TMI Blog2018 (10) TMI 1364X X X X Extracts X X X X X X X X Extracts X X X X ..... place. It is evident that the nature and manner, in which, the sale was effected by the petitioner to the purchaser at the other State are certainly, crucial factors to be considered and decided as to whether the turn over has escaped assessment. Such scope of consideration, undoubtedly, is not outside the jurisdiction of the respondent, merely because the marketing Companies have got the benefit of exemption under section 6(2)(b) of the Central Sales Tax Act at the hands of their Assessing Officer at Chittoor, Andhra Pradesh. When admittedly the goods have moved from the territorial jurisdiction of the respondent, he is certainly, vested with jurisdiction under section 27 to reopen the assessment for deciding such issue, when he finds sufficient materials to do so. Power of enhancement of turn over by 25% by treating the same as sales turn over of the marketing Companies - Held that:- When such issue requiring probing is within the domine of the respondent as conferred under section 27 of the Tamil Nadu value Added Tax Act, I do not think that the petitioner is justified in contending that the respondent lacks jurisdiction to pass the present impugned order. Principles o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Justice K. Ravichandrabaabu For the Petitioner : Mr.R.L.Ramani, Senior Counsel for Mr.B.Ravendran For the Respondent : Mr.Narmadha Sampath, Additional Advocate General, assisted by Mrs.G.Dhana Madhri, Government Advocate(Tax) COMMON ORDER Both these writ petitions are filed by the very same petitioner challenging the order of the respondent dated 28.07.2017 in revising the assessment made under Central Sales Tax Act, in respect of the assessment years 2014-15 and 2015-16. The issue involved in both the writ petitions is one and the same and therefore, the facts narrated hereunder are common to both these Writ Petitions. 2. The case of the petitioner is as follows: (a) The petitioner is a manufacturing Company of motor vehicles and also a registered dealer on the file of the respondent under the provision of Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956. The petitioner sold the motor vehicles to two of its sister Companies which are marketing Companies and separate entities. The said marketing Companies namely, M/s.Renault India Private Limited and M/s. Nissan Motor Private Limited, are separate business entities and are engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d outside Tamil Nadu and paid tax at 2% on the interstate sales effected by the petitioner. The assessment under CST Act, 1956, for the assessment years 2014-15 and 2015-16 in respect of Andhra Pradesh office of M/s. Nissan Motor India Private Limited, has been completed by the Assessing Officer, Chittoor, and exemption under section 6(2)(b) of the CST Act, 1956, was granted on the second interstate sales effected by them in respect of the motor vehicles sold by the petitioner. (c) While so, the respondent herein issued notice dated 26.10.2016 proposing to levy higher rate of tax and disallow exemption for non-filing of declaration forms. Another notice dated 08.12.2016, also was issued to furnish copies of invoices. The petitioner submitted the same. Thereafter, the respondent passed the assessment order dated 23.01.2017, levying tax at 2% in respect of interstate sales turnover covered by C declaration forms and higher rate of tax in respect of interstate sales turnover not covered by C declaration forms. Likewise, exemption was granted on export sales under section 5(1) and 5(3) of the CST Act, 1956. The respondent also disallowed the turnover, for which documents and For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale would fall only under section 3(b). The Assessing Officer rejected their objections. Accordingly, the assessment under CST was revised. The assessment was not reopened based on some change of opinion. Only the value of the transaction which represents the sale in the hands of the petitioner alone was enhanced. It was proposed to add 25% to the value of the transaction on best of judgment to the value of goods sold to the other two Companies. The petitioner failed to disprove the estimation made at 25%. The exemption granted by the Assessing Officer at the relevant point of time, cannot alter the power of the Assessing Authority to re-determine the value of turn over. The revised order was passed placing reliance on the findings of the Honourable High Court of Telungana and Andhra Pradesh in the case of Larsen and Toubro reported in (2016) 88 VST 422 . For the sale under section 3(a), the movement is under the contract, whereas for the sale under section 3(b), the contract comes into existence only after commencement and before termination of the inter-State movements of the goods. Thus, to attract exemption under Section 6(2), it is essential that the sale mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies. The marketing Companies effect further inter-state sales by transfer of documents of title to the goods during inter-State movement of goods. The petitioner has not challenged the present impugned action of re-assessment by the respondent on its merits. The petitioner contentions are two fold. The first issue relates to violation of principle of natural justice and the second issue relates