TaxTMI 
TaxTMI 
1997 (2) TMI 451
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.....K. Mani and R.L. Ramani, Advocates, for the appellants in other civil appeals. B.A. Mohanty, Senior Advocate (Ms. Kirti Misra, Advocate, with him), for the State of Orissa. G. Prakash and Mrs. Bina Prakash, Advocates, for the State of Kerala. P. Mahale, Advocate, for the State of Karnataka. D.S. Mehra and V.K. Varma, Advocates, for the Union of India. V.N. Ganpule, Senior Advocate (S.M. Jadhav, Advocate, with him), for the State of Maharashtra. Senior Advocates: A.S. Nambiar, A.K. Ganguli and K.N. Shukla for the parties. Satish K. Agnihotri, Advocate, for the State of Madhya Pradesh. Other Advocates: P.K. Manohar, Yashank, Niti Singh, M. Mannan, V.G. Pragasam, Niraj Sharma, C. Natarajan, Shanta Kumar and Ms. Binu Tamta for the parties. -------------------------------------------------- The judgment of the Court was delivered by B.P. JEEVAN REDDY, J.-Leave granted. 2.. Ashok Leyland Limited, the appellant herein Though several other dealers are the petitioners/appellants herein, we shall refer to Ashok Leyland as a representative dealer. The discussion and directions made in this....
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....adu is to treat the said movement of vehicles as inter-State sales and tax them which would ultimately go back to that State by virtue of the provisions contained in articles 269 and 286 of the Constitution and the Central Sales Tax Act. The appellant says that it did not effect any inter-State sales and that there was only one sale in the other State which has already been taxed under the sales tax law of that other State. The appellant complains that the same transaction cannot be taxed twice, once as an intra-State sale by one State and again by the State of Tamil Nadu as an inter-State sale. The appellant complains that the reopening of assessments- in some cases, even the reassessment has been made and Central sales tax levied- and taxing the same transaction once again (by the State of Tamil Nadu) is causing serious harassment to the appellant, making it impossible for it to carry on its business operations in a smooth and orderly manner. It approached the Madras High Court with the said grievance. Though a number of factual issues were also raised in the writ petitions filed by the appellant, it was stated by their counsel at the time of hearing that they do not propose to i....
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....cannot be defeated by resorting to the power of reopening conferred upon the authorities by section 16 of the Tamil Nadu General Sales Tax Act read with section 9(2) of the Central Sales Tax Act. The order accepting form "F" as true cannot also be reopened for the reason that such order of acceptance gives rise to certain consequences which cannot be rectified even if the order accepting form "F" is reopened and revised. The vehicles have been transferred/consigned to the appellant's R.S.Os., in various States which R.S.Os. have issued forms "F" in that behalf and which, on being produced by the appellant before its assessing authority, have been accepted as true. This means that the sale of the said vehicles in the other State is an intra-State sale in that State and has in fact been taxed as such. Now if the Tamil Nadu sales tax authorities propose to reopen the said orders accepting the said forms "F" and levy Central sales tax treating the said movement of vehicles to other States as inter-State sales, the consequence would be that though there is only one sale, it is being taxed by two different States under two different enactments. This cannot be. The show cause notices issu....
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....hicles is in pursuance of or is an incident of a contract of sale. (4) Section 4 of the Central Sales Tax Act provides clearly that (a) in the case of specific or ascertained goods, the sale of goods shall be deemed to take place inside a State if the goods are within that State at the time of the contract of sale and (b) in the case of unascertained or future goods, the sale of goods should be deemed to take place inside a State when the goods are appropriated to the contract of sale by the seller or by the buyer, whether the assent of the other party is prior or subsequent to such appropriation. This principle is at variance with the general principle contained in the Sale of Goods Act. It must, therefore, be held that sale of vehicles takes place only when they are appropriated towards their order and the appropriation is only when the vehicles are earmarked for delivery to the S.T.Us. The vehicles so appropriated are always in the State to the S.T.U. of which the vehicles are earmarked and delivered. (5) In the absence of any Central machinery which can decide disputes between the States, viz., where one State claims that a particular transaction is an inter-State sale an....
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....sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce", among other taxes, shall be levied and collected by the Government of India but shall be assigned to the States in the manner provided in clause (2) of the said article [vide article 269(1)(g)]. "Taxes on the consignment of goods (whether the consignment is to the person making it or to any other person) where such consignment takes place in the course of inter-State trade or commerce" is one of the taxes mentioned in clause (1) of article 269. The power to levy consignment tax, however, is conferred upon the Parliament by virtue of entry 92B of the Union List. So far no such tax has been levied by the Parliament. Clause (2) of article 269 provides that the net proceeds in any financial year of any duty or tax mentioned in clause (1) shall not form part of the Consolidated Fund of India but shall be assigned to the States within which that duty or tax is leviable in that year and that the same shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law. Clause (3) further pr....
