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of <h1>Court upholds assessment orders under TNGST Act for non-compliance with rules and del credere agreement</h1> <h3>M/s. Chennai Polymers (P) Ltd. Versus The Commercial Tax Officer</h3> M/s. Chennai Polymers (P) Ltd. Versus The Commercial Tax Officer - TMI Issues Involved:1. Legality of the assessment orders under the Tamil Nadu General Sales Tax Act (TNGST Act) for the assessment years 2000-2001 and 2001-2002.2. Validity of the show cause notices issued to the petitioner.3. Petitioner's compliance with Rule 26(6)(a) and (b) of the TNGST Rules, 1959.4. Nature of the relationship between the petitioner and M/s. Haldia Petrochemicals Limited.5. Petitioner's liability for the tax and penalties imposed.Detailed Analysis:1. Legality of the assessment orders under the TNGST Act:The petitioner, a trader in plastic raw materials, challenged the assessment orders for the years 2000-2001 and 2001-2002. The court noted that the petitioner did not avail the alternative remedy of appeal and had approached the court directly. Despite this, the court proceeded to hear the matter on merits due to the long pendency of the writ petitions since 2004.2. Validity of the show cause notices:The petitioner argued that the show cause notices were vague, inconsistent, and issued with a closed mind. The court, however, found that the notices were clear and cogent, and that the petitioner had not raised these objections in their initial reply. The court referenced the Supreme Court's decision in Oryx Fisheries Private Limited v. Union of India, distinguishing it on the facts and holding that the notices were proper.3. Petitioner's compliance with Rule 26(6)(a) and (b) of the TNGST Rules, 1959:The court found that the petitioner, as a del credere agent, failed to comply with Rule 26(6)(a) and (b) of the TNGST Rules. The petitioner admitted to handling the goods, but failed to maintain and furnish the required records. The court held that the petitioner could not escape liability by claiming they did not handle the goods.4. Nature of the relationship between the petitioner and M/s. Haldia Petrochemicals Limited:The court examined the del credere agency agreement and concluded that the relationship between the petitioner and M/s. Haldia Petrochemicals Limited was on a principal-to-principal basis, not an agency basis. The court referenced the decision in Parikh Metal Corporation v. The Commercial Tax Officer, which supported this interpretation.5. Petitioner's liability for the tax and penalties imposed:The court found that the petitioner was liable for the taxes and penalties as they had domain over the goods and failed to prove the existence of the buyer, M/s. Nandhini Polymers. The court noted that the petitioner had breached the terms of the del credere agreement by not ascertaining the financial status of the buyer and not complying with statutory requirements.Conclusion:The court dismissed the writ petitions, affirming the impugned assessment orders and holding that the petitioner had not made out any case for interference. The court found that the show cause notices were proper, and the petitioner was liable for the taxes and penalties due to their failure to comply with statutory requirements and the terms of the del credere agreement.
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