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TMI Blog2009 (6) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ents relating to the years 2000-01, 2001-02 and 2002-03, it was found that the branch at Noida dispatched the goods to other branches in order to comply with the orders already received by the branches and communicated. The Order Contract Number (OCN) was found noted on the stock transfer challans relating to machines. By the date of inspection and survey, the assessment orders under the CST Act for the years 1998-99, 1999-2000 and 2000-01 have already been passed accepting the appellant's claim of stock transfer. No Central sales tax was, therefore, demanded. However, these assessments were reopened on the basis of inspection report received from the investigating team and the revised assessment orders were passed on March 30/ 31, 2005 for the said three years treating the stock transfers as inter-State sales and demanding Central sales tax thereon. Such orders were passed in exercise of powers under section 9(2) read with section 21 of the U.P. Trade Tax Act. Against these orders, the appellant preferred appeals. The Joint Commissioner (Appeals I), Trade Tax, Noida, by his order dated October 29, 2005 remanded the cases to the assessing officer for a fresh survey and inspecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 6A therefore applies and the movement of goods from Noida (UP) to other States shall be deemed to have been occasioned otherwise than as a result of sale . Once the F forms are so accepted and an assessment has been made excluding the stock transfers, it is legally impermissible to reopen the assessment on a change of opinion or on finding some new material except on the grounds of fraud and misrepresentation, as ruled by the Supreme Court in the case of Ashok Leyland Ltd. v. State of Tamil Nadu [2004] 134 STC 473; [2004] 2 RC 249; [2004] 3 SCC 1. It is pleaded that it has not been found nor established that the appellant had committed any fraud or misrepresentation. Therefore, it is submitted that the correctness of the assessment originally made cannot be called in question by initiating reassessment or revision proceedings under the State Act. It is also submitted that there is no clinching proof to the effect that the goods moved to fulfil specific prior orders received from out-of-State customers and on the basis of few documents noticed at the time of survey, the reassessment has been made without examining all the transactions and without even considering the dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. [2009] 233 ELT 171 which held that the limitation under section 35G of the Central Excise Act, 1944 cannot be extended in the absence of specific provision permitting condonation of delay. Another decision on the point is that of Commissioner of Sales Tax v. Parson Tools and Plants [1975] 35 STC 413 (SC). In reply to the above plea, the learned counsel for the appellant, apart from contending that this objection cannot be raised at this belated stage, has invoked section 29(2) read with sections 14(2) and 5 of the Limitation Act and submitted that the period between the date of filing the revision cases in the High Court and their pendency in the High Court ought to be legitimately excluded. It is contended that sub-section (3) of section 20 of the CST Act does not expressly exclude the application of section 14 of the Limitation Act. Reliance has been placed on a three-judge Bench decision of the Supreme Court in Commissioner of Sales Tax, U.P. v. Madan Lal Das Sons [1976] 38 STC 543 and another decision of the Supreme Court in Mangu Ram v. Municipal Corporation of Delhi AIR 1976 SC 105 as well as a Division Bench decision of the Punjab and Haryana High Court in Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the Revenue. If such objection had been raised before or in the course of hearing of the condonation delay petition, the appellant would have at least approached the High Court to make suitable observations for pursuing the appeal before this Authority, notwithstanding the delay caused by reason of choosing a wrong forum. The appellant who took prompt steps to assail the orders of the Trade Tax Tribunal by filing revisions in the High Court, apparently not being aware of the new remedy provided by the CST (Amendment) Act, should not be made remediless at this point of time. The respondent refrained from raising the objection as to limitation and thus paved the way for hearing on merits. It is, therefore, unjust and improper to take note of the objection belatedly raised by the respondent and to review the order condoning the delay. Before proceeding to consider the rival contentions on the merits, we shall refer to sections 3 and 6A of the CST Act and highlight the interpretation placed on them by the Supreme Court. Section 3. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase, (a) occa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods from one State to another is the result of a covenant or incident of the contract of sale, and property in the goods passes in either State. We are concerned herewith section 3(a) and not (b). We may mention that in a recent case of A G Projects and Technologies Ltd. v. State of Karnataka [2009] 19 VST 239; [2009] 2 SCC 326, the Supreme Court analysed the difference between clauses (a) and (b) of section 3 in the following words: (page 239 of VST) The dividing line between sales or purchases under section 3(a) and those falling under section 3(b) is that in the former case the movement is under the contract, whereas in the latter case the contract comes into existence only after the commencement and before the termination of the inter-State movement of the goods. In Commissioner of Sales Tax, U.P. v. Bakhtawar