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TMI Blog2021 (9) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority' for short) in respect of tax period namely April 2006 to March 2007 and April 2007 to March 2008 passed under Section 39(1) of the Act and Section 9(2) of the Central Sales Tax Act, 1956 (hereinafter referred to as 'the 1956 Act', for short). By the said orders, the claim of the petitioner for exemption on 'sales in the course of imports' under Section 5 of the 1956 Act has been rejected and demand on account of Value Added Tax / Central Sales Tax has been raised on local / inter-state sales. 2. Facts leading to filing of this petition briefly stated are that the petitioner is engaged in the business of sale of desktops, work stations, note books and other information technology products. The petitioner caters directly to the customers. The process of import and sale of the products commences when a potential customer in India enquires about Dell products either online or through interactions with petitioner's sales representatives. On the basis of the enquiries and requirements of the customers, the petitioner raises a 'quotation' on the end customer containing the name of the customer, billing / shipping address, quotation date, quota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the meanwhile, the Assessing Authority initiated re-assessment proceedings and issued a revised proposition notices dated 20.04.2011 and 25.04.2011 under Section 39 of the Act and under Section 9(2) of the 1956 Act for the tax period April 2006 to March 2007 and from April 2007 to March 2008, respectively. The Assessing Authority relied upon inter-company purchase agreement between the petitioner and the DAP to propose denial of the claim for exemption on sales in the course of imports. The Commissioner of Commercial Taxes, by an order dated 19.7.2011 which was passed subsequent to issuance of proposition notice by the Assessing Authority, confirmed the order passed by the ACAR. However, liberty was granted to the Assessing Authority to verify the factual matrix to determine if there was any factual deviation so as to render the ruling of ACAR inapplicable. It is pertinent to note that the aforesaid order passed by the Commissioner has attained finality. 5. In response to the proposition notices dated 20.4.2011 and 25.4.2011, the petitioner filed replies on 22.7.2011 and 28.7.2011 in support of its claim for exemption on sales in the course of imports. The Assessing Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer that he has examined voluminous transaction to unearth different factual matrixes is factually incorrect. It is contended that inter-company purchase agreement is a framework agreement between the DAP and the petitioner which does not impose any obligation to buy and sell Dell products and the actual imports are not in pursuance of the aforesaid agreement but are occasioned from Malasyia on the basis of purchase order / quotation which constitute binding agreement to sell / contract for sale between the customer and the petitioner. It is also argued that the transactions are sales in the course of imports under Section 5(2) of the 1956 Act and it is not necessary that sale should precede import. Alternatively, it is submitted that the Tribunal being the last fact finding authority, ought to have recorded its independent findings and erred in accepting the orders passed by the Adjudicating Authority and the Appellate Authority. 8. It is further submitted that in any case Assessing Authority was under an obligation to examine each individual transaction rather than to decide the question of levy of tax on mere generalities. It is also pointed out that distributorship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ACAR till 31.03.2006 and in other States except Harayana and Karnataka, is paying tax. It is also urged that since the proceeding for re-assessment were initiated within the period of limitation, therefore, the question of same being barred by limitation does not arise. In support of aforesaid submission, reliance has been placed on the decisions of this Court in 'BUSINESS PROCESS OUTSOURCING (INDIA) PRIVATE LIMITED, BANGALORE' Vs. THE AUTHORITY FOR CLARIFICATION AND ADVANCE RULINGS, BANGALORE' (2004) 56 KLJ 397 (HC) and 'HEWLETT PACKARD FINANCIAL SERVICES INDIA PRIVATE LIMITED Vs. THE STATE OF KARNATAKA AND ORS.' LAWS (KAR) 2016 2146. 10. We have considered the submissions made on both sides and have perused the record. The questions of law which arise for consideration in this petition are as follows: (1) Whether advance ruling dated 31.03.2006 by the Authority for Clarification and Advance Ruling is without jurisdiction and non-est? (2) Whether there is any change in law or facts so as to render the ruling by the Authority for Clarification and Advance Ruling inapplicable? (3) Whether the re-assessment proceedings initiated against the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interest of the revenue, he may, if necessary, stay the operation of such order for such period as he deems fit and after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment or directing a fresh assessment." Thus, from perusal of the aforesaid relevant statutory provisions, it is evident that the order passed by the Authority is binding on all the Officers of the State Government other than the Commissioner. The Commissioner is not bound by the order passed by the ACAR as under Section 22-A(2) of the KST Act, he has been given the suo motu revisional powers to examine the validity of the order passed by ACAR on the ground that the same is erroneous insofar it is prejudicial to the interest of the revenue. 