2005 (1) TMI 637 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the disallowance of consignment sales and treating them as inter-State sales.
2. Legality of the penalties levied under section 9(2A) of the CST Act, 1956 read with section 12(3)(b) of the TNGST Act, 1959.
3. Jurisdiction of the Tamil Nadu Taxation Special Tribunal concerning matters arising under the Central Sales Tax Act.
4. Validity of the evidence and declarations (Form F) provided by the assessees.

Detailed Analysis:

1. Legality of the Disallowance of Consignment Sales and Treating Them as Inter-State Sales:
The core issue in all three writ petitions was whether the consignment sales were properly disallowed and treated as inter-State sales. The assessing officers had disallowed claims of exemption on consignment sales and brought them to tax as outright inter-State sales assessable at 8%. The Tribunal, however, upheld the appeals of the respondents, maintaining that the transactions were consignment sales and not inter-State sales. This decision was based on the fact that the respondents had provided necessary declarations in Form F and other supporting documents to substantiate their claims.

2. Legality of the Penalties Levied:
The assessing officers also levied penalties under section 9(2A) of the CST Act, 1956 read with section 12(3)(b) of the TNGST Act, 1959. The Tribunal, however, deleted these penalties. The High Court noted that penalties could only be levied in cases where the assessment is a best judgment assessment made on an estimate, not solely based on the accounts furnished by the assessee in the prescribed return. The Tribunal's decision to delete the penalties was upheld as the assessments were based on the accounts provided by the assessees and not on any other material or estimates.

3. Jurisdiction of the Tamil Nadu Taxation Special Tribunal:
The appellant contended that the Tamil Nadu Taxation Special Tribunal had no jurisdiction to hear matters arising under the Central Sales Tax Act. The High Court agreed, noting that the Tamil Nadu Taxation Special Tribunal Act, 1992, did not vest the Special Tribunal with jurisdiction over matters arising under the Central Sales Tax Act. Consequently, the High Court entertained the writ petitions under Article 226 of the Constitution of India.

4. Validity of the Evidence and Declarations (Form F) Provided by the Assessees:
The High Court emphasized the importance of the declarations in Form F and the supporting evidence provided by the assessees. It was noted that the burden of proving that the movement of goods was not by reason of sale but by transfer to an agent or another place of business lay on the dealer. The Tribunal had found that the assessees had discharged their burden by filing the necessary documents, including Form F, and that the assessing officers had not rejected these forms or provided evidence to the contrary. The High Court upheld the Tribunal's findings, stating that the assessing officers had not provided sufficient evidence to disprove the declarations and supporting documents provided by the assessees.

Conclusion:
The High Court dismissed the writ petitions, confirming the Tribunal's orders. The Court found that the assessees had adequately demonstrated that the transactions in question were consignment sales and not inter-State sales. Additionally, the penalties levied by the assessing officers were deemed inappropriate as the assessments were based on the accounts provided by the assessees. The High Court also clarified the jurisdictional limitations of the Tamil Nadu Taxation Special Tribunal concerning matters arising under the Central Sales Tax Act. The writ petitions were dismissed without costs, and the connected WPMPs were closed.