High Court of Judicature at Allahabad
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M/S Sunrise Traders Thru' Its Prop. Rajendra Wadhawan v. The Commissioner Of Trade Tax U.P. Lucknow - SALES/TRADE TAX REVISION No. 141 of 2006  RD-AH 6045 (20 March 2006)
Court no. 55
Trade Tax Revision no. 141 Of 2006.
M/S Sunrise Traders, Bilaspur, Rampur. ... Applicant.
The Commissioner of Trade Tax, U. P. Lucknow. ...Opp. Party.
Hon'ble Rajes Kumar, J.
Present revision under Section 11 of U.P. Trade Tax Act (hereinafter referred to as "Act") is directed against the order of Tribunal dated 09.01.2006 relating to the assessment year 2001-02 under the Central Sales Tax Act.
It appears that the applicant has entered into a contract with M/S L. T. Overseas, Ghaziabad for the sale of paddy on Principle-to-Principle basis. The total supply of the aforesaid party during the year under consideration was for Rs.74,72,796.25. Applicant has treated the sale of paddy to the said party as intra-State sales and claimed exemption on the sale on the basis of Form 3-C (1) received from the said party. During the course of enquiry, it was found by the Assessing Authority that the goods worth Rs.65,39,312/- were not delivered inside the State of U. P. but were dispatched to Sonipat, Haryana as per the direction given by the purchaser. On the basis of the aforesaid fact, the Assessing Authority treated the sales for Rs. .65,39,312/- as inter-State sales and levied tax @ 4% under the Central Sales Tax Act. Applicant filed appeal before the Joint Commissioner (Appeals), which too has been dismissed by the order dated 15.3.2005. Applicant further filed appeal before the Tribunal, which too has been dismissed by the impugned order.
Heard learned Counsel for the parties.
Learned Counsel for the applicant submitted that as per the terms of agreement, which are referred in the assessment order, applicant had to purchase paddy on behalf of M/S L. T. Overseas, Ghaziabad. He submitted that the applicant had purchased paddy on behalf of M/S L. T. Overseas and supplied the same to them against Form 3-C (1). Claim of applicant was that M/S L. T. Overseas had furnished Form 3-C (1) and had taken the liability of purchase tax on it, thus, the transactions should be considered as intra-State sales and not inter-State sales. He further submitted that since the purchases were made on behalf of M/S L. T. Overseas and even if the transactions is treated as inter-State transaction, it should be treated as inter-State purchases made on behalf of M/S L. T. Overseas and the movement of goods outside the State of U. P. can not be said to be in pursuance of any contract of sale. He submitted that the Tribunal has erred in not entertaining the alternative submissions of the applicant. Learned Standing Counsel relied upon the order of the Tribunal.
Having heard learned Counsel for the parties and have perused the order of the Tribunal and the authorities below.
I do not find any substance in the argument of learned Counsel for the applicant. The terms of contract are referred hereinbelow:-
1. THAT SUNRISE shall purchase paddy on behalf of LTO during the currency of the present Memorandum of understanding. The period of present memorandum of understanding shall be eight months starting w. e. f. 1.1.2002 to 31.8.2002 (both days inclusive) renewable for a further period as mutually agreed upon by both the parties.
2. That LTO shall appoint its qualified staff for selection of paddy to be purchased by SUNRISE.
3. That LTO shall be responsible for the acts and omission of the staff appointed by it for the purchase of selection of the quality Sunrise shall in no manner be responsible for quality selected and identified by the staff of L.T.O. selected and identified by the staff of LTO.
4. That LTO. Shall have right to return the goods in case the same is not as per the quality selected identified by the staff of LTO.
5. That LTO shall pay the price for paddy purchased from SUNRISE at the agreed price.
6. All the salaries and expenses with respect to the staff appointed by LTO shall exclusively be paid by LTO only.
7. That sunrise shall pack the paddy and rice selected by LTO on behalf of LTO and shall raise the bill accordingly.
8. That LTO shall make the payment of the bills raised by Sunrise within 7 days from the receipt of the same.
9. That the delivery of the paddy shall be at local Mandi and LTO shall be responsible for transportation and lifting of rice and paddy and shall pay the cartage and other related incidental expenses.
10. That LTO shall be at liberty to take the paddy purchased by it from Sunrise to anywhere in India either for trading or for processing at its own plant or with any other processor for further processing at its own risk and cost.
11. That the relation in between Sunrise and LTO shall on principle-to-principle basis.
Clause-11 of the contract says that the relations between the applicant and M/S L. T. Overseas would be Principle-to-Principle basis. Clause-4 says that M/S L. T. Overseas shall have right to return the goods in case the same is not as per the quality selected identified by the staff of L. T. O. and Clause-5 saysthat L. T. O. shall pay the price for paddy purchased from Sunrise at the agreed price. The above clause leaves no manner of doubt that the transactions between the applicant and M/S L. T. Overseas were on principle-to-principle basis. Before the Assessing Authority also the applicant had all along pleaded that it had made sales of paddy to M/S L.T. Overseas. No were it was pleaded that the paddy was purchased on behalf of M/S L. T. Overseas in its Purchasing Commission Agency and dispatch of the goods was not in pursuance of contract of sale. Before the Assessing Authority, initially it was pleaded that the goods were delivered inside the State of U. P. and the Form 3-C (1) was received from the party, but on enquiry, this fact was found incorrect in respect of transaction for Rs.65,39,312/- and it was found that the paddy was not in fact delivered inside the State of U. P. to M/S L. T. Overseas but were dispatched to Sonipat, Haryana in pursuance of their direction. Thus, the transaction has been rightly treated on principle-to-principle basis and the movement of goods has been rightly held as inter-State-sales being moved outside the State of U. P. in pursuance of prior contract of sale under Section 3 of the Central Sales Tax Act. It is settled principle of law that the issuance of Form can not decide the nature of transaction. The nature of transaction has to be determined in law on the basis of facts found. In the present case, it was found that in pursuance of the contract of purchase and sales, goods moved outside the State of U. P. and thus, it was inter-State-sales under Section 3 of the Central Sales Tax Act.
For the reasons stated above, there is no merit in the present revision.
In the result, revision fails, and is, accordingly, dismissed.
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