2016 (7) TMI 856 - HC - VAT and Sales Tax

Court sets aside assessment order for 2004-05, emphasizing proper examination of Form F Declarations.

The court set aside the assessment order for the assessment year 2004-05 under the Central Sales Tax Act, 1956 and the Tamil Nadu General Sales Tax Act, ... Interstate sale or stock transfer - Claim for exemption on consignment sale and stock transfer - though it is supported by Form F Declarations, the claim was found not in order for the reason that the goods have been sold on the very next day and therefore, the first respondent proceeded to disbelieve the transaction as one between principal and agent, but as a transaction between a seller and a buyer - Held that:- the first respondent has not conducted the enquiry as required to be done and as explained by the Hon'ble Division Bench of this Court in the decision in [1994 (9) TMI 326 - MADRAS HIGH COURT]. Therefore, on this ground, the impugned order is liable to be set aside. - Matter remanded back. Issues:Challenge to assessment order for the assessment year 2004-05 under the Central Sales Tax Act, 1956 and the Tamil Nadu General Sales Tax Act, 1959.Analysis:The petitioner, a registered dealer in hosiery garments, contested an assessment order dated 26.2.2007 for the assessment year 2004-05. The assessment scrutinized the petitioner's purchases of hosiery materials, stock transfers, consignment sales, and pre-export sales. The claim for exemption on pre-export sales was accepted, supported by Form H and other evidence under Section 5(3) of the Act. However, the exemption claim for consignment sales and stock transfers was partially allowed, with a portion of the claim disbelieved due to quick subsequent sales, leading to the assessment order.The crux of the issue revolved around the examination of Form F Declarations filed by the dealer. The court emphasized that extraneous reasons should not influence the assessment of Form F Declarations. Referring to the decision in A.Dhandapani Vs. State of Tamil Nadu, the court outlined the limited scope of inquiry under Section 6A(2) of the Act. The court stressed that the authority must focus on verifying the truth of particulars in Form F, considering additional evidence provided by the dealer, and could request further information to ascertain the accuracy of the declaration.The court highlighted the failure of the first respondent to conduct the necessary inquiry as directed by previous judgments, notably the decision in A.Dhandapani Vs. State of Tamil Nadu. Due to this lapse, the court ruled to set aside the impugned assessment order and remit the matter back to the first respondent for a proper examination under Section 6A(2) of the Act, following due notice and providing an opportunity for a personal hearing. The court allowed the writ petition, with no costs incurred in the process.