pradesh Dairy Development Corporation Ltd.

M.N. Rao, J.—No specific question of law falling within the ambit of section 22 of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act") has been referred to this Court in this tax revision case filed by the State against the order passed by the Sales Tax Appellate Tribunal in T.A. No. 468 of 1983 holding that by filing "F" forms the respondent-Andhra Pradesh Dairy Development Corporation has discharged its initial burden and the view taken by the Deputy Commissioner of Commercial Taxes, on examination of the agreement between the Corporation and its agents in Calcutta, was totally incorrect.

During the assessment year 1977-78 the A.P. Dairy Development Corporation effected outside the State certain sales of infant milk food, ghee and skimmed milk power through their agents, M/s. Tea King Private Limited, Calcutta, and M/s. Bijoy Traders, Calcutta. At the time of assessment proceedings, the Corporation produced the "F" forms given by their agents u/s 6-A of the Central Sales Tax Act, 1956 and also evidence of despatch of the goods. The following two turnovers fell for consideration before the assessing authority - (1) Rs. 3,84,87,675.94 relatable to branch transfers, and (2) Rs. 93,22,615.64 relatable to consignment transfers. The assessing authority had accepted the "F" forms covering the first category, but rejected the "F" forms relatable to the second category by observing that it was necessary to produce patties, way bills, etc., for the purpose of allowing the claim. On appeal, the first appellate authority, by examining clause 15 of the agreement between the aforesaid two agents and the Corporation, came to the conclusion that inasmuch as the agreement contemplated a seller and buyer, all transfers of stocks in favour of the two agents must be deemed to be "sales" exigible to tax under the Central Sales Tax Act. On further appeal, the Sales Tax Appellate Tribunal, after analysing the clauses of the agreement, expressed the view that the agreement does not contemplate the relationship of seller and purchaser between the agents and the Corporation, and by filing the "F" forms the initial burden was discharged by the Corporation. The Tribunal further observed that the first appellate authority failed to consider the mode of sales by the commission agents, but merely passed the order with reference to one of the clauses of the agreement. In conclusion, the Tribunal observed that the non-resident agents in Calcutta sold the goods to several parties as the goods of the Corporation but not as their own goods; they used the bill books of the Corporation and also collected the sales tax payable on the sales to the Government of West Bengal.

Challenging the view taken by the Tribunal, the present revision case was filed without even stating the exact question of law that should be considered by this Court u/s 22 of the Act.

Section 22 of the Act confers revisional jurisdiction on this Court to interfere with any decision of the Sales Tax Appellate Tribunal, if it has decided either erroneously or failed to decide any question of law.

u/s 6 of the Central Sales Tax Act, every dealer, subject to the provisions of the Act, is liable to pay tax under the Act on all sales effected by him in the course of inter-State trade or commerce. Section 6-A of the Central Sales Tax Act, which incorporates the burden of proof in case of transfer of goods claimed otherwise than by way of sale, is in the following terms :

"6-A Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale. - (1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving that the movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit a declaration, duly filled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods.

(2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section (1) are true, he may, at the time of, or at any time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall be deemed for the purposes of this Act to have been occasioned otherwise than as a result of sale.

Explanation. - In this section, ''assessing authority'', in relation to a dealer, means the authority for the time being competent to assess the tax payable by the dealer under this Act."

There is no other section in the Central Sales Tax Act dealing with "burden of proof." The two requirements u/s 6-A of the Central Sales Tax Act are - (1) Filing of "F" forms, and (2) evidence of despatch of goods. Both the requirements have been satisfied in the case on hand. The evidence relating to despatch of goods has not been doubted. But, the "F" forms were not accepted only on the ground that clause 15 of the agreement between the agents and the Corporation speaks of relationship of "seller and purchaser". This view is patently incorrect. Clause 15, which speaks of the mode of termination of the agreement, reads :

"The selling agents agree that this agreement of dealership can be terminated by the company within two months notice if the selling agents fail to achieve the targets of sale agreed upon in this agreement. The selling agents further agree that this agreement can be terminated by the company if they adopt any malpractices which affect the fair name and reputation of the company."

Termination of agreement can be effected in one of the following two ways, as per the aforesaid clause - (1) If the selling agents fail to achieve the targets of sale agreed upon under the agreement by them; (2) If the selling agents indulge in any malpractice affecting the fair name and reputation of the Corporation. By a mere reading of clause 15 it is clear that it does not contemplate any relationship of "seller and purchaser"; it only deals with the relationship of "principal and agent". There are several clause in the agreement which speak of the relationship of "principal and agent" between the parties. By condition 11, the agents agreed to produce bank guarantee towards proper and timely fulfilment of the agreement. One of the clauses, to which our attention has been drawn, speaks of the area of operation of the agents as - West Bengal, Assam and Bihar States. An agreement between a seller and purchaser would not refer to any of operation.

Although the assessing authority has observed that sale patties, way bills must be produced by the Corporation in order to claim exemption u/s 6-A of the Central Sales Tax Act, from a reading of the appellate order of the Tribunal it is clear that the sale patties were in fact produced before the first appellate authority by the agents and those sale patties clearly disclosed that all incidental charges like sales tax payable to the Government of West Bengal, freight, insurance, handling and labour charges, etc., were deducted by the agents. One other important factor which escaped the attention of the assessing authority and the first appellate authority was that the goods were sold to several parties in Calcutta and the agents used the bill books of the Corporation.

One of the modes by which the assessee can claim non-liability to tax is by producing "F" forms u/s 6-A of the Central Sales Tax Act. By producing the "F" forms, the assessee in the present case had discharged the initial burden. Unless the "F" forms were found to be defective in any respect, the assessee was not required to produce any further material other than the evidence of despatch of goods, which is referred to in section 6-A of the Central Sales Tax Act.

For the foregoing reasons, we hold that the Sales Tax Appellate Tribunal has not committed any error in deciding the question of law that fell for consideration before it. The tax revision case, therefore, fails and accordingly it is dismissed. As the assessee is also a State owned Corporation, we are not inclined to award costs.

Petition dismissed.