Swarup Vegetable Products Industries Ltd. vs Commissioner of Trade Tax

Sudhir Agarwal, J.—Heard Sri Piyush Agrawal, learned counsel for the revisionist and learned Standing Counsel for the respondent. This revision has been filed against the order of Trade Tax Tribunal dated 22.09.2004 rejecting assessee''s second appeal in respect of assessment year 1989-90.

The following questions of law have been raised in this revision:

(1) Whether in view of the judgment of Central Distillery & Beverages Limited (supra); Sri Shadi Lal Enterprises (supra) and Co-operative Company Limited (supra), the Trade Tax Tribunal was justified in treating the stock transfer made by the applicant to Delhi Depot as inter-State sale?

(2) Whether in view of the agreement with Delhi Administration, a perusal of which clearly shows that the applicant has to maintain a buffer stock as well as there was no guarantee for purchase of any specific quantity of 50 degree up Rum, still the authorities were justified in treating the stock transfer made to Delhi Depot as inter-State sale?

(3) Whether merely form ''C'' and tax @ 4% under protest has been deposited, the stock transfer made to Delhi Depot can be treated as inter-State sale?

(4) Whether the Trade Tax Tribunal was justified in drawing an adverse inference on the ground that the applicant has not submitted any record/documents to justify the stock transfer losing sight of the fact that the applicant has submitted all documents before the assessing authority itself?

(5) Whether in view of the facts and circumstances of the case, the stock transfer made by the applicant to Delhi Depot can be treated as inter-State sale and tax can legally be imposed?

(6) Whether in view of the facts and circumstances of the case, the order passed by the Trade Tax Tribunal is justified?

It is contended that as per the agreement dated 04.08.1989 executed by revisionist-assessee with Commissioner of Excise Department, Delhi he was supposed to maintain a particular quantity of stock at Delhi Depot and the agreement also shows that Government of Delhi does not guarantee purchase of specified quantity of Rum from licensee. However, in order to carry out the said agreement assessee transferred requisite quantum of stock to Delhi and in this regard Form ''F'' was also submitted before Assessing Authority but he has refused to accept the same and treated aforesaid transfer as ''Sale''.

The Tribunal while confirming order of Assessing Authority and rejecting second appeal preferred by assessee on the one hand said that assessee did not submit any evidence to show that there was any stock transfer made by it to Delhi Depot pursuant to aforesaid agreement but simultaneously has also mentioned in the order that Form ''F'' was submitted but details were not given. The findings read as under:

All the facts concerning the said dispute were considered by us. From the perusal of the orders passed by the subordinate officers, it is clear that the trader has, at any juncture, not adduced any evidence or proof in respect of the alleged stock transfer to the Delhi Branch of the foreign liquor manufactured in India shown to have been sold in F-Forms for the said years entailing central taxes, which evidence or proof may establish the alleged stock transfer made by him. Even at this stage, no such evidence has been produced nor has any detail of the Form-F been given, which is said to have been tendered, in respect of the these transactions nor has any contract entered with the Delhi Administration nor purchase orders issued by the Delhi Excise Department in favour of Delhi Depot been produced nor has any such proof from the buyer been produced as may demonstrate that this purchase made by the concerned buyer was in fact not an inter-State purchase but a local purchase from Delhi. Hence, in the circumstances discussed above, when no evidence or proof has been produced by the trader at any juncture in respect of the said alleged stock transfer by him; when, on the contrary, only C-Forms for the entire sales have been produced and deposition of taxes has been made by taking such sales to be Central Sales even in Forms, I opine that it is legal & justifiable for the subordinate officers to reject the claim for the said stock transfer made by the tax payer in the relevant years and to consider the said transfer to be Central Sales. (English translation by the Court)

The case set up by assessee was that stock was to be transferred to Delhi so as to comply the stipulations of agreement and that transfer itself was not assailed to be ingenuine, bogus etc. and, therefore, question of any purchase order issued by Delhi Government in respect of said transfer would not have arisen.

Moreover, when Form ''F'' was submitted by assessee it was the duty of revenue to look into such document and without showing any infirmity, irregularity or illegality therein, the same could not have been ignored so as to treat the goods therein as sale.

A similar kind of agreement, which is involved in the present case, came to be considered by this Court in Central Distillery & Breweries Ltd. v. Commissioner of Trade Tax, 1999 UPTC 457 and this Court has held in paras 9 and 10 of the judgment, as under:

As is evident from the terms of the agreement, the intention of the parties was to bring about intra-State sales at Delhi from warehouse of the dealer that it was required to establish within the territory of Delhi where the dealer was required to maintain a buffer stock of atleast two trucks without any guarantee of any purchase being actually made by the Delhi Administration. As and when the Delhi Administration would make the purchases, the dealer who was to be a L1-A licensee would supply the goods and replenish the stocks and the things would go on like that during the currency of the agreement. Therefore, as is indicated by the agreement, the movement of the goods to Delhi was not in pursuance of any transaction of sale but in pursuance of the licence under which the dealer was to maintain a warehouse with a minimum stock within the territory of Delhi. The agreement by itself did not bring about any sale or purchase and, therefore, the transport of goods from the distillery in U.P. to warehouse in Delhi could not be treated as a movement of goods occasioned by any sale or purchase. The sale, as stated above, took place only when any order was actually placed by the Collector of Central Excise, Delhi. As stated above, the Assessing Officer has not probed further into the matter to find out if there was no buffer stock at Delhi and the goods were transported from the distillery only on receipt of the orders. Therefore, there is no evidence to show that the supply of rum to the Delhi Administration in the three years resulted in any inter-State sales taxable in State of U.P. The findings of the authorities below are based on a misconception about the nature of the agreements dated 27th of December, 1984 which, as stated above, did not bring about any sale or purchase. The Tribunal''s finding, therefore, that the disputed turnover was taxable as inter-State sales suffers from a legal error and is hereby set aside. I hold that it is not established that the turnover, referred to above, represented inter-State sales and it was, therefore, not taxable as inter-State sales under the Central Sales Tax Act.

It was also contended that the Delhi Administration had issued Form D in respect of these purchases which indicated that these were inter-State transactions. In my view this is immaterial. Form D only declares that the purchases have been made on behalf of Government. There is no declaration that they were the result of inter-State sales or purchases. Therefore, the declarations issued by the Delhi Administration cannot conclude the issue against the assessee.

In my view, the issues in the matter are squarely covered by aforesaid judgment and, therefore, all the questions raised in this revision are answered in favour of assessee and against Revenue. The revision is allowed accordingly with cost, which I quantify to Rs. 5000/-. It is held that the disputed turn over would not be liable to be treated as an inter-State sale. The order of Tribunal dated 22.09.2004 is hereby set aside. Let a copy of this order be sent to Tribunal for passing consequential order.