2022 (12) TMI 560 - HC - VAT and Sales Tax

Claim of exemption of penultimate sale in course of export - production of H Forms and export documents including Bill of Lading in respect of claim under Section 5(3) and 5(4) of the CST Act - Validity of order of remand for levy of penalty - there was no appeal or cross objection by the State - HELD THAT - mere non-production of agreement entered into between the Indian Exporter and the Foreign Buyer would not invalidate the claim of the petitioner-penultimate seller for exemption under Section 5(3) of the CST Act. Furthermore the authorities have not complained that the petitioner has not complied with the terms of sub-section (4) of Section 5. The disallowance of claim of the petitioner under Section 5(3) of the CST Act has been made by the Assessing Authority and confirmed by the Appellate Authority and the Odisha Sales Tax Tribunal was on account of non-production of copy of agreement between the Indian Exporter and the Foreign Buyer. - Decided in favor of assessee. Levy of penalty - HELD THAT - In the First Appellate stage the petitioner had been granted relief with respect to penalty for non-submission of statutory forms. There was neither cross-appeal nor cross-objection by the Revenue. It deserves to be noted therefore that in the appeal of the petitioner-dealer the Odisha Sales Tax Tribunal was not legally correct to grant relief to the opponent-State of Odisha by remanding the matter to the Assessing Authority to take action as deemed proper as per requirement of statute qua matter of imposition of penalty. - Decided in favor of Assessee.

Issues Involved:
1. Legitimacy of remanding the matter to the Assessing Authority for fresh assessment despite the production of 'H' Forms and export documents.
2. Justification of reconsideration of penalty imposition under Section 12(3)(g) of the CST(O) Rules, 1957 in the absence of appeal or cross-objection by the State.

Issue-wise Detailed Analysis:

1. Legitimacy of Remanding the Matter to the Assessing Authority:

The petitioner, a partnership firm, challenged the order of the Odisha Sales Tax Tribunal which upheld the rejection of the petitioner's claim for exemption from Central sales tax under Section 5(3) of the CST Act. The assessment was based on the non-production of agreement copies between the Indian Exporter and the Foreign Buyer. The petitioner argued that the production of 'H' Forms, purchase orders, and bills of lading should suffice for the exemption claim.

The court examined whether the production of these documents without the agreement copies was sufficient under the CST Act. It was noted that the CST Act and CST (R&T) Rules require the submission of 'H' Forms and supporting documents but do not explicitly mandate the production of agreement copies. The court referred to various judgments, including the Madras High Court's decision in V. Win Garments and the Supreme Court's ruling in Consolidated Coffee Ltd., which supported the petitioner's stance that the non-production of agreement copies should not invalidate the exemption claim if other required documents were provided.

The court concluded that the petitioner had fulfilled the statutory requirements by providing 'H' Forms and supporting documents, and the authorities could have verified the transactions based on these documents. Therefore, the court set aside the Tribunal's order, stating that the mere non-production of agreement copies should not lead to the denial of the exemption claim.

2. Justification of Reconsideration of Penalty Imposition:

The court also addressed the issue of penalty imposition under Rule 12(3)(g) of the CST(O) Rules, which mandates a penalty for non-submission of declaration forms. The petitioner argued that the First Appellate Authority had correctly deleted the penalty, considering the absence of contumacious conduct and the bona fide nature of the transactions.

The court referred to a Circular issued by the Commissioner of Commercial Taxes, Odisha, which instructed not to impose penalties for bona fide non-submission of declaration forms. The court emphasized that the circular was issued to ensure uniformity and avoid unnecessary litigation. It was noted that the Odisha Sales Tax Tribunal should not have interfered with the First Appellate Authority's decision to delete the penalty, especially in the absence of a cross-appeal or cross-objection by the State.

The court cited its previous judgments, including Srinivas Traders, which held that the Tribunal should not grant relief to the State in the absence of a cross-appeal. The court concluded that the Tribunal's decision to remand the matter for reconsideration of penalty imposition was not justified.

Conclusion:

The court answered both questions in favor of the petitioner, setting aside the Tribunal's order and corresponding orders of the First Appellate Authority and the Assessing Authority. The court allowed the sales tax revision petition, emphasizing that the production of 'H' Forms and supporting documents sufficed for the exemption claim, and the deletion of the penalty was justified in the absence of contumacious conduct and a cross-appeal by the State.

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