Decided on December 24,2010

G.D. Pharmaceuticals Pvt. Ltd. Appellant
Assistant Commissioner Of Commercial Taxes, Corporate Division And Others Respondents


(2.)THE petitioner, M/s. G.D. Pharmaceuticals Private Ltd., an incorporated company within the meaning of the Companies Act, 1956, having its registered office at "Asha Mahal", 94, Nalini Ranjan Avenue, Kolkata 700 053, is a manufacturer of miscellaneous consumer goods. In response to an invitation for a quotation to purchase a cartoner machine, M/s. Wimco Limited, Mumbai, offered a quotation vide No. E/AA/PAC/94 dated September 26, 1994. The petitioner accepted the quotation and M/s. Wimco Limited sold the machine to the petitioner under invoice No. 1 dated April 29, 1995, challan No. 30 dated April 29, 1995. The machine was despatched by M/s. Buddha Roadways Private Limited under consignment note No. 19824 dated May 4, 1995. The machine was installed at the factory of the petitioner, but in the month of June, 1995, some latent defect in the machine surfaced. Attempts were made to rectify the defects in the machine and ultimately the petitioner asked M/s. Wimco Limited to take back the cartoner machine on February 14, 1997 and to refund the price paid for it. By a letter dated April 7, 1997, Wimco Limited agreed to take back the cartoner machine and to supply a tube filling machine by way of replacement/exchange/barter for the cartoner machine on payment, by either party, of the difference of price of the two machines. The petitioner agreed for the same. Accordingly, the cartoner machine was removed from the factory of the petitioner under Central Excise Invoice No. 120 dated July 8, 1997, challan Nos. 480 and 481 dated July 8, 1997. The machine was despatched under consignment note No. 005450 dated July 8, 1997 of M/s. Buddha Roadways Private Ltd. In the meantime, M/s. Wimco Limited raised pro forma invoice No. PI/49/97 -98, dated October 28, 1997, for the difference amount of Rs. 65,299. The petitioner paid the amount and advised M/s. Wimco Limited to despatch the tube filling machine to Ghaziabad factory of the petitioner. The said machine was despatched to Ghaziabad factory under excise invoice No. 34 dated November 13, 1997. While making assessment for the 4 quarter ending on March 31, 1998, the assessing officer of the petitioner, the Assistant Commissioner of Commercial Taxes, Corporate Division (in short, "A.C.C.T., C.D.O. added back of Rs. 2,54,166 in the gross turnover as consideration for sale of the cartoner machine since the said amount was shown as "other income" in the profit and loss account of the petitioner. The petitioner filed appeal before the Deputy Commissioner of Commercial Taxes, Corporate Divisions, (in short, "the D.C.C.T., C.D.") on many grounds including the addition of Rs. 2,54,166 to the gross turnover. The appellate authority set aside the assessment order, but observed that the alleged sale value of the machine amounting to Rs. 10,56,000 (excluding sales tax) should be added with the gross turnover as inter - State sales covered under section 3 of the Central Sales Tax Act, 1956. The petitioner, thereafter, filed revision applications before the West Bengal Commercial Taxes Appellate and Revisional Board who by an order dated November 5, 2008 confirmed the observations of the authorities below for addition of Rs. 10,56,000 in the gross turnover. In the meantime, the assessing authority re -assessed the petitioner and also added back the disputed amount to the gross turnover. Being aggrieved the petitioner has filed this revision application before this Tribunal under section 8 of the West Bengal Taxation Tribunal Act, 1987. Mr. J.A. Khan, learned advocate of the petitioner, has submitted that the procurement of the tube filling machine in replacement/exchange of the cartoner machine and the payment of difference of price does not mean that the cartoner machine was sold by the petitioner. Learned advocate has assailed the assessment, appellate and revisional orders on the following grounds:
(a) that in the first assessment order a sum of Rs. 2,54,166 was included in the gross turnover as consideration for the alleged sale of the cartoner machine. No other remark was made to such addition in the gross turnover,

