AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2008 (1) TMI 835
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....of the Central Sales Tax Act, 1956? (iii) Whether, in the facts and circumstances of the case, the assessing officer is not justified to impose penalty under section 12(8) of the Orissa Sales Tax Act? The background in which this tax revision case has been filed is as follows: The petitioner in this case is one Voltas Limited (hereinafter called, "the dealer") registered under the Orissa Sales Tax Act, 1947 (hereinafter referred to as, "the OST Act") and under the Central Sales Tax Act, 1956 (hereinafter referred to as, "the CST Act"). It is engaged in different activities inside the State of Orissa. During the year 1993-94 the dealer supplied six circulating water pumps to OPGC on the basis of a contract entered into between the dealer and Orissa Power Generation Corporation (for short, "OPGC"). The dealer also supplied some air-conditioners on the basis of supply of contract to National Thermal Power Corporation (for short, "NTPC") and has also made a separate contract with NTPC for erection, commissioning, etc., of air-conditioning system. During the said year, the dealer disclosed its gross turnover under the OST Act at Rs. 7,50,31,028.24 which has been revised by fili....
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....e circulating water pumps with BHEL of New Delhi and Kirloskar Brothers at Pune. These component suppliers raised sale bills in the name of the dealer and also consigned the goods in the name of the dealer, as a result of which, the goods moved from Delhi and Pune to the State of Orissa. The dealer claimed that while the goods were in transit, title of the goods passed to OPGC by means of transfer of documents, which afterwards were again supplied to the dealer by OPGC for use in course of execution of works contract and they being the subsequent seller of the goods in course of inter-State trade, the goods were exempted under section 6(2) of the CST Act. Analysing the provisions of law as contained in the CST Act, the assessing officer held that a subsequent sale must be made by way of transfer of documents of title over the goods while the goods were still in transit and before delivery of the same to the purchaser and that any sale made after the goods were delivered to the purchaser shall not be subsequent sale in course of inter-State sale within the meaning of section 6(2) of the CST Act. On verification of different documents produced before him by the dealer, the assessing ....
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....of Rs. 10,00,000 imposed under section 12(8) of the OST Act. Being aggrieved by the order of assessment passed under section 12(8) of the OST Act, the appellant filed appeal before the first appellate authority. The first appellate authority while disposing of the appeal vide his order dated May 25, 1996 has treated the contract made with the OPGC and NTPC as indivisible works contract and disallowed the dealer's claim for exemption under section 6(2) of the CST Act. The authority treated the transaction as intra-State sale as held by the assessing officer and levied tax at four per cent after allowing 22 per cent of the gross payment received as deduction towards labour and service charges. Against the first appellate order, the petitioner preferred second appeal before the Orissa Sales Tax Tribunal (hereinafter referred to as, "the Tribunal"). The learned Tribunal disposed of the second appeal by its order dated April 30, 2001 in S.A. No. 1085 of 1996-97 and S.A. No. 1072 of 1996-97 by confirming the assessment. In the said order, the learned Tribunal held that there was no infirmity in initiation of the proceeding under section 12(8) of the OST Act by the assessing off....
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....12 of the OST Act. It is further submitted that in the original assessment order passed under section 12(4) of the OST Act no discussion has been made with regard to the dealer's claim on account of subsequent sale in terms of section 6(2) of the CST Act and, therefore, question regarding change of opinion did not arise. He relied on the observation made by the assessing officer at page 4 of the said assessment order passed under section 12(8) of the OST Act. Now, it is essential to see what are the findings of the Tribunal on these issues. While dealing with the issue relating to recording of reasoning of reopening, the learned Tribunal at page 10 of the order observes as follows: "I have gone through the assessment records, and found it recorded as follows: In course of verification of accounts under the CST Act for the year under question, it is revealed that the dealer/company had claimed the deduction of Rs. 3,96,784 on the contention that such sale transaction are covered under the provisions of section 6(2) of the CST Act, 1956. But on perusal of the copy of the orders placed by M/s. OPGC Ltd., Bhubaneswar and NTPC Ltd., New Delhi in favour of the dealer-company....
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....8) of the OST Act and the same has not been communicated to the dealer before the assessment order was passed. To deal with the issue relating to change of opinion it is necessary to refer to page 4 of the assessment order passed by the assessing officer under section 12(8) of the OST Act which reads as follows: "The annual return, filed in form IV of the OST Rules, 1947 reveals that the dealer-company has disclosed the gross turnover of Rs. 7,49,74,817.24 and has claimed the deduction of the sales turnover of Rs. 3,96,32,784 under subsequent sales as provided under sub-section (2) of section 6 of the CST Act. Since, such disclosed sales transaction does not come under the purview of inter-State transaction the gross turnover is determined at Rs. 3,53,42,033.07 by the learned assessing officer under the OST Act, 1947 on the grounds that the representative of the company preferred to produce the supporting documentary evidences for the verification of the assessing officer during the assessment stage under the CST Act for the period under question . . ." It goes without saying that a completed assessment cannot be reopened on change of opinion of the assessing officer on si....
