TMI Blog2024 (1) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Excise Taxation Department of the other States, is unwarranted , perverse and contrary to law. In ONKARLAL NANDLAL VERSUS THE STATE OF RAJASTHAN AND ANOTHER [ 1985 (9) TMI 314 - SUPREME COURT ] the Supreme Court held that there is no antithesis between a sale in the course of inter-State trade or commerce and a sale inside the State. Even an inter-State sale must have situs , and the situs may be in one State or another. It is held that the ETO at the Barrier or the Check Post, in the facts and circumstances of the case, could not have examined the nature of the sale transaction and act beyond the limited jurisdiction of examining the documents, accompanying goods, and impose a penalty on a transaction not otherwise liable to tax under the Act; and that the impugned order is perverse for not considering the fact that the Assessing Authority, in the assessment order dt. 04.09.2008, passed for the Assessment Year 2006- 07, had accepted the Returns filed by the petitioner and had not imposed any tax on the transaction disputed in the impugned order. It is also held that the genuineness of the Form-C and Form E-1, cannot be doubted by the Excise Taxation Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper and genuine documents and that the petitioner had made an attempt to evade tax. Petitioner s contentions 6) It was the petitioner s contention that there were two inter-State sales involved, one from Goa to Gurgaon and another from Gurgaon to Shimla, which had been affected by the petitioner through transfer of documents of title. 7) It was also petitioner s contention that the Central Sales Tax ( for short CST ) on goods purchased from Goa was exempt and no CST was chargeable on the sale-in-transit as per Section 6(2) of the Central Sales Tax Act,1956 ( the CST Act ); since goods had moved in consequence of an agreement to sell, the ingredient of Section 3(a) of the CST Act were duly fulfilled, and so no VAT was to be paid to the State of Himachal Pradesh; that goods were sold in-transit and no sale had taken place in the State of Himachal Pradesh, and so the question of evasion of VAT did not arise; the petitioner produced the Supply Agreement, Purchase Order, Goods Receipt, C-Forms and E- 1 declaration before the ETO (Annexure A-3). The order dt.20.12.2006of the ETO . 8) The ETO passed an order on 20.12.2006 imposing a penalty of Rs. 8,50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e H.P. Tax Tribunal, Dharamshala, Camp at Shimla. 16) The Tribunal passed order on 19.8.2009 observing that penalty imposed did not seem to be relevant in the inter-State transaction and so remitted the matter back to the Assistant Excise Taxation Commissioner, Shimla in whose jurisdiction the machinery and equipment were to be received, and directed both parties to raise all objections available. 17) It held that if it is found that no penalty is to be imposed, the amount of penalty already deposited shall be refunded by the Assistant Excise Taxation Commissioner (AETC), Shimla, as early as possible. The order dt.7.4.2011 of the Assessing Authority post remand by the Tribunal 18) After such remand, the Assistant Excise Taxation Commissioner-cum- Assessing Authority, Shimla passed an order on 07.04.2011 holding that the petitioner had tried to evade tax and imposed a penalty of Rs. 8,50,000/-. 19) He held that the petitioner-Company, which is registered at Gurgaon, had procured the material from Eltek S.G.S. Pvt. Ltd. Gurgaon and another consignment was procured from M/s Andrew Telecom India Pvt. Ltd. Goa; M/s Bharti Airtel Ltd. had issued Form-C to M/s Eri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, which dismissed the appeal on 09.09.2016. 25) It examined the Supply Agreement and the Purchase Order produced by the petitioner and considered the contention of the petitioner that the goods had been sold in transit as per provisions of 6(2) of the CST Act, 1956, and held that the petitioner could not have sold the same in transit in violation of the terms of the Supply Agreement and the Purchase Order, which required him to supply the same at the site. 26) It therefore rejected the contention of the petitioner that the goods were sold in transit and even gave a finding that Form-C and E-1 declarations produced by the petitioner, amounted to misuse of those Forms by him; and held that it had evaded tax by importing goods into the State without being accompanied with proper and genuine documents. It also held that the petitioner had mens-rea to evade tax. The instant Revision petition 27) Challenging the same, this Civil Revision is filed by the petitioner-appellant. Contentions of counsel for petitioner 28) Counsel for the petitioner contended that the impugned order levying penalty on the petitioner is unsustainable. 29) According to him, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherever required for checking attempt at evasion nor can be extended to areas where there was no attempt at evasion. (3) In an appropriate case, the writ court may examine the exercise of power and interfere if exercise of power is found to be arbitrary, mala fide and without nexus with attempt at evasion on the face of it. (4) If there are disputed questions and there is reasonable nexus of exercise of power with attempt at evasion, writ petition against imposition of penalty at the check-post cannot be entertained. (5) Where relevant documents are duly produced but a bona fide plea against taxability is raised and there is neither mis-declaration nor concealment, exercise of power of imposing penalty at the check-post on the ground of attempt at evasion may not be called for. In the present case, contention raised by the assessee that the cast iron castings carried by it were not cast iron liable to tax at the first stage, could not be held to be requiring no adjudication or frivolous or mala fide . It is not relevant as to what is the interpretation finally taken on this subject and we do not express any conclusive opinion at this stage but hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted, is legitimate and genuine. 44) Consequently, the Excise Department of the State of Himachal Pradesh, had no right to invalidate and/or question the same, as it had admittedly been furnished and authenticated by the selling States. 45) The finding in the impugned order regarding genuineness of the statutory Forms C and E-1, issued by the Excise Taxation Department of the other States, is unwarranted , perverse and contrary to law. 46) More importantly, the petitioner had been assessed for the Assessment Year 2006-07 through an assessment order dt. 04.08.2008 and the returns filed by the petitioner had been accepted and the assessment proceedings were cleared with nil demand. It was even allowed to carry forward excess deposit of Rs. 5,86,430/- to the next quarter. 47) There was no discussion in the said Assessment Order on inter-State sale of goods and evasion of tax and no demand was raised during this process. 48) So once the Assessing Authority had accepted Returns filed by the petitioner and did not raise any demand of tax, then it is not open to the ETO at the Check Post to allege evasion of tax. 49) Further the question as to when a sale takes pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessary to se for the authorities under the act to see the situs of the sale in question and they ought to have seen whether there was a movement of goods from one State to the other pursuant to the sale. 53) For the aforesaid reasons, the Revision is allowed; and it is held that the ETO at the Barrier or the Check Post, in the facts and circumstances of the case, could not have examined the nature of the sale transaction and act beyond the limited jurisdiction of examining the documents, accompanying goods, and impose a penalty on a transaction not otherwise liable to tax under the Act; and that the impugned order is perverse for not considering the fact that the Assessing Authority, in the assessment order dt. 04.09.2008, passed for the Assessment Year 2006- 07, had accepted the Returns filed by the petitioner and had not imposed any tax on the transaction disputed in the impugned order. It is also held that the genuineness of the Form-C and Form E-1, cannot be doubted by the Excise Taxation Authorities in Himachal Pradesh. Consequently, the finding of evasion of tax by the petitioner returned by all the authorities, cannot be sustained. 54) Therefore the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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