Natural justice in reassessment and stock transfer treatment: site-to-site movement of machinery was not a taxable sale on the facts.
Reassessment after remand must comply with the remand directions and natural justice, including effective notice, disclosure of relied-upon materials, consideration of objections, and a meaningful personal hearing; failure to follow that procedure renders the reassessment unsustainable. The text also states that movement of machinery and equipment between project sites during execution of the same infrastructure project does not amount to a taxable sale where there is no transfer of property between different persons, and the internal transfer character is shown by the same entity acting as transferor and consignee. On those facts, Form F was not mandatory to establish stock transfer treatment.
Issues: (i) Whether the reassessment orders were vitiated for breach of natural justice in not affording an effective opportunity of personal hearing after remand. (ii) Whether transfer of machinery and equipment from one project site to another in the course of infrastructure execution amounted to taxable sale or transfer of property, and whether Form F was mandatory to support the claim of stock transfer.
Issue (i): Whether the reassessment orders were vitiated for breach of natural justice in not affording an effective opportunity of personal hearing after remand.
Analysis: The record showed that the notice fixing the hearing was received only after the scheduled time had passed, and the dealer had promptly intimated the authority seeking postponement. The remand order had specifically required the authority to furnish relied upon materials, receive objections, and then grant a personal hearing. The impugned orders did not deal with the dealer's communication or the late service of notice, and the directed procedure was not followed in substance.
Conclusion: The reassessment orders were liable to be set aside for breach of natural justice.
Issue (ii): Whether transfer of machinery and equipment from one project site to another in the course of infrastructure execution amounted to taxable sale or transfer of property, and whether Form F was mandatory to support the claim of stock transfer.
Analysis: The movement of machinery between sites was in the course of executing the same project and did not involve transfer of property from one person to another. The same entity was shown as the transferor and consignee, so the transaction retained the character of internal movement of goods rather than sale. On this footing, the absence of Form F was not decisive, because the transaction itself did not attract sale tax treatment on the facts found.
Conclusion: The transfer did not constitute a taxable sale and Form F was not mandatory on the facts of the case.
Final Conclusion: The assessment orders could not be sustained either for want of a valid hearing or on the merits of the alleged taxable transfer, and the writ petitions succeeded.
Ratio Decidendi: A reassessment order must comply with the specific remand directions and the requirements of natural justice, and mere movement of goods between sites by the same entity in execution of a project does not amount to a taxable sale or transfer of property absent an inter-person transfer.
TaxTMI 
AI Drafter ✕
TaxTMI 