to jurisdiction. The notice of re-assessment was only on one ground stating that the exemption claimed by the petitioner under section 3(b) of the CST Act was not in accordance with law and the transaction is falling under section 3(a) of the CST Act. In the very same notice, the respondent directed the petitioner to pay taxes and thereafter to file their objection. Therefore, even while issuing a notice of re-assessment, demand is raised and it clearly shows that the respondent has pre-judged the entire issue. For the first time in the assessment order, the respondent concluded that the subsequent sale should have happened during the movement of goods and that the buyers should not have been identified before the movements of goods. Thus, it is clear that the ground now putforth by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, those two marketing Companies places purchase orders in respect of local sales as well as inter-State sales to the petitioner. Though there is no dispute with regard to the local sales, however in respect of the inter-State sales, the marketing Companies places order with an instruction to the petitioner to deliver the goods directly to the customers of the marketing Companies. Thus, in effect, before the goods commences movement, the delivery instruction is given to deliver to a different purchasers which is contrary to the provision of section 3(b) of the CST Act. Thus, it amounts to first sale. In order to avoid tax component for the actual sale value of such first sale, a new arm is created as sale to their marketing unit. Therefore, the levy of tax under section 3(a) is sustainable and well within the jurisdiction of the authority. The writ petition is not maintainable and the impugned order was passed well within the jurisdiction of the respondent. The petitioner has been given sufficient opportunity and during personal hearing, their objections have been dealt with in detail and the respondent has passed a well reasoned order based on judicial decisions. Therefore, both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed his detailed reply on 24.02.2017 and their objections. They have not objected for the enhancement of turn over. Further two opportunities of personal hearing was granted on 12.05.2017 and 22.05.2017. During the course of personal hearing, they did not raise any objection for the enhancement of the turn over and only objected on the taxation in the hands of the petitioner. From the issuance of notice, the petitioner was aware of the enhancement of turn over. However, they did not object to the same. Hence, the petitioner cannot raise these new issues before this Court. (c) In support of her contention, the learned Additional Advocate General relied on 2019(19) VST 239(SC) (A G Projects and Technologies Ltd. vs. State of Karnataka), 2016 (88) VST 422 (Larsen and Toubro Ltd. vs. State of Andhra Pradesh), 1992(86) STC 554 (Sundaram Industries v. state of Tamil Nadu), 2012(49) VST 200(Mad) ( State of Tamilnadu vs. Mahaveer Chemicals Industries) . 9. Heard Mr.R.L.Ramani, learned senior counsel appearing for the petitioner and Mrs.Narmadha Sampath, learned Additional Advocate General appearing for the respondent. Perused the materials placed before this Court and given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the sale made by them to their marketing Companies is the first sale and consequently, the sale made by the said marketing Companies to their dealer is the second sale. Thus, it is the claim of the petitioner that the subsequent sale in favour of the dealer of the marketing Companies is effected by transfer of documents of title to the goods during their movement in favour of the dealer and therefore, such sale would fall under section 3(b)of the Central Sales Tax Act. 14. On the other hand, it is the claim of the Revenue that the marketing Companies place orders with an instruction to the manufacturing Companies to deliver the goods directly to the customers of the marketing Company and that even before the goods commence its movement, the delivery instruction is given to the manufacturing Companies to deliver the goods to a different purchaser and thus, such transaction would amount to first sale and consequently, would fall under the scope and ambit of the sale referred to under section 3(a) of the Central Sales Tax Act 1956, which disentitle the manufacturing Company to claim exemption, as envisaged under section 6(2)(b) of the Central Sales Tax Act. 15. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction on the part of the Adjudicating Authority. (b) Violation of principles of natural justice. (c) The impugned proceedings is erroneous, on the face of it and such error should apparently shake the judicial conscience of the Court. In other words, the error must be evident on the face of the order, without requiring for a roving probe to arrive at a conclusion, whether it is an error or not. 18. Only under those three circumstances, the aggrieved party can approach this Court and invoke its jurisdiction under Article 226 of the Constitution of India for redressal. Otherwise, such party is not entitled to maintain the writ petition, challenging the orders of assessment or orders in original, in each and every matter, by raising some grounds touching upon the merits of such order, as if this Court is an appellate forum. It is a known