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....n relation to detail given in despatch documents vis-avis the provision of purchase order. The material shall then be handed over to the contractor's site personnel for erection. Till such time, the materials will be in OPGC's storage godowns and custody." According to the learned counsel, in pursuance to the above, materials were despatched and invoices were raised in favour of the dealer. Consignment notes were duly endorsed by the dealer in favour of the OPGC who thereafter took delivery of goods from the transporter. He further submitted that in support of such transaction, necessary declaration forms "C" and "E1" were furnished before the Sales Tax Officer in support of the claim for exemption in terms of section 6(2) of the CST Act and the assessing officer has not found any defect in said declaration forms. In the absence of any defect pointed out in the declaration forms, the claim for exemption in terms of section 6(2) of the CST Act cannot be disallowed. Similarly, referring to the agreement entered with NTPC, learned counsel submitted that the dealer placed orders with HJ International, the manufacturer at Bombay for supply of air-conditioning package and t....
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.... sales under the OST Act. Since the learned counsel for the parties rely on section 3 and sub-section (2) of section 6 of the Central Sales Tax Act, 1956 and on some judicial pronouncements, it is necessary to know what these sections contemplate and the judicial pronouncements they lay down. Section 3 of the Central Sales Tax Act reads as follows: "3. When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.-A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase,- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1.-Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2.-Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of....
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.... (a) A movement of goods in pursuance to a prior sale is the first pre-requisite to a subsequent sale for exemption which means the first sale must have been a sale in the course of inter-State trade or commerce. (b) Subsequent sale must have taken place during the movement under the first sale which means the second sale must have been effected before the journey of goods ends or before the goods reach their destination. (c) The subsequent sale is effected by a transfer of documents of title to the goods. (d) The subsequent sale must be one that comes within clause (b) of section 3. (e) Subsequent sale must be either to (a) Government or (b) to a registered dealer under section 7 of the Central Sales Tax Act. (f) The dealer effecting subsequent sale has to produce before assessing authority form E-I or E-II as the case may be, obtained from the dealer when he purchased the goods and also produce form "C" or "D" as the case may be obtained from the dealer or a person to whom the subsequent sale is effected. Relying on the judgment of the honourable Kerala High Court in the case of P.A. George and Company v. Assistant Commissioner of Sales Tax (Assessment) I, Spec....
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....registered under the said Acts. The officer at the time of issuing declaration form does not know how the declaration form would be used by a dealer. Therefore, power is vested with the assessing officer to examine whether the declaration forms are used in accordance with law or not at assessment stage. The statute also provides penal action against misuse of declaration form. In view of the above, the dealer's claim for exemption of tax under section 6(2) of the CST Act cannot be accepted solely on the basis of mere production of declaration form in E-I and C if the sale in question does not satisfy the required conditions incorporated in section 6(2) of the CST Act. In the case of Siemens India Limited v. State of Kerala reported in [2003] 132 STC 418 (Ker), the honourable High Court has delivered the judgment on the footing that when the goods were in transit, the petitioner transferred the title to the property to the contractee and since the Tribunal had not considered this aspect in detail, the honourable High Court directed the assessing officer to consider the matter again after hearing the parties. In the present case, the dispute is whether or not the title to t....
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....so find that in order to claim an exemption, SALE-B must be a sale in course of inter-State trade and commerce either under section 3(b) or under section 6(2) of the CST Act. The dealer-assessee claims that document of title to goods was transferred while the goods were still in transit before delivery to them, which, of course, was objected to the learned STO. It is observed on record that the Manager (Materials) of M/s. Voltas Ltd., was declared as the consignee of the goods in SALE-A. Similarly, some other Manager of M/s. Voltas Ltd., was declared as the consignee in case of such sales. Sri Patnaik states that the manager took delivery of goods before termination of their journey into the State of Orissa as an agent of M/s. N.T.P.C. Ltd., and M/s. O.P.G.C. Ltd., as the case may be, and not as an employee of the dealer-assessee. But I find that the Manager (Materials) nor the other manager, as the case may be was Manager (Materials) of the dealer-assessee before he worked as an agent (if he is assumed to be an agent of M/s. O.P.G.C. Ltd., or M/s. N.T.P. C. Ltd.). He also remained the Manager (Materials) of the dealer-assessee when the work of taking delivery was over. So he ca....
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....section 3(b) and that therefore, SALE-D as its subsequent sale, is also a sale in course of inter-State trade. The succeeding sales in a series of sales of the same goods cannot be a sale in course of inter-State trade under section 6(2), if the preceding sale is not one in course of interState trade. For the reasons elaborated above, I find that SALE B, and therefore, SALE D, are not sales in course of inter-State trade and commerce, and therefore, I disallow the claim of exemption of the dealer-assessee on the plea of subsequent sale under section 6(2). When the sales made by the dealer-assessee are thus found to be not in course of inter-State trade, they remain subject to tax under the State Act, for they are not sales outside the State, nor in course of export or import. The State, while taxing these sales, have not transgressed the restrictions imposed by the Constitution, discussed in this order at para 6. These sales are now held to be intra-State sales, subject to tax under the OST Act." The above conclusion of the Tribunal is essentially factual and has been arrived at after analysing the materials on record. Those findings are not perverse. Hence, no ques....