TaxTMI 
TaxTMI 
2011 (6) TMI 265
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....ction 5(1) pre-supposes foreign destination of the goods? (iii) If the answer to both the aforesaid questions is in the negative, whether on the facts and under the circumstances of the case the Tribunal was correct in upholding levy of interest under section 27(1) of the Delhi Sales Tax Act, 1957 read with section 9(2A) of the Central Sales Tax Act, 1956?" 2. The aforementioned questions of law arise in the background of the following facts :- 2.1 The assessee/dealer is engaged in the business of supplying meals, snacks and other eatables to foreign airlines in respect of flights operated by them from India. As per the case set up by the assessee/dealer before the authorities below, the eatables (hereinafter referred to as 'goods') supplied by it to the airlines were not to be consumed by passengers within the territory of India. The assessee/dealer in this behalf, amongst other documents, had relied upon a delivery order, which contained the following terms and conditions :- "1. The goods referred to in this Delivery Order are not meant for consumption in India. 2. This Delivery Order shall be proof of ownership of the goods refer....
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....ed as a local sale. Accordingly, the assessee was directed to pay sales tax at the rate of 7 per cent even in respect of this transaction. 4.1 Aggrieved by the order, the assessee/dealer carried the matter in appeal to the Dy. Commissioner (Appeals). The Dy. Commissioner (Appeals) passed two separate orders dated 4-10-1991 and 28-3-1994 in respect of the assessment year 1984-85 and assessment years 1985-86 to 1989-90 respectively. The Dy. Commissioner (Appeals) sustained the view taken by the Assessing Officer by a reasoned order. In coming to the conclusion, which he did, the Dy. Commissioner (Appeals) applied the ratio of the judgment of the Supreme Court in Burmah Shell Oil Storage & Distributing Co. of India Ltd. v. CTO [1960] 11 STC 764 and, that of the Andhra Pradesh High Court in the case of Fairmacs Trading Co. v. State of Andhra Pradesh [1975] 36 STC 260. 4.2 Being aggrieved, the assessee/dealer carried the matter in a further appeal to the Tribunal. The Tribunal by a common order dated 2-2-2001 dismissed the appeals, being six (6) in number, preferred by the assessee/dealer. The Tribunal for the reasons contained in the impugned judgment repelled the contention of the a....
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....rse of business (ii) be used as proof of possession or control of the goods (iii) authorize the possessor to transfer or receive the goods. 10. There is neither any averment nor any proof that the delivery order of the type pressed into service by the appellant is treated as proof of possession or control of goods in the ordinary course of business. There is no suggestion that the sale of foods item to airlines has a market where goods are freely bought and sold. Nor there is any suggestion that in the said market goods are bought and sold only on the basis of delivery or endorsement of delivery order. In fact, the food items are so specific to every airline or fight that there is no market as such. Had it been so there was no necessity to so provide by contractual stipulations in the form of the reverse of the so called delivery order. It has been stated in additional submission dated 22-11-1993 that food is not prepared not on general menu but according to the specific order and specification of individual airlines. The whole contract is a package deal for preparation and supply of food and catering and handling services. The contract involved both supply of good and other works....
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....ame to the conclusion that the assessee/dealer was liable to pay interest under section 27(1) of the Delhi Sales Tax Act, 1975 (hereinafter referred to as 'DST Act') on the ground that it would be difficult to say that the assessee/dealer had filed a true and complete return under a bona fide belief. The observations made in paragraph 22 being important for purposes of adjudication of the captioned reference are extracted hereinbelow :- "22. The appellant has created a set of documents and built up an ingenius argument thereon. The Bombay High Court case also relates to the appellant. There is no other dealer who has so convulated his transactions and raised such disputes. A copy of determination order dated 1-6-1977 in the case of M/s. East India Hotels Ltd. has been placed on the file wherein it was determined by the ld. CST that the supply of food items to British Airways for their international flights is not an export but a local sale. The appellant has improvised addition of a delivery order and modification of a few terms in an attempt to come over the effects of the determination and the Burmah Shell, which did not find favour at any stage....." 6. The assessee/dealer....
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....of the orders passed, the Assessing Officer had made any adverse comments on the return filed; the returns filed were acted upon and accepted; and finally there is no penalty imposed on the assessee, even as of today, on the ground of either having filed a false or a fraudulent return. In other words, it was submitted that, tax having been paid on the turnover disclosed in the return, no interest could be levied based on the assessed turnover. 8.2 In connection with the above, the learned counsel took us through the scheme of the Act and in particular referred to the following provisions, apart from provisions of sections 27(1) and 21(3), to establish the sustainability of his arguments. The provisions referred to were: section 25, which relates to payment and recovery of tax; section 55 which pertains to imposition of penalty, inter alia, for failure to pay tax under section 21(3); section 56(1) which relates to penalty for concealment or furnishing inaccurate particulars; and lastly, section 50(f) which provides that furnishing false return would be construed as an offence. 8.3 According to Mr. Syali, non-payment of tax as per the return filed by the assessee would lead to impo....