12. In the instant case, the petitioner had made an application to the Authority under Section 4 of the KST Act and advance ruling / clarification order was passed by the Authority on 24.08.2004 and it was inter alia held that Authority is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular transaction of it can be included in the taxable turnover under the KST Act? The Advance Ruling Authority relying on the observations made by a Division Bench of this Court in the case of Business Process Outsourcing (India) Private Limited -vs- Authority for Clarification and Advance Ruling STA No.63/2003 dated 10.3.2004, has concluded that it does not have the power to clarify a transaction, which would fall under the purview of the provisions of the CST Act. 10. At this stage, Sri. R.V. Prasad, learned Counsel very fairly would submit that without expressing any opinion on the merits or demerits of the case, he may be permitted to make an appropriate application before the authority for Clarification and Advance Ruling and further, requests this Court to direct the authority to pass an appropriate order, without being influenced by its earlier findings and conclusion. 11. Smt. Sujatha, learned Additional Government Advocate has no objection to the request made by Sri. R.V. Prasad, learned Counsel for the appellant company. 12. In view of the request made by the learned Counsel for the appellant company, in our opinion, we need not have to express any opini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction. The movement of goods from DAP is as a result of contract of sale by the customer with Dell India and terminates when the goods are delivered to the customer. As explained earlier, the whole transaction is "in the course of import" and it cannot be taxed under CST Act as well as under the provisions of KST Act. Therefore, to decide that a transactions is not exigible to tax under KST Act, it is necessary to discuss the provisions of CST Act 1956 in order to come to the conclusion that the purchases made by the dealer are "in the course of import" as falling u/s.5(2) of the CST Act. Hence the following Order: In the light of the above discussions this Authority rules that the purchases made by the dealer for delivery of goods to the customers are in the course of import and not exigible to tax under KST Act 1957. The turnover is not includible in the taxable turnover u/s 2(1)(u-1) of the KST Act 1957." xxxx 15. Thus, it is evident that the ACAR vide order dated 31.03.2006, has opined on the issue of applicability of the tax or otherwise on a transaction under KST Act and has not dealt with the issue under Section 5(2) of the Act. It is pertinent to not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under Section 38 or re assessment under Section 39 of an amount of tax due for any prescribed tax period shall not be made after the following time limits.- (a) five years after the end of the prescribed tax period; or (b) three years after evidence of facts, sufficient in the opinion of the prescribed authority to justify making of the re assessment, comes to its knowledge, whichever is later. (2) If any tax is, not paid by a dealer who has failed to get registered under Section 79, an assessment or re-assessment may be made as if in sub-section (1), reference to five years was a reference to ten years. (3) In computing the period of limitation specified for assessment or re-assessment, as the case may be under this Act, the period taken for disposal of any appeal against an assessment or other proceeding by the appellate authority, a tribunal or competent court shall not be taken into account in computing such period for assessment or reassessment as the case may be." Section 40 of the Act was amended by an amending Act No.17 of 2012 w.e.f. 01.04.2012 and the period of re assessment was enlarged to 5 years and the time limit for re assessment for any ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not paid by a dealer who has failed to get registered though liable to do so or fraudulently evaded attracting punishment under Section 79, an assessment or reassessment may be made within eight years from the end of the prescribed tax period. Provided that an assessment or reassessment relating to any tax period upto the period ending 31st day of March, 2007 shall be made under this sub-section within a period of ten years after the end of the prescribed tax period. (3) In computing the period of limitation specified for assessment or re-assessment, as the case may be under this Act, the period taken for disposal of any appeal against an assessment or other proceeding by the appellate authority, a tribunal or competent court shall not be taken into account in computing such period for assessment or reassessment as the case may be." 18. The dispute in this petition pertains to tax periods April 2006 to March 2008 and as on the date of re assessment, the time limit for re-assessment for the disputed period was as under: Tax period Period of limitation Due date for completion of re-assessment April 2006 to March 2007 5 years April 2011 to March 2012 April 2007 to Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Authority. The Tribunal which is the final fact finding Authority ought to have recorded its independent findings with regard to nature of transactions in question. However, on careful scrutiny of the order, it is evident that the Tribunal has failed to do so and has affirmed the orders passed by the Appellate Authority and the Assessing Authority. Since the adjudication of the nature of transaction involves factual adjudication, therefore, we deem it appropriate to remit the matter to the Adjudicating Authority in respect of the transactions beyond March 2007 and March 2008 as the transactions for a period between April 2006 to March 2007 and April 2007 to March 2008 have become final and the re-assessment proceedings cannot be initiated in respect of the transactions between the period from April 2006 to March 2007 and April 2007 to March 2008. Therefore, the fourth question of law is answered accordingly. 20. For the aforementioned reasons, it is evident that the Tribunal has decided the questions of law erroneously and the order passed by the Tribunal as well as the Authorities under the Act cannot be sustained. 21. In the result, the orders passed by the Assessing Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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