2010 (5) TMI 761 - HC - VAT and Sales Tax

Tribunal's Decision on Branch Transfers Disallowed under Sales Tax Acts Reversed

The court held that the Tribunal was not justified in upholding the disallowance of branch transfers under the Bombay Sales Tax Act when already allowed ... Whether upon a true and correct interpretation of section 55 of the Bombay Sales Tax Act, 1959, the Tribunal was justified in upholding the order of the first appellate authority in disallowing the claim of branch transfers of ₹ 60,45,032 which was already allowed under section 6A of the Central Sales Tax Act, 1956 when there was no appeal pending under the Central Sales Tax Act, 1956? Held that:- The legal question referred to this court is answered in the negative and against the Revenue. Issues Involved:1. Interpretation of Section 55 of the Bombay Sales Tax Act, 1959.2. Validity of disallowing the claim of branch transfers under the Bombay Sales Tax Act when already allowed under Section 6A of the Central Sales Tax Act, 1956.3. Jurisdiction and powers of authorities under the Central Sales Tax Act and the Bombay Sales Tax Act.4. Requirement of notice for reopening assessments under the Central Sales Tax Act.Detailed Analysis:1. Interpretation of Section 55 of the Bombay Sales Tax Act, 1959The primary issue was whether the Tribunal was justified in upholding the first appellate authority's order disallowing the claim of branch transfers of Rs. 60,45,032 under the Bombay Sales Tax Act, 1959, despite the same being allowed under Section 6A of the Central Sales Tax Act, 1956. The court noted that both Acts are distinct with separate rules and procedural aspects. The jurisdiction to determine the character of transactions is with the Central Government under the Central Sales Tax Act, 1956.2. Validity of Disallowing Branch TransfersThe applicant argued that once the branch transfers were allowed under the Central Sales Tax Act, the same could not be disallowed under the Bombay Sales Tax Act. The court cited the apex court's decision in Ashok Leyland Ltd. v. State of Tamil Nadu, which held that once the assessing authority accepts Form F and holds the transaction as a branch transfer, it is final and cannot be reopened under another statute. The court concluded that the Tribunal was not justified in upholding the order of the first appellate authority.3. Jurisdiction and Powers of AuthoritiesThe applicant contended that the jurisdiction to determine whether goods are sold in the State or dispatched outside is with the Central Government under the Central Sales Tax Act. The Revenue argued that the Deputy Commissioner had the powers to reopen the assessment under the provisions of Section 55 and 57 of the Bombay Sales Tax Act and Section 9 of the Central Sales Tax Act. However, the court emphasized that once the matter is settled under the Central Sales Tax Act, the authority does not have any powers under the State Act to reopen the same and impose penalty or tax.4. Requirement of Notice for Reopening AssessmentsThe applicant argued that the authority failed to issue any notice for reopening the assessment under the Central Sales Tax Act, making the proceedings illegal and void. The court referred to its earlier decision in K. Mohan & Co. (Exports) v. M.H. Vatnani, which held that notice is mandatory for reopening assessments. The court reiterated that without such notice, the reopening of the assessment cannot be sustained.Conclusions:The court concluded that the legal question referred was no longer res integra and had been settled by the apex court. The decision in Ashok Leyland Ltd. was directly applicable, establishing that the same cause of action cannot be punished under another enactment once settled under one. The court held that the Tribunal was not justified in upholding the disallowance of branch transfers under the Bombay Sales Tax Act when already allowed under the Central Sales Tax Act. The legal question was answered in the negative and against the Revenue, disposing of the reference with no order as to costs.