Full Judgment Text
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CASE NO.:
Appeal (civil) 2255-56 of 1999
PETITIONER:
STATE OF TAMIL NADU
Vs.
RESPONDENT:
M/S. KERALA STATE SMALL INDUSTRIES DEVELOPMENT &
DATE OF JUDGMENT: 10/04/2001
BENCH:
S.P. Bharucha, N. Santosh Hegde & Y.K. Sabharwal
JUDGMENT:
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Y.K.SABHARWAL,J.
The respondent, Kerala State Small Industries
Development and Employment Corporation Ltd., imported cement
into India under an import licence. The ships were berthed
at Tuticorin port in Tamil Nadu and the cement unloaded at
the said port. The respondent had opened its branch office
at Tuticorin to undertake the delivery of cement at
Tuticorin port and to further transport it to various
parties including those in the State of Kerala. It,
however, did not make any payment of central sales tax to
the State of Tamil Nadu. In respect of the cement directly
despatched from Tamil Nadu to the customers in Kerala, the
respondent took the stand that it had no liability to pay
the sales tax in the State of Tamil Nadu as the goods were
imported with the intention to deliver the same to customers
and sub-allottees at Kerala. The Enforcement Wing Officers
of the Sales Tax Department of the State of Tamil Nadu
conducted investigation, seized the record and on the basis
thereof came to the conclusion that direct sales were made
by the respondent-corporation from the State of Tamil Nadu
to the State of Kerala and the said sales were camouflaged
as sales from Kerala depots with a view to avoid payment of
inter-state sales tax by showing that the cement was
despatched to the warehouse of the Corporation shown as
stock-transfer whereas, in fact, it was sent directly to the
customers. The fact that it was sent directly to the
customers was only noted in the separate papers and not
shown in despatch notes. The assessing authority on the
basis of documents on record assessed the respondent to
central sales tax in respect of assessment years 1982-83 and
1983-84 holding that the documents had established an
inter-state sale of imported cement and the respondent had
attempted to camouflage the transaction in the manner
aforestated. The appeals filed by the respondent were
dismissed and the orders of assessment were upheld by the
Appellate Assistant Commissioner. The second appeals
preferred by the respondent before the Tamil Nadu Sales Tax
Appellate Tribunal were also dismissed.
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The aforesaid orders of the Tribunal were challenged by
the respondent in two revision cases filed in the High
Court. The High Court by the impugned judgment and order
has set aside the orders of assessment and also the orders
passed in the first and second appeals. The State of Tamil
Nadu is in appeal.
The only ground on basis whereof the High Court has set
aside the orders of assessments is that the unloading of
cement at the Tuticorin port in Tamil Nadu was purely a
fortuitous circumstance as, according to the respondent,
when the ship came, the port of Cochin was congested and
there would have been considerable delay and additional
expense if the ship had to wait for a berth at Cochin and,
therefore, Tuticorin being the nearest other port, the ship
berthed at the said port and cement was unloaded there for
the purpose of transportation from the State of Tamil Nadu
to the State of Kerala. Learned counsel for the appellant
contends that before the High Court there was no material
whatsoever for coming to the conclusion that the ship
berthed at Tuticorin because of congestion at Cochin port
and that being the only basis for setting aside the orders
of Sales Tax authorities, the impugned judgment is clearly
erroneous and unsustainable. Learned counsel for the
respondent-corporation was unable to draw our attention to
any material which may show that the unloading of the cement
at Tuticorin Port had to be undertaken under the
circumstances found by the High Court. It is evident that a
submission in this regard was made across the Bar before the
High Court which was accepted and made the basis for setting
aside the findings of fact arrived at by the assessing
authority and confirmed in first and second appeals. The
authorities, on consideration of material on record, had
recorded factual findings that the respondent had opened a
branch office at Tuticorin before arrival of ships; during
the period of nearly 9 months cement was unloaded at
Tuticorin; sale of cement from Tuticorin was directly made
to the parties in Kerala and the transactions were
camouflaged to show as if cement was being sent to warehouse
of respondent in Kerala. These findings have been set aside
by the High Court without any material whatsoever. There
was no basis for the High Court to hold that the respondent
in the normal course would have transferred the entire stock
of cement to its own godowns at Kerala and from there it
would have delivered the cement to its customers in Kerala
but it had to be unloaded at Tuticorin on account of the
unforeseen congestion in the port in Kerala which led to
ship being diverted to Tuticorin. There was also no basis
for the High Court to conclude that : "The fact that the
lorries loaded with cement at Tuticorin were moved directly
to the premises of the customer in Kerala, in the background
of these facts, cannot be regarded as a factor tilting the
scales in favour of a finding that these were inter-state
sales."
It may also be noticed that the Sales Tax Authorities
had also come to the conclusion on the basis of record that
well before the arrival of the shipment at Tuticorin port,
the respondent had opened its office at Tuticorin and that
no material had been produced about the non-availability of
berth at Cochin when the ship reached Indian Ocean.
For the foregoing reasons, we set aside the impugned
judgment and order of the High Court and allow the appeals
with costs.
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