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2019 (11) TMI 423

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..... the present case, has proceeded to assess the transaction as sale of equipment, taxable at the rate of 20%, that by itself cannot lead to an inference of suppression and a bonafide difference of opinion on the interpretation of a taxing statute cannot be ruled out. In the facts and the circumstances of the present case, particularly bearing in mind that no personal hearing has been granted to the petitioner, I am inclined to set aside the assessments, to be re-done de novo for both periods 2004-05 and 2005-06, on merits. The assessee shall appear before the Assessing Authority on 30.10.2019 at 10.30. a.m. No further notice need be issued in this regard. Assessment periods 2002-03, 2003- 04 and 2004-05 - Orders of assessment dated 27.02.2007 are impugned in relation to assessment periods 2002-03 and 2003-04 and show cause notice dated 27.02.2007 for the period 2004-05 - whether the provisions of Section 12C and the procedure for expedited assessment provided therein could also be sought by an assessee where there had been proceedings for assessment initiated even prior to 01.04.2006? - HELD THAT:- The tenor of Section 12C, to my mind, appears to be that assessments in relation to t .....

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..... made by the petitioner for the previous and later years and the Assessing Authority has, on an examination of relevant documents, accepted the claim for exemption. The conclusion of the Assessing Authority turns on the position that the petitioner has not supplied cotton yarn for export but has, in fact, supplied cloth manufactured from out of the cotton yarn, for export. Learned counsel for the Revenue is unable to produce a copy of the Clarification and instead circulates a copy of the Exemption Notification to which I have already made reference. The fact that the petitioner has indeed supplied manufactured cotton is not denied by it - the case of the petitioner is admitted, simply on the anvil of consistency. Though a ground has been raised questioning the validity of the present assessment in the light of Section 12 C of the TNGST Act, this ground is given up by the learned counsel for the petitioner in the course of the hearing. Petition allowed. - Writ Petition Nos.12166 & 12167 of 2007 18254 & 18255 of 2008 11364 to 11366 of 2007 M.P. Nos.1 & 1 of 2007, 1 and 1 of 2008 and 1,1,1 and 2,2,2 of 2007 - Dated:- 4-10-2019 - Dr. Justice Anita Sumanth For the Petitioner : Mr.B.Rav .....

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..... e presence of the dealer or production of books of accounts by the dealer subject to such conditions as may be prescribed: Provided that this sub-section shall not apply to a dealer who has filed an appeal or other proceeding in respect of any assessment for the period referred to in this sub-section and is pending before the High Court or the supreme Court, as the case may be. (2) Every dealer who claims to be not liable to pay tax and has not filed return, shall file the return on or before the 31st March 2007 in the prescribed manner relating to his turnover for the period prior to the 1st day of April 2006 and such return shall be accepted, subject to the provisions of section 16, failing which his registration shall be cancelled, after giving him a reasonable opportunity of being heard.' Rule 15(5-E): '(5-E) The conditions to be satisfied by a dealer for the purpose of sub-section (1) of Section 12-C are , namely:- (1) The dealer should have submitted prescribed return for the year before 20th December 2006. (2) The dealer should submit the declaration referred to in subsection (1) of section 12-C in Form XVII or other certificates already prescribed in the Act (3) Dur .....

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..... tificates prescribed have not been submitted, notices must be issued immediately by disallowing the concessional rate of tax / exemption specifying the date (within 90 days) before which the records should be filed. (5) In case the forms and declarations were not filed within the stipulated time, orders should be passed disallowing the claim of concessional rate of tax / exemption. (6) If the declaration forms or certificates are produced subsequently after passing of the order, revision of assessment may be considered. The assessing officers are instructed to follow the above instructions strictly. They are strictly instructed not to call for the dealer's accounts under any circumstances for the purpose of passing deemed assessment upto the assessment year 2005-2006. They will be held personally responsible if any deviation is noticed. Assistant Commissioners and Deputy Commissioners are instructed to properly supervise this item of work. If any complaint is received, they will also be held responsible. The receipt of this circular should be acknowledged at once. Sd/- XXXXXXXXX Commissioner of Commercial Taxes' 6. My understanding of the Scheme of expedited assessment is a .....