fact that most of such writ petitions are filed, in fiscal matters, challenging the order of the original authority, instead of going before the appellate authority, only to avoid the statutory obligation of making pre-deposit of the tax/duty liability while filing such appeal. Certainly, such practice should be discouraged since the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alers and not the value on which the petitioner paid tax under Central Sales Tax Act. 23. I have already stated supra, the rival contentions of the parties is with regard to the nature of the disputed sales. While the petitioner claims the disputed sale as the one falling under Section 3(b), the Revenue claims the same as the one under section 3(a). Needless to say that whether the disputed sale would fall under section 3(a) or section 3(b), is purely a question of fact which needs to be considered and decided, by appreciating factual aspects of the matter and by considering the relevant documents in support of such sale. In other words, the nature of the disputed sale has to be ascertained and determined going by the manner in which it had taken place. 24. Undoubtedly, as claimed by the Revenue, if the disputed sale fall under section 3(a), the sale to the dealer of the marketing Companies should be the first sale and consequently, the turn over covered by such sale is liable to be taxed and not the turn over as shown by the petitioner, being the sale price received from its marketing company. On the other hand, if the case of the petitioner is to be accepted that the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such sale in the hands of the dealer is only a second sale covered by section 3(b). For proving such contention, the petitioner has to establish that such second sale was effected by a transfer of documents of title to the goods during their movement from one State to another. When such issue requiring probing is within the domine of the respondent as conferred under section 27 of the Tamil Nadu value Added Tax Act, I do not think that the petitioner is justified in contending that the respondent lacks jurisdiction to pass the present impugned order. 26. If it is a first sale, what was the actual price of such first sale, is again a question touching upon the factual aspects of the matter. Likewise, if it is a second sale, what is the price shown by the marketing companies to the buyer/dealer is once again a question touching upon the factual aspects of the matter. 27. Learned senior counsel relied on 1992(87) STC 240 (State of Tamil Nadu v. Mohamed Haneefa) , in support of his contention that only when the turn over of the business has escaped assessment of tax, the power is vested on the authority to subject the escaped turn over to assessment. There is no quarrel abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes as if the petitioner had identified the subsequent purchaser much before the starting of movement of the cars. Therefore, it is contended that a new fact is stated in the impugned proceedings without disclosing the same in the notice of proposal. I am not convinced with the above said submissions, solely on the reason that the very notice of proposal dated 24.01.2017 commenced by stating that verification of the invoice furnished by the petitioner in pursuant to the notice dated 08.12.2016, issued by the respondent, revealed that when those two marketing companies were shown as buyers, the distributors/dealers in other States were shown as the consignees and thus, it appears that the goods were moved from the Tamilnadu directly to the distributors/ dealers in pursuant to the orders placed by those marketing Companies. Therefore, it is evident that the cause of action for issuing such notice by the respondent had arisen on verification of the invoices furnished by the petitioner. Hence the invoices, being the documents emanated from the petitioner, cannot be stated as new materials or contents of such invoices cannot be termed as new facts referred to in the impugned proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Technologies Ltd. vs. State of Karnataka), 2016 (88) VST 422 (Larsen and Toubro Ltd. vs. State of Andhra Pradesh), 1992(86) STC 554 (Sundaram Industries v. state of Tamil Nadu), 2012(49) VST 200(Mad) ( State of Tamilnadu vs. Mahaveer Chemicals Industries), touching upon the merits of the assessment to justify that the disputed sale, would fall under section 3(a) and not under section 3(b). I do not think that there is any necessity to go into all these decisions, since I am fully convinced that it is for the petitioner to question the correctness or otherwise of the assessment order before the next fact finding authority namely, the appellate authority. Certainly, this factual aspect, disputed by both parties, needs to be considered and decided only by the next fact finding authority, viz., Appellate Authority, and not by this Court, exercising its discretionary jurisdiction under Article 226 of the Constitution of India, as the said disputed question of fact requires probing of the matter once again on appreciation of material facts and documents placed. Only the next fact finding authority viz., Appellate Authority has to consider and decide whether such reasoning of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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