Karthik Papers Limited Vs Commercial Tax Officer (CESTAT Delhi)
The appeal was filed by Shree Karthik Papers Limited against the portion of the order dated 16.09.2014 passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, which restored the assessment on a turnover of ₹1,51,28,219 as inter-State sales and restored penalty of ₹25,64,365. The appeal also challenged the dismissal of the appellant’s appeal against the reduced penalty of ₹2,21,858.
Background
The appellant, a manufacturer of paper and paper products situated in Tamil Nadu, sold goods through intra-State sales, inter-State sales, and through agents located in Karnataka, Kerala, Orissa and West Bengal.
An inspection was conducted by the Enforcement Wing on 26.07.1995. Based on the inspection report, assessment for the year 1995-96 was completed on 21.03.1997 without distinguishing between inter-State sales and consignment sales claimed by the appellant.
The assessment order was challenged and remanded for fresh examination. Upon reassessment on 31.07.1998, the Commercial Tax Officer classified the transactions into:
- Inter-State sales covered by C Forms;
- Inter-State sales not covered by C Forms;
- Sale returns;
- Stock transfers to Kerala branch; and
- Consignment sales outside the State amounting to ₹1,54,28,218.
The appellant claimed exemption on consignment sales of ₹1,54,28,218 for the period from 01.08.1995 to 31.03.1996. The Commercial Tax Officer rejected the claim on the ground that full value of goods had been received before dispatch through bill discounting and that agents sold the goods in the same quantity received. The turnover was therefore treated as inter-State sales and taxed, with penalty of ₹25,64,365 imposed.
Order of the Additional Appellate Assistant Commissioner
The Additional Appellate Assistant Commissioner set aside the reassessment order insofar as it treated turnover of ₹1,51,28,219 as inter-State sales.
The authority found that:
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