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....4 (SC); and (iii) Maruti Wire Industries (P.) Ltd. v. STO [2001] 3 SCC 735. 8.7 In addition to the above, the learned counsel also submitted that the Bombay High Court by an interim order dated 5-12-1988 passed in WP(C) No. 2939/1988, (which as noticed hereinabove, was finally disposed of on 9-10-2003) directed stay on collection and recovery of tax from the assessee/dealer, in respect of flight kitchen sales, pursuant to assessment orders dated 19-11-1987 and 4-1-1988, and also with regard to levy and collection of tax on assessee/dealer's flight kitchen sales to foreign airlines. The learned counsel submitted that the interim protection continued till 9-10-2003 when, final judgment in the matter was delivered by the Bombay High Court. It was contended that since the dismissal of the writ petition by the Bombay High Court, the assessee has been paying local Sales Tax with effect from January, 2004 even on flight kitchen sales made to foreign airlines. This position according to the learned counsel obtains even with respect to tax imposed pursuant to the aforementioned assessment orders. 9. As against this, Mr. Bhatia who appeared for the revenue submitted that the question t....
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....thout wilfully omitting or withholding any particular information which has a bearing on the assessment of tax, which he honestly believes to be 'correct and complete', it would be difficult to hold that the dealer had not acted bona fide in depositing the tax due on that information before the submission of the return." [Emphasis supplied] 9.1 Relying upon the aforesaid observation, Mr. Bhatia thus contended that it could not be said that in the instant case the assessee/dealer had filed a true and correct return if regard is had to the following facts :- (i) by an order dated 1-6-1977, the Commissioner of Sales Tax in the case of East India Hotels had rendered an advance ruling holding supply of food items by East India Hotels to British Airways Plc was a local sale and not a sale in the course of export; (ii) the assessee itself had been paying tax on such sales to Airlines upto assessment year 1984-85; and (iii) the assessee in order to give the transaction a colour of an export sale contrived a delivery order knowing fully well that the transaction in issue was otherwise a local sale. 9.2 In support of the aforementioned contentions, the....
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.... furnish along with the return a receipt from such Treasury or bank showing the payment of such amount." [Emphasis supplied] "21(5). Every return under this section shall be signed and verified ..." 10.4 At this juncture, it may also be relevant to refer to Rule 21(1). The said Rule reads as follows :- "Every registered dealer shall furnish returns in Form ST-11 quarterly, within thirty days from the expiry of each quarter:.." 10.5 Section 22 of the DST Act inter alia provides that no person who is not a registered dealer shall collect any amount by way of tax under the DST Act in respect of sale of goods by him in Delhi. Furthermore, a registered dealer is obliged to collect tax only in accordance with the provisions of the Act and the Rules contained there under. 10.6 Section 23 of the DST Act prescribes the mode and manner of the assessment. In particular, sub-section (2) of section 23 provides that if the Commissioner is satisfied that the returns furnished in respect of any period are "correct" and "complete", he shall assess the amount of "tax due" from the dealer on the basis of "such return". Sub-section (3)(a) provides that if the Commissioner is not satisfied that th....
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.... amount of tax due' from him under the DST Act in accordance with the provisions of sub-section (3) of section 21. A perusal of the provisions referred to above also shows that expression "tax due" and "such returns" are used by the legislature to ensure that the concerned assessee/ dealer files "such return" which is "complete" and "correct". A harmonious reading of provisions of sections 21(3), 23(2) and 27(1) make that abundantly clear. 11.1 The issue which thus arises for consideration is whether the full amount of tax due from the dealer (i.e., the assessee) according to "such return" would mean any and every return filed by the assessee. 11.2 The liability to pay interest under section 27(1) of the DST gets triggered immediately upon the failure of the dealer to pay tax due in accordance with such return under the provisions of sub-section (3) of section 21. It is the contention of the learned counsel for the assessee that section 27(1) will get triggered only if tax is not paid by the assessee/dealer in accordance with turnover disclosed in the return. This argument is buttressed with the submission that there was no finding that the return contained false or incomplet....
