TMI Blog1997 (2) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... emanded from the appellant, provided it is established by the appellant that in respect of the same transaction, the appellant has paid tax in another State treating it as an intra-State sale in that other State. - Civil Appeal No. 999-1005 of 1997, - - - Dated:- 20-2-1997 - JEEVAN REDDY B.P. AND MAJMUDAR S.B. JJ. Y.P. Adhyaru and Ms. Hemantika Wahi, Advocates, for the State of Gujarat. K. Parasaran, Senior Advocate (A.T.M. Sampath, N. Balaji and P.N. Ramalingam, Advocates, with him), for the appellant in Civil Appeals Nos. 999 to 1005 of 1997. C. Seetaramaiah, Senior Advocate (K. Ram Kumar, C. Balasubramanian and Ms. Asha Nair, Advocates, with him), for the State of Andhra Pradesh. Santosh Hegde, Senior Advocate (Dalip Sinha, D. Krishnan and J.R. Das, Advocates, with him), for the State of West Bengal. K.V. Venkatapathy, Advocate-General of Tamil Nadu (V. Krishnamurthy, T. Harish Kumar and P.R. Kovalan, Advocates, with him), for the respondents (the State of Tamil Nadu) in Civil Appeals Nos. 999 to 1005 of 1997. S.N. Bhatt, K.K. Mani and R.L. Ramani, Advocates, for the appellants in other civil appeals. B.A. Mohanty, Senior Advocate (Ms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es from Tamil Nadu from time to time. In respect of vehicles sold in Andhra Pradesh-whether to Andhra Pradesh State Road Transport Corporation or to other parties-sales tax is levied and collected by the State of Andhra Pradesh inasmuch as they are intra-State sales for the purpose of the Andhra Pradesh General Sales Tax Act. Over the years, the appellant says, it has been sending the trucks, chassis and other vehicles to R.S.Os. all over the country under "F" form and at no time was the correctness of the "F" forms produced by it questioned by anyone. However, the State of Tamil Nadu has been seeking, in the recent times, to reopen the concluded assessments contending that the transfer of vehicles from Tamil Nadu to other States was not mere consignments (without effecting sales) but constitute inter- State sales within the meaning of clause (a) of section 3 of the Central Sales Tax Act, which are taxable in the State of Tamil Nadu by virtue of the provisions of the Central Sales Tax Act. The attempt of the State of Tamil Nadu is to treat the said movement of vehicles as inter-State sales and tax them which would ultimately go back to that State by virtue of the provisions contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Sales Tax Act. The order accepting form "F" is nothing more than a step-in-aid of, or a part and parcel of, the assessment proceedings; (iii) an order passed by the assessing authority accepting form "F" cannot be reopened except in accordance with sections 16, 32 and 55 of the Tamil Nadu General Sales Tax Act read with sub-sections (2) and (2A) of section 9 of the Central Sales Tax Act. A mere change of opinion is not sufficient to reopen the order accepting form "F". Having declared the law thus, the High Court directed the appellant to prefer appeals before the appropriate appellate authority where an order of assessment has been made and to go and show cause to the assessing authority where the appellant has approached the High Court at the stage of show cause notice. 3.. Sri K. Parasaran, learned counsel for the appellant, urged the following contentions: (1) Section 6-A creates a conclusive presumption which comes into play on proof of the truth of facts stated in form "F". This conclusive presumption cannot be defeated by resorting to the power of reopening conferred upon the authorities by section 16 of the Tamil Nadu General Sales Tax Act read with section 9(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .U. or to any other person. Curiously enough, the impugned reopening notices are confined only to sales effected in favour of various S.T.Us. in several States. No such attempt to reopen is made in respect of sales effected to persons other than S.T.Us. As a matter of fact, the S.T.Us., are nothing but manifestations of their respective State Governments. Since the S.T.Us./State Governments purchase vehicles in bulk, they insist that the sale of vehicles should take place within their respective State so that they may be able to derive income in the shape of sales tax on those sales. Unless the sales are effected within their State and tax is paid thereon under the sales tax enactment of that State, that State Government or S.T.U., is not prepared to purchase vehicles from the appellant. Indeed, it is for this reason also that the appellant maintains R.S.Os., almost in all the States in the country. Simply because the orders are booked by the R.S.Os. and sent to Head Office, it does not follow that the movement of vehicles is in pursuance of or is an incident of a contract of sale. (4) Section 4 of the Central Sales Tax Act provides clearly that (a) in the case of specific or asc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. It is as much amenable to power of reopening as any other order under the Act. Whether a particular movement of goods across the boundaries of one State to another is a mere movement (i.e., in this case, a consignment of goods by the Head Office to its R.S.O.) or whether the move- ment is occasioned by a contract of sale, is a question of fact and is not a question of law. The said question has to be decided by the appropriate authority in each case having regard to the relevant facts and circumstances. The appellant was ill-advised to approach the Madras High Court by way of writ petitions at the initial stage of proceedings. Nothing prevented the appellant to satisfy the Tamil Nadu authorities that it has effected no inter-State sales and that the transfer of vehicles was only a transfer without effecting a sale. If it succeeds in establishing the said fact, it is obvious that no Central sales tax will be levied by the Tamil Nadu authorities. 