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..... he act and also the circular instructions of the commissioner of Commercial Taxes, Chennai are not fulfilled by the dealers. Hence they are not eligible to be assessed under section 12 (c) of the Act' 11. It is not disputed that the dealer in this case has commenced business in October, 2005, as rightly stated by the Assessing Authority. Thus clause (6) under Rule 15 (5-E), that excludes assessments for the first or last year of business from the scheme of a 12 C assessment, will be attracted in the present case. The rejection by the Assessing Authority for the request to complete the assessment under Section 12 C for the period 2004-05 is thus in order. 12. However as far as the period 2005-06 is concerned, the position is different. The request of the petitioner to complete the assessment under Section 12 C has been dealt with by the Assessing Authority in the following terms: 'Request to complete the assessment under Sec.12-C In this case, the business premises of the dealers was inspected by the Enforcement wing officers on 27.7.05 and they noticed that the supply of 'clean Room Equipment' was reported under Work Contract and paid tax @ 4% instead of 20% and tax .....

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..... hority on 30.10.2019 at 10.30. a.m.. No further notice need be issued in this regard. The Assessing Authority shall after hearing the petitioner and considering all materials that may be placed by it, pass orders of assessment de novo and on merits within a period of four (4) weeks from date of conclusion of personal hearing. 18. These Writ Petitions are allowed in the aforesaid terms. W.P.Nos.11364 to 11366 of 2007: 19. These Writ Petitions relate to the assessment periods 2002-03, 2003- 04 and 2004-05. Orders of assessment dated 27.02.2007 are impugned in relation to assessment periods 2002-03 and 2003-04 and show cause notice dated 27.02.2007 for the period 2004-05. 20. Some dates are relevant in these matters. Pre-assessment notices for the periods 2002-03 and 2003-04 were issued on 31.08.2005 and the assessee filed its reply dated 15.11.2005. The question for determination is whether the provisions of Section 12C and the procedure for expedited assessment provided therein could also be sought by an assessee where there had been proceedings for assessment initiated even prior to 01.04.2006 The tenor of Section 12C, to my mind, appears to be that assessments in relation to the p .....

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..... nd reasonable doubt by the Assessing Authority, to enable him to take a view that the provisions of Section 12 C are inapplicable. 25. The allegation in the present cases is that the petitioner has disguised taxable transactions under central excise as branch transfers. The petitioner has admittedly carried on a consistent modus operandi of running its business. Branch transfers were being effected to its depot in Kerala from where they are sold to various entities including Henkal Spic India Ltd., a group concern. According to the Assessing Authority the quantity of the commodities transferred by the petitioner to the Kerala Depot and the sales effected by the Kerala Depot to other group concerns did not match, hence justifying the conclusion of suppression. In my considered view this argument prima facie, and by itself may not be the sole factor to determine the existence of suppression or otherwise. 26. A Division Bench of this Court in the case of State of Tamil Nadu V. Kalpana Lamp Components (Pvt.) Ltd. (T.C.Nos.548 and 549 of 1985 dated 24.01.2001), in this context, has stated as follows: 'Counsel contends that the numerical similarity in the quantity of the goods moved .....

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..... dismissed.' 27. While the Assessing Authority is always at liberty to establish the truth of the matter, the aspect of quantitative identity will not be the sole determinative factor in deciding upon the veracity of inter-branch transfers. Moreover, the assessee has also pointed out that even in the previous year i.e., for the period 2001-02, an identical query was raised by the Assessing Authority and a conclusion arrived at as in the present case. The order travelled in appeal to the first Appellate Authority, who concurred with the petitioners stand. This appellate order remains unchallenged. This position was brought to the notice of the Assessing Authority in the impugned proceedings who negates the same stating that each assessment is independent, and in relation to a different assessment period. Then again, the petitioner has also established by production of orders of assessment of the Kerala Unit that sales effected in Kerala have suffered tax in Kerala. The Assessing Authority has brushed aside this contention as well. Factually, the impugned orders of assessment do not set out a break-up in respect of the items transferred from the Madras unit which, in my view, is n .....

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..... f the periods 2002-03 and 2005-06 are placed on file to establish that identical claims of exemption have been made by the petitioner for the previous and later years and the Assessing Authority has, on an examination of relevant documents, accepted the claim for exemption. However, in the impugned order of assessment, while rejecting the claim, the Assessing Authority states as follows: 'As regards pre export sales the dealers filed xerox copy of the letter dt:20.08.2004 of Tvl.Knit Fab International (P) ltd, confirming the fact that they did not export cotton yarn purchased from the dealers and what they exported was cloth manufactured by them out of cotton yarn purchased from dealers (vide CST act 56). According to the clarification issued in Special Commissioner and Commissioner of Commercial Taxes, Chennai in Lr.No: Cell/IV/25577/2004 dt:29.11.06. If the cotton yarn purchased is converted into cloth and only if the latter is exported, the tax liability exists even as per the notifications issued in G.O. P.No:2398, Revenue Department dt:27.07.70. Hence the dealers are liable to pay tax @ 4% on ₹ 30,95,758.00 under the TNGST Act 1959.' 35. The Assessing Authority c .....

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