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....lace of business or by his agent or principal, as the case may be, containing the prescribed particulars, along with the evidence of despatch of such goods. Forms "F" have to be obtained from the prescribed authority. The section further provides that if the assessing authority is satisfied after such enquiry as he may deem necessary, that the particulars contained in the declaration furnished by the dealer are true, he may, at the time of or at any time before the assessment of the tax payable by the dealer under the Central Sales Tax Act, make an order to that effect. Thereupon, the movement of goods to which the declaration relates shall be deemed, for the purpose of this Act, to have been occasioned otherwise than as a result of sale. It would be appropriate to set out the section in its entirety: "6-A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale.-(1) Where any dealer claims that he is not liable to pay tax under this Act, in respect of any goods, on the ground that the movement of such goods from one State to another was occasioned by reason of transfer of such goods by him to any other place of his business or to his agent or ....
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....eferred to in sub-section (1) of section 6-A shall be in form "F". Sub-rule (6) says that form "F" referred to in sub-rule (5) of rule 12, shall be the one obtained by the transferee in the State in which the goods covered by such form are delivered. Sub-rule (7) says that the declaration in form "F" shall be furnished by the dealer to the prescribed authority up to the time of assessment by the first assessing authority. Clause (a) of sub-rule (8) says that only the person referred to in rule 3(1)(a) shall be competent to sign the declaration/form "F". The Rules also prescribe the form in which form "F" shall be issued. It is in triplicate. It is issued by the prescribed authority and contains his seal. It has to be signed by the transferee and is addressed to the transferor affirming that "the goods transferred to me/us as per details below have been received and duly accounted for". The person signing it is obligated to mention his status in relation to the transferor. In other words, form "F" in the case before us has to be issued by the person in-charge of the R.S.O. receiving the vehicles from Tamil Nadu-and sent to the appellant. The appellant, in turn, has to produce the....
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....thority made under the provisions specified therein. This power can be exercised suo motu and only where the order is prejudicial to the interests of Revenue. This power has also to be exercised within five years from the date of the order proposed to be revised. The contentions urged by Sri Parasaran have to be examined in the light of the above provisions of law and certain decisions, to which he has invited our attention. 12.. We find it difficult to agree with Sri Parasaran that section 6-A creates a conclusive presumption. It is true that if the particulars stated in the declaration/ form "F" are found to be true, the assessing authority shall pass an order, either at the time of making of the assessment or at any time before, that the contents of form "F" are accepted as true. On such order being made, it shall be deemed that the movement of goods to which the form relates has been occasioned otherwise than as a result of sale. But there are no words in section 6-A which can be said to create a conclusive presumption or clothe the "deemed" fact with a conclusive character. All that it says is that if the particulars stated in form "F" are true, certain fact shall....
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....ntention. The first decision relied upon is in Izhar Ahmed Khan v. Union of India (1962) Suppl 3 SCR 235, which dealt, inter alia, with section 9 of the Citizenship Act, 1955. Sub-section (1) of section 9 provides that if any citizen of India voluntarily acquires citizenship of another country, he shall cease to be a citizen of India with effect from the date of such acquisition. Sub-section (2) says that if any question arises as to whether, when or how any person has acquired citizenship of another country, it shall be determined by such authority in such manner and having regard to such rules of evidence as may be prescribed in that behalf. Rule 30 of the Rules framed under the Act prescribes Central Government as the authority to decide the said question while rule 3 incorporates a conclusive presumption. According to it, "the fact that a citizen of India has obtained on any date a passport from the Government of any other country shall be conclusive proof of his having voluntarily acquired the citizenship of the country before that date". The petitioners challenged the validity of rule 3 saying that rule 3 was not a mere rule of evidence but a rule of substantive law and, ther....
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....barrier before his exit from the State, failing which it shall be presumed that the goods carried thereby have been sold within the State by the owner or person-in-charge of the vehicle". It is relevant to notice that the said provision did not create a conclusive presumption but only a rebuttable presumption of law. Since the said provision did not create a conclusive presumption but permitted the person concerned to rebut the said presumption by such evidence, as he may place before the authority, the validity of the said provision was held to be beyond challenge. This decision, in our opinion, is equally of no help to the appellant herein. 16.. Sri Parasaran then relied upon the decision in Balabhagas Hulaschand v. State of Orissa [1976] 37 STC 207 (SC). At page 214, Fazal Ali, J., set out certain situations to illustrate when does an inter-State sale take place or for that matter it does not. Case No. II reads thus: "Case No. II.-A, who is a dealer in State X, agrees to sell goods to B but he books the goods from State X to State Y in his own name and his agent in State Y receives the goods on behalf of A. Thereafter the goods are delivered to B in State Y and if B acc....
