State of A.P. vs Sree Akkamamba Textiles Ltd.

Challa Kodanda Ram, J.—These two tax revision cases are filed by the State u/s 22(1) of the Andhra Pradesh General Sales Tax Act, 1957, questioning the common order dated September 29, 1999, passed by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad in T.A. Nos. 182 and 183 of 1999. In these revision cases, the following questions of law have been raised for consideration by this court:

(i) Whether these disputed turnovers are relate to transactions of sales in the course of inter-State trade and commerce?

(ii) Whether the S.T.A.T., A.P., is justified in setting aside the orders of the Deputy Commissioner (CT), Eluru, by holding that latter failed to gather sufficient material evidence when essentially the burden of proof u/s 6A of the CST Act is on the assessee-appellant?

(iii) Whether the S.T.A.T., A.P., being revisional authority-cum-appellate authority as per the judgment of the Supreme Court of India in the case of State of Andhra Pradesh, etc. Vs. M/s. Hyderabad Asbestos Cement Production Limited etc. etc., ) failed to examine each and every transaction vis-a-vis the evidence produced by the appellant and then decide about the true nature of the transactions under dispute in this appeal?

Heard Sri P. Balaji Varma, learned Special Standing Counsel for the petitioner and Sri S. Dwarakanath, learned counsel for the respondent.

M/s. Akkamamba Textiles Ltd., Tanuku, is an assessee manufacturing, selling and transferring the cotton yarn and waste. It was finally assessed by the C.T.O., Tanuku-I circle for the assessment year 1993-94 under the Central Sales Tax Act, 1956. The assessing authority had allowed exemption on certain turnovers u/s 6A of the CST Act. The exempted turnover, inter alia, relates to depot/branch transfer of cotton yarn made from Tanuku to its Maharashtra (Bombay and Ichalkaranji), West Bengal and Tamil Nadu based four selling depot-agents. The Deputy Commissioner (CT), Eluru division, took up suo motu revision of the CTO''s order, disallowing exemption as turnover, relating to the sales said to have been made through depots, branch in Maharashtra, West Bengal and Tamil Nadu on certain grounds.

Aggrieved by the aforesaid revision orders of the Deputy Commissioner (CT), Eluru division, the assessee preferred the appeal before S.T.A.T., A.P., and latter allowed the appeal and remanded the appeal to the DC (CT), Eluru, to give fair and reasonable opportunity to the appellants-assessee. In pursuance of these remand orders, the revisional authority passed consequential orders leaving once again on the disputed turnovers u/s 3(a) of the CST Act. Aggrieved of these orders the assessee preferred another appeal before the S.T.A.T., A.P., who had allowed the appeals in favour of the assessee holding that these disputed transactions are not inter-State sales but are mere stock transfers to the four non-resident selling depot agents.

At the outset, in our considered opinion, the questions of law said to have been arisen are not the questions of law inasmuch as all the questions relate to the finding of facts. As stated supra, the assessing authority after examination of returns filed by the assessee and on scrutiny of the books of accounts granted exemption relating to depot/branch transfer of cotton yarn made from Tanuku to Maharashtra (Bombay-Ichalkaranji), West Bengal and Tamil Nadu and allowed the exemption of the turnovers in exercise of the powers conferred u/s 6A of the CST Act. The revisional authority had reversed the order of the assessing authority which was the subject-matter of appeal before the Tribunal. After consideration of various aspects in an elaborate order, the Tribunal recorded as under:

We have considered the rival contentions and are at a loss to understand how Sri Harikishan Bhagaria''s deposition on hearsay can be of any evidential value. Sri Harikishan Bhagaria, according to us, could not have known the facts and could not have been the witness to the same during the year 1992-93 and 1993-94 as his appointment itself is subsequent to the years 1992-93 and 1993-94 in Sri Laxminarayana Gourishankar Private Limited. Sri Laxminarayana Gourishankar Private Limited itself had taken up the management of the depot/branch of the company on November 1993 which is completely beyond the assessment year 1992-93 and beyond a part of the assessment year 1993-94.

...

We are convinced that the D.C. has merely proceeded on surmises and conjectures without establishing the fact that ingredients of section 3(a) or section 3(b) are satisfied in this case. He has generalised the issue without citing specific instances. He has merely observed at page 9 that revision is made because of additional information, but we do not find that the so-called additional information, in the form of 3 statements recorded in 1995, throw any light on specific transactions relating to these two assessment years. In fact, the statements recorded are themselves general and are of no assistance to the revisional authority. The appellant contends that the Act and Rules do not support the case of the Deputy Commissioner and there is no essential conditions regarding godown facilities or payment of rent. In the totality of the facts and circumstances of the case, it is evident that whole consignments of different types and counts of yarn were dispatched on the appellant''s own name and account to depots in different States and were unloaded by the transporters and taken to the appellant''s stocks at the destination and thereafter sold at random. The dispatches are neither inter-State sale u/s 3(a) nor u/s 3(b). The sales materialised and culminated only in respect of available stocks at the destination in control of the depots and relevant local tax incurred in these States were borne and paid by the appellants as evidenced by the assessment orders under the Sales Tax Acts in respective States.

...

