The Madras High Court in its case M/s Advance Paints (P) Ltd. v Commercial Tax Officer held that no liability to pay CST arises merely on the assumption of pre-existing contract implicating branch transfer.
The present Court has been approached by way of its writ jurisdiction wherein the assessee has been aggrieved by the order passed by the two authorities below, concurrently holding that the Stock/Branch transfer of goods made by the assessee to its branches in Bangalore and Kerala were liable to tax under the provisions of the CST Act, treating them as inter-state sales. The same has been held on the ground that no documentary evidence has been produced before the lower authorities.
The Assessing Authority while rejecting the petitioner’s contention reasoned that despite the fact that the proof of movement of goods, proof of arrival and disposal of the goods and submission of Form ‘F’ in support of such Branch Transfers, an assumption was made that there was a pre-existing contract. An assumption that sales with the agent in Kerala and the movement of goods in question took place in pursuance of such pre-existing contracts, making the transaction liable to be brought under the CST Act.
It was contended by the Revenue that relevant documents were not furnished by the Assessee and therefore the assessment order and its confirmation by the two Appellate Authorities was justified.
The Bench constituting of Justices Dr Vineet Kothari and R.S. Kumar holding in favour of the assessee overruled the decisions of the lower authorities. The Hon’ble Court disregarded the assumption of pre-existing contract and imposition of CST on the same ground.
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