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M/S Kashi Ram Munish Kumar v. Commissioner Of Trade Tax, U.P. Lucknow - SALES/TRADE TAX REVISION No. 1007 of 1996  RD-AH 10927 (2 July 2007)
Trade Tax Revision No. 1007 of 1996
M/s. Kashi Ram Munish Kumar Vs. The Commissioner of Trade Tax, U.P. Lucknow.
Trade Tax Revision No. 1008 of 1996
M/s. Kashi Ram Munish Kumar Vs. The Commissioner of Trade Tax, U.P. Lucknow
Hon'ble Prakash Krishna, J.
The above two revisions were heard together and are being disposed of by a common judgement, as jointly agreed by the learned counsel for the parties. They relate to the assessment year 1981-82 (U.P. and Central).
The applicant, a registered dealer claims that it has purchased food grain, matar, oilseed and gur for Rs.26,29,179.23 on behalf of the Ex U.P. Principal. The Assessing Authority although has also accepted the account books of the applicant but has not accepted the case of the dealer that the aforesaid purchases were made on behalf of Ex-U.P. Principal. The dispatches made by the applicant of the aforesaid goods to the alleged Ex U.P. Principal was treated as interstate transaction and it levied Central Sales Tax accordingly. Two appeals, one under the U.P. Trade Tax Act and another under the Central Sales Tax Act were filed before the First Appellate Authority. The appeal no.102 of 1986 with regard to the U.P. sales was rejected by the appellate authority. However, the appeal no.103 of 1986 so far as it relates to the liability created under the Central Sales Tax Act was allowed and the said liability was knocked off. thereafter the dealer as well as the department preferred second appeals before the Tribunal. The Tribunal confirmed order of the assessing authority by restoring it after setting aside the order passed by the First Appellate Authority.
Heard the learned counsel for the parties and perused the record. During the course of argument, the learned counsel for the dealer confined his submission with regard to the following question of law common in both the appeals :
"Whether on the facts and circumstances of the case, the Tribunal is legally justified in rejecting the claim of the exemption on the purchases made on behalf of the Ex U.P. Principal being the purchases in the course of interstate transaction?"
Shri Kunwar Saxena, the learned counsel for the applicant strenuously contends that applicant's case throughout being that it has made purchases on behalf of the Ex-U.P. Principal but without making any probe in the matter, the authorities below have wrongly rejected the said claim on the ground of irrelevant considerations such as form 3 C was issued, name of Ex-U.P. Principal was not disclosed to the sellers, 9 R was made in the name of the dealer and in the return of turnover it was accepted that the purchases were made by the applicant in his own account. These considerations are wholly irrelevant so far as the question as to whether the purchases were made in the course of interstate purchases, is concerned, were interstate purchases, submits the learned counsel for the applicant.
The learned standing counsel supported the order under revision.
Reliance has been placed by the counsel for the parties on the judgement of the Apex Court in the case of CST v. Bakhtawar Lal Kailash Chand Arhati 1992 UPTC 971 wherein it has been held by the Apex Court that the purchases made by dealer on behalf of the Ex-U.P. Principal are the purchases made in the course of interstate purchases and as such no tax is leviable by the State legislature on such transaction and the said purchases are exempt.
The Assessing Authority proceeded to deny the claim of exemption of the dealer applicant on the ground that the dealer made the purchases in his own account and thereafter the goods were sold in interstate transaction. Thus, there were two transactions and since the purchases of goods were made inside the state of U.P., the dealer applicant is liable to pay the purchase tax on such purchases. To arrive at such conclusion, the assessing authority has taken into account that the dealer has admitted that it made purchases in his account in the monthly returns of turnover for the period up to October, 1981. In the monthly returns filed for the period up to October, 1981 he has admitted his tax liability and also that he made the purchases to the tune of Rs.10,47,732.21. For the subsequent period s he has made the purchases to the tune of Rs.15,81,447.82 and has deposited the tax under protest. So far as the period up to October, 1981 is concerned, the dealer is bound by his admission. Whether the purchases were made on behalf of the Ex-U.P. Principal or in his own account, was in his special knowledge of the dealer and he is bound by his admission unless satisfactorily explained. Therefore, I find no illegality in the order of the Tribunal so far as it relates to the purchases up to the period of October, 1981 is concerned. For the period subsequent to October, 1981 till March, 1982 is concerned, the contention is that the authorities below have not examined the facts of the case with right angle. They have rejected the claim of the applicant dealer on untenable grounds such as form 3 C was issued, which is not relevant factor as held by this Court in various cases such as 2001 UPTC 525. So far as the issuance of form 9 R is concerned, it is also not determinative factor as held by this Court in 1987 UPTC 1307 C.S.T. Vs. Khandelwal and Co. (para 4). The determinative factor is whether purchased goods and their dispatch to Ex U.P. Principal were part of the same transaction, as observed by the Apex Court in para 11 of CST Vs. Bakhtawar Lal Kailash Chand Arhti (supra). The relevant para is reproduced below:-
"11. If we examine the facts of this case in the light of the above principles, it would be clear that the purchases effected by the respondent-dealer were inter-State purchases. The purchases were made by the respondent as a commission agent on behalf of the ex-U.P. principals and the goods purchased under each of the purchases were duly despatched to such principals. It is found that such despatch took place not later than three days from the date of purchase, as soon as the railway wagon was available. The purchase of goods and their despatch to ex-State principal were parts of the same transaction. The movement of goods from Uttar Pradesh to another State was occasioned by and was the result - or the incident of - the purchase. It was the consequence of the purchase. Such movement of goods, though not proved to have been expressly stated in the contract of sale, was yet held to have been agreed upon between the parties. We must emphasise that the question whether a sale/purchase is an inter-State sale/purchase depends on the facts of each case. The principles are well settled; it is only a question of application of these principles to the facts found in each case."