On the same analogy, in the cases on hand, the dispatches of yard in self-name of the appellant to various destination in other States terminated when the appellant''s depots agents acknowledged the stocks and took them into account for future disposal to willing buyers. The lorry receipts from Tanuku to other States lapsed on unloading of the yarn and stocking it for safe custody as evidenced by the agreements with the transporters. The subsequent disposal of yard as per sales finalised by depot agents are nothing but sales in the destination State but not inter-State sale from A.P. If the reasoning of the D.C. is accepted then the dealers can contend that only sales effected physically from their premises is their turnover and the goods stocked and sold at other places cannot be treated as the turnover under local Act. As long as the ingredients of section 3(a) or 3(b) are not satisfied factually, a transaction cannot be termed as inter-State sale. In this case, the D.C. has failed to establish such facts by bringing on record any documentary evidence by way of prior contracts or purchase orders to satisfy u/s 3(a) nor it is his case that the appellant has transferred the documents of title to the goods, namely, the lorry receipts to any person.

...

The place of business is an inclusive definition and covers any place where the dealer keeps his goods. In the present case, the dealer has kept the goods at the transporters premises after arrival and thus, there is delivery to the appellant. Thereafter the goods are in legal custody of the appellant. The goods are sold to prospective buyers at the destination and the delivery is organised at the transporter premises by independent delivery instructions of the appellant''s depot. This amounts to taking delivery of the goods from the appellant at the transports premises but not taking delivery from the transporters. On the facts and circumstances of the case, effecting the deliveries at the transporters premises by the appellant does not amount to a delivery on inter-State sale/movement but it is a delivery after germination of inter-State movement covered by the lorry receipts in appellant''s favour from Tanuku to various places. Further, the language of section 6A of the CST Act which deals with burden of proof to claim that an interest to movement of goods by a dealer to any other places of his business is not an inter-State sale, also supports the appellant''s case. The expression is ''transfer of such goods by him to any place of his business'' which need not necessarily be his place of business. In other words, the appellant must have business at the place to where the goods are moved but the place itself need not belong to it. Even, otherwise as definition of ''place of business'' includes a warehouse, godown or other place where dealer keeps his goods, this will cover transporter''s godown where a dealer keeps his goods after termination of inter-State movement and effects sales to his will and discretion. The appellant has discharged its burden u/s 6A by filing statutory form F which have been considered by the assessing authority along with various other documentary evidence to conclude the transactions to be depot/branch transfers.

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The D.C. acting in revision has failed to factually establish that the transactions were inter-State sales supported by documentary evidence, for all the reasons discussed above and hence the levy on disputed turnover is set aside.

In the light of what has been extracted above, there is no manner of doubt that the Tribunal on appreciation of the facts on records had come to the conclusion that the order of the Deputy Commissioner is totally based on surmises and conjectures and as a matter of fact the assessee was entitled to exemptions granted u/s 6A of the CST Act.

Inasmuch as the Tribunal on appreciation of facts has found which facts are not challenged in the present tax revision case in our considered opinion within the scope of section 22(4) of the Act, there is no question of law that is required to be answered.

Further, Sri S. Dwarakanath, learned counsel appearing for the assessee while drawing attention to the para No. 43 of the order of the Tribunal would contend that the reasoning of the Tribunal that the authorities can go behind the form F declaration and investigate the matter is not correct. In view of the judgment of the Supreme Court reported in Ashok Leyland Ltd. Vs. State of Tamil Nadu and Another, the order of the Tribunal reads as under:

There cannot be a dispute that the authorities have power to examine the matter beyond the F form declarations and the Deputy Commissioner acting in revision can go beyond the form F and investigate the matter. Section 20 of the APGST Act which provides revision power also contemplates that the revision authority can make enquiries as he thinks fit. Thus merely because the F forms are filed and accepted by the assessing authority, it cannot be correct to say that no further enquiry should be made.

In the judgment of the Supreme Court referred to above, it has been held (pages 508, 514 and 515 in 134 STC):

Section 6A of the Act although provides for a burden of proof, the same has to be read in the context of section 6 of the said Act. Section 6 provides for liability to pay tax on inter-State sales. Any transaction which does not fall within the definition of ''sale'' would not be exigible to tax, the burden whereof would evidently be on the assessee. We have noticed hereinbefore that whereas prior to the amendment in sub-section (1) of section 6A the dealer had an option of filing a declaration in form F; after such amendment, he does not have such option, insofar as in terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale. It is to be noticed that for the aforementioned purpose also, the Parliament advisedly used the expression ''deemed''. If the expression ''deemed'' is interpreted differently, an incongruity would ensue.

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An order passed by the statutory authority who has jurisdiction therefore, the same would amount to a part of substantive and not procedural law. In addition to this there is no provision for appeal. Thus, it is only in the limited cases of fraud, mis-representation, etc., that reassessment can be directed and not if there had been a mere error of judgment.

If it is not an inter-State sale provided through a legal fiction, then it amounts to transfer of stock and this is a finding which has been arrived at by a statutory authority wherefor there does not exist any provision for appeal. Therefore, it cannot be reopened on the premise that there was a mere error of judgment or change in opinion.

Once it is held that such determination of an issue having regard to legal fiction created in terms of sub-section (2) of section 6A is conclusive, it must a fortiori follow that the same is binding.

The particulars required to be furnished in form F clearly manifest that the proof required is as to whether the goods were factually transferred to the assessee himself or his branch office or his agent and not to any third party. Any other enquiry is beyond the realm of the assessing authority.

In the light of the judgment of the Supreme Court to the extent the Tribunal had recorded that the authorities can go behind the form F declarations is not correct law and the tax revision cases are liable to be dismissed. Accordingly, both the tax revision cases are dismissed. No order as to costs. Miscellaneous petitions, if any pending in these T.R.Cs. shall stand closed.