2026-VIL-969-CESTAT-DEL-CST
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VAT Tribunal

Central Sales Tax Act, 1956 - Consignment sales versus Inter-State sales - Applicability of pre-search period evidence to post-search period transactions - Following an inspection conducted on 26.07.1995, the assessing authority disallowed claim of consignment sales for the period 01.08.1995 to 31.03.1996 based on materials and slips recovered during inspection, which related to the pre-inspection period - Appellate Commissioner set aside this assessment, finding that the transactions were genuine consignment sales based on the agreement. The Sales Tax Appellate Tribunal restored the assessing authority's order by extrapolating the pre-search findings to the post-search period - Whether the movement of goods from one State to another constitutes an inter-State sale or a consignment sale when an agreement explicitly provides for consignment terms, and whether evidence and materials relating to the period prior to 01.08.1995 can be used to characterize transactions occurring after 01.08.1995 – HELD - Under section 6A, when a dealer claims that movement of goods from one State to another was occasioned by transfer to an agent and not by sale, the burden lies on the dealer to prove this through statutory declarations and supporting evidence. However, once the dealer discharges this initial burden through proper documentation and agreement, the Department cannot rely on mere assumptions and conjectures to displace this burden. The agreement executed on 01.08.1995 explicitly provides that the principal will consign products to the agent depending upon availability as per marketing conditions, that goods remain the property of the principal until sold, that the principal will insure the goods in transit and custody until sold, and that the agent will render monthly statements of account. These contractual terms clearly establish the consignment nature of the transactions - The Appellate Tribunal erred in extrapolating materials and evidence relating to transactions from 01.04.1995 to 31.07.1995 to transactions occurring after 01.08.1995. The slips, blank cheques, and debit notes recovered during inspection prior to 01.08.1995 and cannot serve as evidence for characterizing transactions executed pursuant to the agreement dated 01.08.1995 – The order passed by the Tax Appellate Tribunal is set aside to the extent that it treated transactions occurring from 01.08.1995 to 31.03.1996 as inter-State sales - The assessment regarding consignment sales is set aside and the finding of the Appellate Commissioner that the transactions constitute consignment sales is upheld. The penalty reduced to a lesser amount is restored – The appeal is partly allowed
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