2015 (11) TMI 1320 - HC - VAT and Sales Tax

Court allows appeals, rejects tribunal opinion, grants benefit of unamended form for interstate sales

M/s. Classic Engineering Co., M/s. Jakson & Co., Nand Kishore & Co., Prem Oils, D.D. Sales Corporation, Murlidhar Vijay Kumar, Almex India Pvt Ltd Versus The Commissioner of Sales Tax

M/s. Classic Engineering Co., M/s. Jakson & Co., Nand Kishore & Co., Prem Oils, D.D. Sales Corporation, Murlidhar Vijay Kumar, Almex India Pvt Ltd Versus ... Issues Involved:1. Entitlement to the benefit of Form ST-35 for sales made outside Delhi.2. Legality of the levy of penalty and/or interest under Section 56 of the Delhi Sales Tax Act, 1975.3. Satisfaction of conditions for reopening under Section 24 of the Delhi Sales Tax Act, 1975.Issue-wise Detailed Analysis:Issue 1: Entitlement to the Benefit of Form ST-35 for Sales Made Outside DelhiThe court addressed whether the appellants were entitled to the benefit of Form ST-35 for inter-state sales, which resulted in the enhancement of their respective turnovers. The appellants argued that despite the amendment to Rule 11 (XXXIV) and (XXXIVA) with effect from 30th September 1999, the amended forms were not printed by the Department. Consequently, they continued using the unamended forms issued by the Department. The court observed that the Department's failure to print the amended forms meant the dealers could not be penalized for using the old forms. The court referred to the Supreme Court decision in *Polestar Electronics (P) Ltd. v. Additional Commissioner of Sales Tax*, which held that if the Department fails to issue amended forms, the dealers cannot be held liable for using the old forms. Therefore, the court concluded that the appellants were entitled to the benefit of the unamended Form ST-35 for sales made outside Delhi.Issue 2: Legality of the Levy of Penalty and/or Interest under Section 56 of the Delhi Sales Tax Act, 1975In light of the court's decision on the first issue, it was held that the majority opinion was in error in upholding the levy of interest and penalty under Section 56 of the DST Act. The court referred to the Supreme Court decision in *J.K. Synthetics Ltd and Birla Cement Works v. Commercial Taxes Officer and State of Rajasthan*, which held that if the original assessment is accepted and the dealer has paid tax in terms of that return, the levy of interest will not be justified. The court further noted that the imposition of penalty is not automatic, even assuming that the reassessment was justified. The dissenting opinion by one of the Tribunal members indicated that it was not a case of concealment of particulars but rather a possible interpretation in favor of the Assessee.Issue 3: Satisfaction of Conditions for Reopening under Section 24 of the Delhi Sales Tax Act, 1975The court examined whether the conditions for reopening the assessment under Section 24 of the DST Act were satisfied. It was noted that the order sheet did not record any reasons for reopening the assessment, nor was there any separate noting in the files indicating satisfaction by the Assessing Officer of no assessment or escapement of turnover. The court emphasized that the recording of reasons by the assessing authority before issuing a notice of reassessment under Section 24 is mandatory. The court referred to the decisions in *Samagya Consultants (P) Ltd. v. CST* and *Jagdish Cold Storage & Ice Factory v. The Commissioner of Sales Tax, Delhi*, which held that the violation of this requirement would invalidate the entire reassessment proceedings. Consequently, the court held that the conditions for reopening the assessment under Section 24 of the DST Act were not satisfied in the present cases.Conclusion:The appeals were allowed, and the majority opinion of the Tribunal dated 19th September 2012 was set aside. The court held that the appellants were entitled to the benefit of the unamended Form ST-35 for interstate sales, the levy of interest and penalty under Section 56 of the DST Act was not justified, and the conditions for reopening the assessment under Section 24 of the DST Act were not satisfied.