Lal Kailash Chand Arhti [1992] 87 STC 196, a three-judge Bench of the Supreme Court explained the scope of section 3(a) in the following words: (page 200, 201) According to clause (a) of section 3, an inter-State sale or purchase is one which occasions the movement of goods from one State to another. In other words, the movement of goods from one State to ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occasioned otherwise than as a result of sale. (ii) Whenever such an order is passed, a legal fiction is created. Legal fiction, as is well known, must be given its full effect. At para 53 of SCC (para 41 in STC) it was observed: (page 503 of STC) ...Once it is held, as we do, that section 6A of the Central Act provides for a conclusive proof, except on a limited ground, reopening of assessment would not be permissible. The observations at paragraph 113 (para 94 in STC) may also be noticed: (page 518) ...mere change in the opinion of the assessing authority or to have a re-look at the matter would not confer any jurisdiction upon him to get the proceedings reopened. Discovery of a new material although may be a ground but that itself may not be a ground for reopening the proceedings unless and until it is found that by reason of such discovery, a jurisdictional error has been committed. In other words, when an order passed in terms of sub-section (2) of section 6A is found to be illegal or void ab initio or otherwise voidable, the assessing authority derives jurisdiction to direct reopening of the proceedings and not otherwise. While so holding, the three-judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and the notings therein. They are all documents kept in the regular course of business. The reassessment was not based on any material clandestinely kept in the custody of the appellant in furtherance of any design to avoid tax. The original assessment orders show that the books of account and other relevant records including stock registers were produced before the assessing officer. May be, by reason of inadvertence or lack of comprehensive scrutiny, the assessable turnover escaped assessment to tax. But, that does not give rise to the inference of fraud, etc. It is not the case of the Department that the assessee dodged to produce the records called for by the original assessing authority who accepted the forms. Above all, we find that the assessee does not stand to gain by manipulating the inter-State sales as local sales. The Central sales tax rate will not be higher if C forms are obtained from the registered dealers. We are, therefore of the view that the appellant's case cannot be brought within the exceptions laid down in Ashok Leyland's case [2004] 134 STC 473 (SC); [2004] 2 RC 249 (SC); [2004] 3 SCC 1 for reopening the assessments. A similar view was taken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the first appellate authority has clearly stated that the judgment of the honourable Supreme Court in the case of Ashok Leyland [2004] 134 STC 473; [2004] 2 RC 249; [2004] 3 SCC 1 is not applicable to the present case . The first appellate authority virtually brushed aside the said judgment by merely stating that the facts relating to the appellant's case were different from the facts of Ashok Leyland case [2004] 134 STC 473 (SC); [2004] 2 RC 249; [2004] 3 SCC 1. What is the difference in facts that makes the principle inapplicable is not spelt out. The cases referred to by the Tribunal, viz., English Electric Company of India Ltd. v. Deputy Commercial Tax Officer [1976] 38 STC 475 (SC) and Sahney Steel and Press Works Ltd. v. Commercial Tax Officer [1985] 60 STC 301 (SC) dealt with the aspect whether on the facts of the case, the inter-State movement of goods was the result of covenant or incident of the contract of sale as envisaged by section 3(a) of the CST Act. It is also worthy of note that in those cases, there was prior contract for the manufacture and supply of goods according to the specifications given. The interpretation of section 6A and the manner of dischargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse. The word imertal request is not intelligible. None of the counsel was able to say what exactly the word meant. However, it has been stated that it perhaps, means internal request by the branch. Even if such request had emanated from the branch it cannot be said that inter-State movement was occasioned by prior contracts. It is trite that a dealer having branches dispatches the goods to the branches for sale on assessing the approximate requirements of the branches. The branches feed information in this regard. From that it does not follow that inter-State movement shall be ascribed to antecedent contracts of sale especially when the goods are standard but not tailor-made goods. At the same time, the dealer in reply to the show-cause notice has not come forward with a specific case that there were no prior orders nor any such orders have been noted in the records of Noida branch. However, the second reason given by the assessing authority raises some question marks about the correctness of the appellant's claim of stock transfer of spare parts. The assessing officer has pointed out in the show-cause notice itself that the stock registers of branches submitted by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainly photocopiers and fax machines (which are described in the assessment orders as machines), and (ii) spare parts. The major part of turnover relates to spare parts. F forms covering stock transfers to the branch were filed and found to be correct and, therefore such transfers were excluded from taxable turnover by the original assessing authority. During the relevant years, filing of F forms was not mandatory but once they are filed and accepted