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....Hyderabad as the result of a covenant in the contract of sale or an incident of that contract that the goods manufactured at Hyderabad according to the specifications stipulated by the buyer should be the very goods delivered to him outside the State." 18.. Indeed, the decision in Sahney Steel and Press [1985] 60 STC 301 (SC), is precisely, what the Tamil Nadu State says is, the factual position in cases where notices to reopen the assessments have been given. The facts of Sahney Steel and Press [1985] 60 STC 301 (SC) are the following: The petitioner- company was engaged in the manufacture and sale of certain steel products which were utilised as raw-material for making electronic motors, transformers, etc. The petitioner's registered office and factory was at Hyderabad in Andhra Pradesh. It had branches in Bombay, Calcutta and Coimbatore which were engaged in effecting sales and looking after sales promotion and liaison work. The branches received orders from customers within and outside their respective States for the supply of goods conforming to definite specifications and drawings and advised the registered office at Hyderabad. The petitioner thereupon manufactured the goo....
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....equently found to have issued form III-A wrongly does not confer upon the assessing authority the jurisdiction to reopen the assessment of the selling dealer. The principle of this decision, we find, has no analogy to the situation in the appeals before us. 20.. We are, therefore, of the opinion that section 6-A does not create a conclusive presumption and that an order accepting form "F", whether passed during the assessment or at any point earlier thereto, is ultimately a part and parcel of the order of assessment. Its amenability to power of reopening and revision depends upon the provisions of the concerned State sales tax enactment by virtue of section 9(2). It is also not possible to agree that an order under section 6-A(2) has an independent existence. It does not have. An order refusing to accept form "F" may or may not be appealable independently depending upon the provisions of the local sales tax enactment but it is certainly capable of being questioned in the appeal preferred against the order of assessment-for the simple reason that an order accepting or rejecting form "F" does affect the quantum of turnover taxable under the Act. So far as the power of reopening is....
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....ed. This sale, according to the learned counsel, has taken place in the other State. May be or may not be. According to the respondents, the sale that has taken place is an inter-State sale. This is yet again a question of fact. 22.. Having thus disposed of the main contentions of the appellant, we must yet say that the situation the appellant is facing is no doubt real, which may indeed put it in good amount of jeopardy. If the vehicles which have been sold to, say, Maharashtra S.T.U. have been moved to the appellant's R.S.O. in Maharashtra and that R.S.O. has issued form "F" (which form "F" has been accepted by the Tamil Nadu authorities during the course of assessment of the appellant for the relevant assessment year) reopening the said assessment/orders accepting forms "F" after a number of years, seeking to treat the said movement of goods as consequent upon or incidental to contract(s) of sale (and, therefore, amounting to inter-State sale taxable in the State of Tamil Nadu) does present the appellant with a serious problem inasmuch as it says that it has already paid tax on sale of said vehicles in Maharashtra under the Bombay Sales Tax Act. Sri Parasaran submits that unl....
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....ashtra authorities. The law as now in force does not appear to permit such a course more particularly in a situation where the orders of Maharashtra sales tax authorities have become final, as stated above. The Maharashtra authorities may well refuse to appear before the Tamil Nadu authorities. They may not accept the jurisdiction of Tamil Nadu authorities over them or over the orders passed by them. They may also refuse to submit to the jurisdiction of the Tamil Nadu authorities. In this aspect, we must, however, notice an observation in a recent decision of this Court in Bharat Heavy Electricals Limited v. Union of India [1996] 102 STC 373; (1996) 4 SCC 230, wherein the following observation occurs at page 383 of STC (page 239 of SCC): "If a dispute arises in which State is the tax lawfully leviable, the authorities under the Act have got to decide it. If, in a given case, an assessee says that the particular transaction which is sought to be taxed in State 'A' has already been taxed in State 'B', nothing prevents him from impleading the State 'B' in proceedings in State 'A' and have the matter decided in the presence of all parties. It must be remembered that while acting und....
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....ecide the matters before them. Thereafter, if the orders are against the appellant, we permit the appellant to file the appeal(s) directly before the Tribunal. If the Tribunal decides in favour of the appellant, no further question would arise. But if it decides against the appellant, to wit, if it holds that the sale of vehicles to the S.T.Us. of various States are inter-State sales and if it is found that those very transactions have also been taxed as intra-State sales under the State sales tax enactments of another State, that would be the stage for considering the advisability of giving appropriate directions of the nature contemplated above by this Court- that is, of course, if by that time, no Central mechanism to meet such a situation comes into existence. 24.. In the interest of inter-State trade and commerce, the suggestion for creation of a Central mechanism to decide such disputes-which are really in the nature of inter-State disputes-may be well worth considering; every dealer affected may not be in a position to approach this Court for appropriate directions. It is for the Government of India to consider this aspect and take necessary decision in that behalf. 25....