The court held that the reasons for denying exemption under Section 6-A of the Central Sales Tax Act were contrary to established legal principles regarding inter-State sales and agency.

COMMON ORDER

(Judgment of the Court was delivered by C.KUMARAPPAN, J.)

The instant writ petitions are arising against the order of the Tamil Nadu Sales Tax Appellate Tribunal in STA.Nos.777, 779 & 782 of 2000 dated 11.03.2008.

2. The brief facts which are necessary for disposal of the instant writ petitions are as follows:-

(a). The Assessee M/s.Techni Tools is a manufacturer of M.S.Rounds, M.S.Bars etc. During the material assessment years 1992-93, 1993-94 and 1994-95, they claimed exemption towards inter-State consignment transfers of the above materials under Section 6-A of the Central Sales Tax Act, 1956. However, the Commercial Tax Officer vide Assessment Orders dated 29.11.1996 and 06.05.1996 respectively has disallowed the exemption and also imposed a penalty under Section 12(3)(b)(v) of the Tamil Nadu General Sales Tax Act.

(b). Aggrieved with the said order, the assessee preferred an Appeal before the Appellate Assistant Commissioner under Section 31 of the Tamil Nadu General Sales Tax Act. The Appellate Assistant Commissioner vide order dated 28.09.1999 reversed the assessment order and granted exemption as prayed by the Assessee.

(c). Not satisfied with the above order, the Revenue preferred an appeal under Section 36(1) and (2) of the Tamil Nadu General Sales Tax Act before the Sales Tax Appellate Tribunal. The Sales Tax Appellate Tribunal, after having considered either side submissions, ultimately reversed the order of the Appellate Assistant Commissioner and thereby, restored the order passed by the Commercial Tax Officer. Aggrieved with the said order, the assessee preferred the instant writ petitions.

3. We have heard Mr.D.Vijayakumar, learned counsel for the petitioner and Mr.V.Prashanth Kiran, learned Government Advocate appearing for the respondents 2 and 3.

4. The learned counsel for the petitioner-assessee would vehemently contend that the reason for disallowing exemption is that the agent of the assessee has sold the goods on the same value as received from the assessee, and that the assessee received the cheque on the date of delivery itself, and the delivery was also effected on the same day of the receipt by the same vehicle booked by the assessee. According to the learned counsel, based on the above ground, the authority arrived at a wrong conclusion that the pattern of transaction would reveal a pre-existing contract between the assessee and the buyer. The learned counsel for the assessee would further contend that having the Authority not disputing the existence of the agency and the transfer of consignments to the agents, ought not to have concluded that the pattern of transaction is inter-State sale. The learned counsel would further contend that the receipt of advance payment and the sale of material on the same day of arrival, cannot be a ground to deny the exemption under Section 6A of Central Sales Tax Act. In this connection, the learned counsel relied upon the following judgments:-

1. State of Tamil Nadu Vs. Kumaran Mills Limited and another reported in [2010] 28 VST 262 (Mad);

2. Commissioner of Trade Tax Vs. Vijendra Engineering reported in [2009] 25 VST 600 (AII);

3. State of Tamil Nadu Vs. P.M.P.Iron and Steel India Limited and another reported in [2010] 28 vst 370 (Mad).

5. Per contra the learned Government Advocate would vehemently contend that the Original Authority as well as the Tribunal has given a factual finding that due to certain pattern of transaction viz., sale of goods on the day of arrival and also receipt of sale price in advance and the bulk sale, has disallowed the exemption, and that those things are all the telltale signs of direct inter-State sale. It is in this background, the learned Government Advocate contended that, the order of the Sales Tax Appellate Tribunal is to be confirmed. In support of his contention, the learned Government Advocate relied upon the following judgments:-

1. Govindan Engineering Foundry Trichy Vs. The State of Tamil Nadu reported in [2002] 128 STC 579