5.. Article 269 of the Constitution says that "taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce", among other taxes, shall be levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made pursuant to article 286 as well as clause (3) of article 269. Section 6 of the Central Sales Tax Act is the charging section. Section 6-A has been inserted by the Amendment Act 61 of 1972 with effect from April 1, 1973. This provision appears to have been enacted in the light of the judgment of this Court in Tata Engineering and Locomotive Co. Ltd. v. Assistant Commissioner of Commercial Taxes [1970] 26 STC 354. Section 6-A provides that where any dealer claims that he is not liable to pay tax under the Central Sales Tax Act in respect of any goods on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or principal, as the case may be, and not by reason of sale, the burden of proving the said fact shall be upon him. For that purpose, he may furnish to the assessing authority, within the prescribed time, a declaration duly filled and signed by the principal officer of the other place of business or by his agent or principal, as the case may be, containing the prescribed particulars, along with the evidence of despatch of such goods. Forms "F" have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a machinery of its own to assess and collect the tax levied thereunder. Probably because the tax will ultimately go to the State in which the said tax is leviable, sub-sections (2) and (2A) of section 9 provide that the machinery provisions under the respective State sales tax enactment shall be treated as the machinery provisions under this Act for all purposes. Sub-section (1) of section 9 provides that the Central sales tax shall be levied by the State from which the movement of the goods commences. This provision is evidently relatable to clause (2) of article 269. Section 13 confers the rule-making power upon the Central Government for certain purposes and upon State Governments for certain other purposes. (It is not necessary to refer to the other provisions of the Act for the purposes of this case). 9.. Rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 is the rule made pursuant to section 6-A among other sections of the Act. Sub- rule (5) of rule 12 says that the declaration referred to in sub-section (1) of section 6-A shall be in form "F". Sub-rule (6) says that form "F" referred to in sub-rule (5) of rule 12, shall be the one obtained by the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (b) Where, for any reason, the whole or any part of the turnover of business of a dealer has been assessed at a rate lower than the rate at which it is assessable, the assessing authority may, at any time within a period of five years from the expiry of the year to which the tax relates, reassess the tax due after making such enquiry as it may consider necessary and after giving the dealer a reasonable opportunity to show cause against such reassessment." (Emphasis added) 11.. Sub-section (2) provides that where the escapement of income is due to wilful non-disclosure of the dealer, penalty can also be levied. Sub-section (3) says that the power under sub-section (1) can be exercised even if the order of assessment is the subject-matter of revision or appeal. Sub-sections (4), (5) and (6) deal with the manner in which the period of limitation prescribed by the section should be computed. Section 32 confers upon the Deputy Commissioner the power to revise the orders or proceedings of any subordinate authority made under the provisions specified therein. This power can be exercised suo motu and only where the order is prejudicial to the interests of Revenue. This power has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court cannot supply that requirement. Ordinarily speaking, an order accepting-or rejecting-form "F" as true will be passed only during the assessment proceedings. There may be cases where such an order is passed earlier to the making of the assessment. Even so, such an order is incidental to and integrally connected with the assessment of the dealer. The High Court has characterised the said provision as a step-in-aid of assessment. Be that as it may, if the very assessment is subject to the power of reopening or revision, it is un-understandable as to how an order under section 6-A(2) is not similarly amenable. The power to reopen can be exercised under section 16 of the Tamil Nadu General Sales Tax Act "where for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax". The power is very wide, though it may be that it should not be mechanically or lightly exercised. 13.. Sri Parasaran has relied upon certain decisions in support of his contention. The first decision relied upon is in Izhar Ahmed Khan v. Union of India (1962) Suppl 3 SCR 235, which dealt, inter alia, with section 9 of the Citizenship Act, 1955. Sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to obviate the prospect of a protracted litigation in a matter involving the religious sentiments of a large section of a sensitive people proud of their heritage. Creation of the said conclusive presumption by the statute, the court held, was neither incompetent nor discriminatory. We may again point out that this decision also dealt with a statutory provision which expressly created a conclusive presumption unlike the case before us. 15.. Section 28-B of the Uttar Pradesh Sales Tax Act, considered by this Court in Sodhi Transport Co. v. State of U.P. [1986] 62 STC 381; [1986]1 SCR 939, provided that "when a vehicle coming from any place outside the State and bound of any other place outside the State passes through the State, the driver or other person-in-charge of such vehicle shall obtain in the prescribed manner a transit pass from the officer-in-charge of the first check-post or barrier after his entry into the State and deliver it to the officer-in-charge of the last check- post or barrier before his exit from the State, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person-in-charge of the vehicle". It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le takes place. It will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell nor is the movement occasioned by the sale. The seller himself takes the goods to State Y and sells the goods there. This is, therefore, purely an internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter-State sale. It is not clear from this illustration whether the goods were particular and specific goods earmarked for delivery to the buyer when they commenced their movement from State X. Apparently not, because it is pointed out that the movement of the goods was neither in pursuance of the agreement to sell nor was the movement occasioned by the sale. The case is distinguishable from the present one where particular goods were manufactured in Hyderabad in satisfaction of an order placed by the buyer who desired delivery outside the State. The goods moved from the registered office at Hyderabad as the result of a covenant in the contract of sale or an incident of that contract that the goods manufactured at Hyderabad according to the specifications stipulated by the buyer should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Parasaran is in Chunni Lal Parshadi Lal v. Commissioner of Sales Tax, U.P., Lucknow [1986] 62 STC 112 (SC) where a dealer sold the goods to another registered dealer and if the purchasing dealer furnished the certificate in form III-A (which means that the goods purchased were intended for resale in the same condition) the selling dealer was not liable to pay tax under the Uttar Pradesh Sales Tax Act. In that case, the purchasing dealer furnished form III-A which was produced by the assessee- dealer and on that basis, his sale was not taxed. Subsequently, it was found that the purchasing dealer did not resell those goods but used them otherwise. On that basis, the assessment of the selling dealer was sought to be reopened. It was held by this Court that the reopening of assessment was incompetent in law inasmuch as there was no finding that there was collusion between the selling dealer and the purchasing dealer. It was held that the mere fact that the purchasing dealer is subsequently found to have issued form III-A wrongly does not confer upon the assessing authority the jurisdiction to reopen the assessment of the selling dealer. The principle of this decision, we find, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w is different in the case of specific or ascertained goods and unascertained or future goods. According to the principles of this section, Sri Parasaran says, the sale of vehicles must be held to have taken place in the State in which they are delivered (to the S.T.U. concerned). But this is again a question of fact upon which no opinion can be expressed in these proceedings. Whether the contract of sale was in respect of specific or ascertained goods or whether it was in respect of unascertained or future goods and if it is the latter, when did the appropriation of the goods to the contract of sale take place are all questions of fact which do not arise for consideration in these appeals. Sri Parasaran says that even according to the show cause notices issued by the Tamil Nadu authorities under section 16 of the Tamil Nadu General Sales Tax Act read with section 9(2) of the Central Sales Tax Act, there is only one sale, namely, the sale to the S.T.U., in the other State concerned. This sale, according to the learned counsel, has taken place in the other State. May be or may not be. According to the respondents, the sale that has taken place is an inter-State sale. This is yet aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and proposing to treat the said movement of vehicles from Tamil Nadu to Maharashtra as inter-State sales. Suppose, tomorrow it is held by the Tamil Nadu authorities that they were indeed inter-State sales and tax is levied and collected by the Tamil Nadu State, can the appellant go and legitimately ask the Maharashtra authorities to refund the tax paid by it on the sale of vehicles in Maharashtra. It may not be able to do so, as the law now stands. The Maharashtra authorities may well tell the appellant that those orders have become final and their orders cannot be reopened because authorities of another State have taken a contrary view. We are not sure whether it is possible to stipulate that while deciding the question whether the said transfer of vehicles constitutes inter-State sale or not, the Tamil Nadu authorities shall give notice to, implead the Maharashtra sales tax authorities, hear them and decide so that their decision would be binding upon the Maharashtra authorities. The law as now in force does not appear to permit such a course more particularly in a situation where the orders of Maharashtra sales tax authorities have become final, as stated above. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Governments are objecting to the jurisdiction of Tamil Nadu sales tax authorities to summon them and decide the question which may require them to revise their own orders. This situation did not arise in B.H.E.L. It is in this situation that the idea of a Central mechanism has come to fore. This does not, of course, mean that this Court cannot devise an appropriate method to meet the interests of justice. It can. Appropriate directions can always be given to both the concerned States to submit to the jurisdiction of a particular designated court or Tribunal which will decide the questions regarding the true nature of the transaction after hearing all the affected parties. The fact that those orders of authorities in certain proceedings have become final may not stand in the way of this Court giving appropriate directions under article 32 or 136 or 146, as the case may be, but that situation has not yet arisen in this case. Let the Tamil Nadu assessing authorities first decide the matters before them. Thereafter, if the orders are against the appellant, we permit the appellant to file the appeal(s) directly before the Tribunal. If the Tribunal decides in favour of the appellant, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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