(b) that in the reassessment order the assessing authority mechanically proceeded to include Rs. 10,56,000 being the alleged sale price of the cartoner machine as directed by the appellate authority. It was not considered by the assessing authority that the alleged sale, if at all, could be a sale in the course of inter -State trade or commerce. There was, in fact and circumstances of the instant case, no authority or occasion to treat such alleged sale as taking place inside West Bengal and to tax it under the said Act,

(c) that it was contended before the appellate authority that an amount of Rs. 2,54,166 being the amount charged as depreciation in the years 1995 -96 and 1996 -97 in respect of the cartoner machine purchased in the year 1995 -96 and return back during the year 1997 -98, had been treated as miscellaneous income,

(d) that the observation of the appellate authority that the petitioner informed M/s. Wimco Limited about unsatisfactory performance of the machine only on February 14, 1997 is not correct and contrary to the fact. It was on July 6, 1995 first communication was made to M/s. Wimco Ltd.,

(e) that the observation of the appellate authority that the petitioner, on his own, computed the total value price of the tube filling machine and asked for adjustment of the cartoner machine supplied to it is baseless. As a matter of fact, it was mutually the value of tube machine was determined and it was agreed that, on payment of difference, the tube filling machine would be delivered in exchange of the cartoner machine,

(f) that the appellate authority wrongly held that the agreement for sale of the cartoner machine did not have any condition which could nullify the sale after two years of purchase. It was always a fact that there was an implied condition as to the suitability of a machine for effective sale,

(g) that the appellate authority did not follow the procedure of law as laid down in rule 251 of the West Bengal Sales Tax Rules, 1995 while enhancing the addition of sales by Rs. 10,56,000 against the enhancement of Rs. 2,54,166 as assessed by the assessing authority,

(h) that the revisional authority failed to appreciate that Rs. 2,54,166 was the amount of depreciation reversed by the petitioner after exchange. Such amount was wrongly treated as profit earned with respect to alleged sale of the cartoner machine,

(i) the revisional authority failed to appreciate that mere raising of excise invoice does not mean that a sale has taken place. An excise invoice had to be issued under compulsion of excise law and it is not a sale invoice, and

(j) that the observations of the revisional authority that the transfer of property in the cartoner machine in exchange of valuable consideration worth of Rs. 10,98,240 fulfils all the conditions laid down in section 2(30) of the Act is misconceived. It is not a fact that there are two separate, distinct and complete transactions of sale.

Mr. Khan has further argued that no independent purchase order for purchase of a tube filling machine was placed by the petitioner to M/s. Wimco Limited as well as no purchase order was placed by M/s. Wimco Limited to purchase the defective cartoner machine; As such, it is not a fact that the two transactions cannot be treated as barter or exchange. There is no reason for M/s. Wimco Limited to purchase a machine of its own make and that too when such machine is defective. It is "further claimed that the excise duty of Rs. 96,000 paid at the time of purchase of the cartoner machine were returned and it was certified by the Superintendent of Central Excise that the said amount was reversed by the petitioner. A sales return declaration duly authenticates by the petitioner's auditor was also issued to M/s. Wimco Limited. Learned advocate has prayed for deletion of the enhanced amount of Rs. 10,56,000 in the gross turnover as inter -State sales.

(3.)MR . B. Majumdar, learned State Representative, has relied on the assessment, appellate and revisional orders. Mr. Majumdar has also filed a written note prepared and signed by one Mr. Sushil Kumar Mondal, A. C. C. T., C. D. It is argued that the petitioner sold one cartoner machine for Rs. 10,56,000 (excluding C. S. T.) under invoice No. 120 dated July 8, 1997 and the said transaction is an inter -State sale within the meaning of section 3 of the Central Sales Tax Act, 1956. Learned State Representative has prayed for dismissal of the petition filed by the petitioner.

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