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2019 (3) TMI 1479 - MADRAS HIGH COURTLevy of sales tax - valuation - Sale taking place or not - transfer of goods to sister concern free of cost (Joint Venture partner) - Form XVII declaration - assessee's case is that the excise duty payable by the assessee for clearance of CO2 to TAC was alone collected and it was remitted to the Department including sales tax - Held that:- The transaction between the assessee and TAC would qualify for a sale transaction, as defined under Section 2(n) of the Act. There has been transfer of the property in goods from the assessee to TAC and such transfer is in the course of business and it was for a consideration. Though the assessee may state that the consideration received is only to meet the central excise liability, it is still a consideration payable for the goods transferred - Further, the transaction would also fall within the definition of “turnover” as defined under Section 2(r), as goods have been supplied by the assessee to TAC and it has been for valuable consideration. The assessee's contention cannot be agreed upon that there was no sale. Though the assessee would contend that Form XVII declaration was filed without prejudice to their rights, having taken note of the factual situation involved in the case and the type of transaction, there is no doubt that the transaction is a sale transaction and the assessee is liable for payment of tax applying the definitions under the Act. The Assessing Officer, in the instant case, has adopted the second method under sub-Clause (ii) of Rule 6(b) by taking into consideration the valuation shown in the central excise invoices and alleged that the assessee had suppressed the basic value of CO2 and completed the assessment by demanding tax on the entire value of CO2 as per the central excise invoices. Under what circumstances, Section 12A could be invoked and what are the prerequisites? - Held that:- The first and foremost pre-requisite is that the Assessing Officer should be satisfied that a dealer with a view to evade payment of tax, shown in his accounts sales or purchase of goods at prices, which are abnormally low comparing to the prevailing market rate of such goods. If the Assessing Officer is satisfied that the dealer has done so, then the Assessing Officer would be empowered to assess or re-assess the dealer to the best of his judgment, on the turnover of such sales or purchases, after making such enquiry as he may consider necessary and after giving the dealer a reasonable opportunity to show cause against such assessment - There is no iota of evidence produced by the Department to disbelieve the records produced by the assessee. The entire financials of TAC were produced to show that no other payment was made by TAC; the Chief Manager of the assessee has filed an affidavit; the copy of the annual report of TAC was produced. Thus, if the Assessing Officer did not have any material to show that the financials of the assessee were incorrect or false, the question of making a best judgment assessment that too invoking the power under Section 12A of the Act cannot be resorted to. The power under Section 12A is a power exercisable only upon satisfaction of the Assessing Officer that the assessee with a view to evade payment of tax, has shown to have sold/purchased goods at abnormally low prices compared to the prevailing market rate. Thus, merely by surmises and conjectures, the Assessing Officer cannot treat the value of CO2 for the purposes of calculation of central excise to be adopted as the sale price for the purposes of levy of sales tax under the TNGST Act. The assessee will be liable to pay sales tax on the amount collected towards the central excise duty component from TAC, which we have held to be a consideration, payable by TAC to the assessee for CO2 supply. The Assessing Officer is directed to redo the assessment in terms of the above direction - These tax case revisions are allowed - the substantial question of law is answered in favor of the assessee.
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