However, in para 17 the Apex Court has examined a situation which could have been different if a dealer has purchased the goods on behalf of Ex-U.P. Principal in the first instance and thereafter in pursuance of the subsequent instructions dispatched the goods. For the sake of convenience the said paragraph is also reproduced below:-
"17. Situation could have been different if the respondent-dealer had purchased the goods on behalf of the ex-U.P. principals in the first instance and thereafter in pursuance of subsequent instructions despatched the goods. In such an event the instructions to despatch the goods are independent of the instructions to purchase. There is a break between the purchase and despatch of goods. It would not be an inter-State purchase. An out-State principal may first instruct his commission agent within the State of U.P. to purchase the goods on his behalf and to await his further instructions. Depending upon the market conditions and other circumstances, the ex-State principal may instruct his agent in the State either to sell the goods within the State or to despatch the goods beyond the State. if such were the case, Sri Sehgal would have been right in saying that the State of U.P. was competent to tax the purchase by the respondent-dealer. But that is not the case here on the facts found by the appropriate authorities."
The crux of the argument of the applicant's counsel is that the goods were purchased on the instructions received from the Ex-U.P. Principal and were subsequently dispatched outside the State of U.P., therefore, it shall be taken that the purchases of the goods and dispatch is part of the same transaction, cannot be accepted in the facts of the present case. The Tribunal has noted in its order that the Assessing Authority has examined the account books of the dealer and has found that the position is otherwise. For example, it is noted that the goods on behalf of M/s. Bhola Ram Agrawal, Karpandia, Dhanbad was purchased on 27th of May, 1991 and it was dispatched on 28 th of August, 1991. A good number of transactions were examined by the Assessing Authority, details thereof have been mentioned in the assessment order where it was found that the goods were not dispatched shortly after their purchase. They were dispatched after sufficient long period from the date of purchase as and when it was found convenient to the dealer. Not only this the Assessing Authority on examination of account books has found that in certain cases the goods were dispatched earlier i.e. before their purchase. For example in the case of M/s. Jamunadhar Meghraj the goods were purchased from 4th of October, 1981 to 6.10.1981 and were dispatched on 5th of October, 1981. Similar is the case with regard to the transaction of M/s. Hanuman Das Matadeen. Purchases were made in between 21.10.1981 to 2.11.1981 of one hundred twenty six bags but the purchase voucher is dated 01.11.1981. In this fact situation, the law laid down by the Apex Court in para 17 in the case of Bakhtawar Lal Kailash Chand (supra) is applicable. The authorities below have rightly concluded that it cannot be said the purchases were made by the dealer on behalf of the Ex-U.P. Principal or in other words the purchases were made in the course of interstate purchases.
Additionally, it has been found that the dealer applicant has charged purchase tax from the alleged Ex-U.P. Principal. The reply of the learned counsel for the applicant is that the said amount is liable to be forfeited under section 29-A of the U.P. Trade Tax Act but it will not change the nature of transaction, does not deserve acceptance. Taking the totality of circumstance that the dealer applicant besides realising the purchase tax from its alleged Ex-U.P. Principal has not dispatched the goods immediately after the purchases, has issued form 3 C and sometimes dispatched the goods even before the purchase order and that the tax has been deposited along with monthly return though under protest do not warrant acceptance of the applicant's contention that the purchases were made in the course of interstate purchases. It was within the special knowledge of the applicant as to whether the purchases made by him were in the course of interstate purchases or not. The applicant utterly failed to establish that the purchases were made in the course of interstate purchases. Circumstances, on the other hand, speaks against the applicant. None of the authorities below have accepted the contention of the applicant and the findings recorded by the Tribunal, cannot be said to be perverse or against the material on record. The said findings are essentially findings of fact. The decision of the Apex Court in the case of C.S.T. Vs. Bakhtawar Lal Kailash Chand Arhti (supra) was given in the fact situation as it existed there. The Apex Court in para 11 of the judgement of the said decision has clearly delineated that whether a sale/purchase is an inter-state sale/purchase depends on the facts of each case.
Viewed from any angle, it is held that the applicant dealer has failed to discharge his burden that the purchase were made by him in the course of interstate purchases.
In this view of the matter, there is no merit in the revisions. Both the revisions are hereby dismissed with cost of Rs.1,000/- (Rupees one thousand only) each.
Dt. (Prakash Krishan, J)
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