CST Assessment 2005-06

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srinivasulu (Querist)
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12 September 2008 Dear all,

Pls explain, we are in manufacturing business and selling also. Actually we made sales against form-c & D (Inter state)
There is some sale returns, we r not filing form-c & D against that returns. But here we made sale on March'06 which is return in the month May'06 which is falls in the FY:2006-07

Now they are asking to file the forms against that sale(actually sale return)or to pay 6% tax(we explained but they r not agreeing)

Now what can we do?

Thanks & regards

CNU

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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15 September 2008 In this question the important point is that goods sold in 2005-06, were returned in 2006-07.
It also appears that the dealer wanted to adjust the goods returned with the sales of May-2006 (As usually people do).

Now, I will like to quote two decisions, which will give you all the hints.

(In case you are not satisfied, please mail me at opg_fca@sify.com)

[1983] 053 STC 0048- - Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam Vs. Motor Industries Co. (SC).
The Apex court observed- “We are, however, of the view that even in the absence of such an amendment, the deduction in respect of "sales return" has to be allowed in the assessment relating to the financial year in which the sales of the returned goods had taken place and even where assessment for that year is completed, the department has to comply with the demand for adjustment or refund by making necessary rectification in the order of assessment, provided that other conditions are satisfied, as that is the inveitable consequence of rule 9(b)(i) which allows deduction of the value of the goods returned within three months from the date of their delivery from the total turnover of that assessment year. But in any view of the matter it is not possible to hold that such deduction in respect of returned goods can be claimed in the assessment proceedings for the financial year subsequent to the financial year in which the sales have taken place. We do not, therefore, agree with the contrary view expressed by the High Court relying on its decision in Jay Engineering Works Ltd. v. State of Kerala [1979] 43 STC 492.

[1983] 053 STC 0097- - State of Kerala Vs. Jay Engineering Works Limited

It was held that “ accordingly, that where goods sold by the assessee in the assessment year 1971-72 were returned by the customer after March 31, 1972, the assessee could not claim deduction therefor in the assessment year 1972-73, but that the department should modify the assessment order for 1971-72 by allowing deduction under rule 9(b)(i) and refund any excess tax paid for that year”.