to be correct, the dealer must be deemed to have discharged the burden of proof and consequentially the stock transfers to branches outside the State of despatch are not to be treated as inter-State sales. During the relevant years, even without filing the F forms, other satisfactory proof of stock transfer as opposed to inter-State sale can be adduced to discharge the burden of proof. Accordingly, in respect of some of the transactions not covered by F forms, exemption was still allowed on the ground that other satisfactory proof in support of the claim was available. In so far as such transactions unsupported by F forms were concerned, evidently, the deeming fiction in subsection (2) of section 6A which has been considered by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot filed. However, time was allowed up to May 31, 2003 to file F forms. The appellant did file the F forms. But, no order was passed after the scrutiny of F forms and no finding was recorded to the effect that the F forms were in order and that the stock transfers were acceptable. This was the position till the reassessment proceedings were initiated in the year 2000 which led to the passing of the final order dated March 30, 2005 whereby the entire claim of stock transfer was disallowed and the turnover of Rs. 11,40,25,950 was subjected to Central sales tax at the rate of two per cent. A turnover of Rs. 8,00,65,770 relating to spare parts was taxed at the rate of 10 per cent. The inter-State sales of photocopier and fax machines to the tune of Rs. 3,39,60,180 were, however, assessed to Central sales tax at the rate of two per cent. This order was passed on September 21, 2006 under section 9(2) of the CST Act read with section 21 of the U.P. Act. This gave rise to further appeals including the present appeals filed before this Authority. Having regard to the above facts, the ratio of the decision in Ashok Leyland [2004] 134 STC 473 (SC); [2004] 2 RC 249; [2004] 3 SCC 1 and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enying the lower rate of tax. Taking an overall view, we therefore direct that 25 per cent of the turnover relating to spare parts for the year 2000-01 shall be subjected to Central sales tax at the rate of two per cent. To this extent, the appeal for the year (Appeal No. 325 of 2008) is allowed. Before parting with the case, we have to deal with one more point raised by the counsel for the respondent-State. As regards the machines (photocopiers, etc.) dispatched to the branches on stock transfers, the learned counsel has raised a contention that the finding of the appellate authority in its order dated October 29, 2005 has become final and it cannot be challenged now by relying on the decision of the Supreme Court in Ashok Leyland's [2004] 134 STC 473; [2004] 2 RC 249; [2004] 3 SCC 1 or otherwise. We find no force in this contention. It is true that the appellate authority made the observation that the machines were dispatched for delivery to the particular customer whose orders were reflected in the order control numbers noted in the stock transfer documents and that the steps taken to reopen the assessment under section 21(2) of the U.P. Trade Tax Act were valid. It must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Full Bench of the Kerala High Court in the case of M. Syed Alavi v. State of Kerala [1981] 48 STC 150 has thoroughly discussed these aspects and held that appealablity of an order passed in the course of a proceeding and the liability of that order being challenged in appeal against the ultimate order are two distinct things and the principle underlying section 105(2) of the CPC did not stand in the way of the petitioner raising the question of liability to assessment before the Appellate Tribunal after the final order was passed on remand. That was a case in which the Appellate Assistant Commissioner confirmed the order of the assessing authority as regards the liability to assessment but remanded the case to the assessing authority with a direction to pass a fresh assessment order in the light of the observations made in the order as regards the specific disputed items. After remand, the petitioner took the stand that it was not liable to be assessed in view of the fact that it discontinued the business. The assessing authority held that the plea was not available to him in the light of the order of AAC. The Appellate Tribunal also took the same view. The High Court reverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity cannot be construed in any other manner. What remains is giving appropriate directions in regard to the refund of the excess tax collected. The appellant sought stay pending disposal of appeals. While condoning the delay by the order dated October 22, 2008, the following observations were made by this Authority in regard to stay. As regards the stay of recovery of disputed tax, it is stated that substantial amount of tax has already been paid and for the balance amount bank guarantee was furnished. As we do not see immediate threat of recovery of tax, we give liberty to the appellant to move for stay if need arises before the next date of hearing . The appeals were posted for hearing on November 21, 2008. Thereafter, the appeals were adjourned at the request of one or both the parties and the next date of hearing was fixed to December 16, 2008. By that time, no counter was filed by the respondent and even later, adjournment was sought on the ground that counsel for the State could not be engaged. While so, on December 5, 2008, the concerned Departmental official addressed a letter to the bank in Delhi to encash the bank guarantee on the same day. An urgent application fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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