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.... Tax on 1-6-1977, in the case of East India Hotel Ltd., and the fact that uptill assessment year 1984-85, the assessee had included flight kitchen sales as part of its turnover, and consequently, paid local sales tax on even this part of the transaction. 13.1 Therefore, the mere fact that the assessee/dealer configured a delivery order (which was a document generated inter-parties only with a view to exclude the flight kitchen sales made to airlines from gross turnover) would not have us hold that the assessee/dealer furnished full, correct and complete particulars in the return filed for the assessment years in issue. This could not have been more starkly brought out than by the observation made by a Division Bench of the Bombay High Court in the assessee/dealer's own case [i.e., Narang Hotels & Resorts (P.) Ltd. (supra)] in paragraphs 110, 111, 112, 113 and 114. Some of these observations, being pertinent, are extracted hereinbelow: "110. Having said so, let us turn to another condition, namely, condition No. 5, which reads as under : "5. Notwithstanding the goods referred to herein being damaged and/or destroyed the consignee shall be liable to make payment for the same t....
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....bling the consignor to claim damages even if goods are deteriorated in quality due to delay in taking delivery unless there is some other hidden contract between the parties. 113. We may at this stage observe as stated hereinabove that in the instant case, the deed of contract between the parties is not on record. The original terms and conditions of contract are also not on record. The facts clearly reveal that prior to the impugned transactions of sale the petitioners were treating the transaction of sales between them and the foreign airlines as the local transactions falling within the sweep of the BST Act and they were paying sales tax on sales effect in favour of foreign airlines. It is not possible for us to conceive that there may not be a written contract between the parties specifying the terms and conditions of the contract. It appears that subsequently, tailor-made terms and conditions of the contract were prepared and got printed on the back of the delivery order so as to bring the transactions of sale within the purview of section 5(1) of the CST Act. As a matter of fact, condition Nos. 4 and 5 do suggest existence of written contract between the parties other than t....
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....livery order was not a document of title, the imposition of interest had to logically follow as a matter of course. It is for this very reason that the assessee sought to argue (as noticed in paragraph 22 of the impugned judgment) that the matter in issue was debatable and hence interest ought not be levied. In our view, the issue whether flight kitchen sales made to foreign airlines were local sales; was not an issue which was debatable. The failure of the assessee/dealer to include turnover relatable to the said transactions in its gross turnover, in the return filed, rendered it incomplete, incorrect and untrue. The necessary consequences of which, in our opinion, would be that the full amount of tax due as per section 27 read with section 21(3) of the DST Act having not being paid, interest would have to be imposed (See observations made in paragraph 11 of Calcutta Jute Mfg. Co.'s case (supra). Thus the principle laid down in Pratibha Processor's case (supra) and Bhai Jaspal Singh's case (supra) is not applicable in the given fact situation. 14. The Supreme Court in the case of Calcutta Jute Mfg. Co. (supra) considered a similar situation. The brief facts of the ca....
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.... of the tax payable" after furnishing a return referred to in section 10 of the Act within the prescribed date. Two obligations are thus implied therein as for a dealer. First is that he should have furnished a return within the prescribed date in accordance with the terms referred to in section 10. Second is that he should make full payment of the tax payable under law. Sub-section (1) operates in the case of a dealer who had performed the first obligation but failed to perform the second obligation. On the other hand sub-section (2) would operate in a case where the dealer failed to discharge the first obligation mentioned above. 7. So the initial aspect to be considered is whether the first obligation has been discharged by the appellants. If a dealer has furnished only a truncated return that cannot be regarded as furnishing the return referred to in section 10. It must be the full and accurate return. If a dealer makes just a statement by calling it a return it cannot be regarded as the return referred to in section 10 of the Act. It is a different matter if the dealer would have committed some marginal errors in the return or there were some mistakes of a minor nature. 8. H....
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....he dealers were justified in excluding the freight charges from sale price. It was for that reason the Constitution Bench refrained from mulcting the taxpayer with liability to pay interest additionally. Appellants in these cases have never disputed that they are liable to pay tax on the turnover under section 6B of the Act even while they focussed on the vires of that provision." 15. On a reading of judgment of the Supreme Court in Calcutta Jute Mfg. Co.'s case (supra), it is quite clear that any and every challenge to the imposition of tax cannot bring the dispute into an arena of a debatable issue. Each case, as is observed, hereinabove by us, will turn on its own facts. In the instant case, as noticed by us hereinabove, the assessee was aware of not only the advance ruling rendered by the Commissioner of Sales Tax in the case of East India Hotels Ltd. but had also been paying local sales tax on flight kitchen sales made to foreign airlines till assessment year 1984-85. The fact that such sales were amenable to tax was also known to the petitioner in view of the principle laid down by the Supreme Court in the case of Burmah Shell Oil Storage & Distributing Co. of India Ltd.....