TaxTMI 
TaxTMI 
2008 (8) TMI 819
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....lleged to have been made to the agents of the appellant in other States, disallowed the claim of Rs. 5.84 crores on a finding that the alleged consignment transfers were in reality inter-State sales and subjected the said turnover to tax at 10 per cent in the absence of "C" forms. Penalty to the extent of three times the tax due on that turnover was also levied by a separate order under section 9(2) of the CST Act read with section 7A(2) of the APGST Act for furnishing false declarations/certificates. The A.P. Sales Tax Appellate Tribunal, by the impugned order, partly allowed the appeal (on a turnover of about Rs. 2.62 crores), partly dismissed the appeal (on a turnover of about Rs. 2.60 crores) and partly remanded the case to the assessing authority (in respect of a turnover of about Rs. 63 lakhs). The penalty was confirmed in so far as the disallowed turnover is concerned, i.e. Rs. 2,60,13,401. The appellant is a firm engaged in the business of manufacture and sale of vegetable oils. It is a registered dealer on the rolls of the Commercial Tax Officer, Rajendranagar circle, A. P. The appellant claimed that it dispatched the consignments of refined oil to its agents located in....
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.... It appears that during the pendency of the appeals before the Tribunal, the Government of A.P. issued G.O. No. 456 (Revenue) dated July 5, 2004 evolving a scheme for granting relief to the oil traders who have been similarly subjected to tax and penalty under the CST Act. By virtue of that G.O., the appellant voluntarily paid tax on a turnover of Rs. 3.16 crores at the rate of four per cent and also paid an equal amount of penalty; but, the Tribunal refused to grant any relief in terms of that G.O. as it had no statutory backing. On this aspect, no arguments have been advanced before this authority and therefore we need not delve into it. Now the question is whether the Tribunal was justified in dismissing the appeal in regard to the turnover of Rs. 2,60,13,401 comprising the alleged consignments made to 41 agents in other States. There is no dispute that if the alleged inter-State transfers to the appellant's agents for sale through the media of such agents is not established, such transactions are liable to be treated as inter-State sales clandestinely effected by the appellant. Such inference can be drawn either expressly or by necessary implication on the basis of the ....
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.... so cast on the dealer may be discharged by furnishing a declaration as prescribed in form 'F' along with evidence of despatch of such goods. It is open to the dealer to discharge the burden of proof cast on him in any other manner by adducing other evidence. In case where the dealer exercises the option of furnishing declaration in form F, clause (2) of section 6A contemplated that the only further requirement is that the assessing authority should be satisfied after making such enquiry, as he may deem necessary, that the particulars contained in the declaration furnished by the dealer are true. In case there is dismal failure on the part of the dealer in the discharge of the burden so cast on him, the irresistible inference that there was a sale under the Central Act cannot at all be avoided." We may add that during the relevant assessment year, i.e., 2000-01, the filing of F form for the purpose of discharging the initial burden of proof cast on the dealer was not mandatory. The declaration in form F was only one mode of proving that the transactions were otherwise than by way of inter-State sales. It did not preclude the assessee from furnishing any other satisfac....
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....has to be reasonably drawn therefrom. At this juncture, we would like to mention that the inquiry reports though called for from the second respondent, have not been furnished. Hence, we have no option but to refer to the substance of those reports, as set out in the orders of the assessing officer and Tribunal. The Sales Tax Appellate Tribunal, keeping the settled legal position in view, proceeded to discuss item-wise the contents of inquiry reports and hen the remarks made by the assessing authority. Thus far, the impugned order of the Tribunal cannot be faulted; but, the fundamental lapse on the (1)Sale means "inter-State sale" as defined in section 3 of CST Act. part of the Tribunal was the failure to record definite findings after adverting to the inquiry reports, etc. A typical paragraph in the order of the Tribunal gives an idea of the manner of disposal by the Tribunal and reveals the said infirmity. For instance, while dealing with item 11 at page 45, the Tribunal stated thus: "The verification officer, i.e., Assistant Commercial Tax Officer, (Enft. Group-III), Salem informed in his letter addressed to the Deputy Commercial Tax Officer, Ferozguda that the agent ha....
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.... the Tribunal in respect of the transactions with the dealers at serial Nos. 10 to 24, 27 to 30, 32 to 35, 39 to 53, 56, 57 and 64 (vide para 56 of the Tribunal's order) covering a turnover of Rs. 2,60,13,401 involving a tax of Rs. 26,01,340. It needs to be clarified here that the sum total of the turnover related to the above items in respect of which the appeal has been dismissed actually comes to Rs. 2,55,57,389. There seems to be a totalling mistake. Item No. 10: Swastik Traders, Kolhapur: Rs. 13,63,600 The STO (Enft., Kolhapur), in his communication dated November 20, 2003 (year wrongly noted as 1993 in the order of the Tribunal) stated that no dealer by the above name was doing business in oils. Further, he furnished a list of dealers bearing the same names who were on the rolls of Kolhapur ST offices dealing in various other commodities. Therefore, the assessing officer rightly commented that the F form and other documents said to have been issued by a non-existing dealer were obviously bogus. The appellant has not furnished any material to challenge this finding. Hence the order of the Tribunal is confirmed. Item No. 11: Sri Jayashakti Rice & Oil Mill, Sa....
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....clined to reject the assessee's claim to the extent of Rs. 2 lakhs and allow the appeal in respect of a turnover of Rs. 16,14,771. Item No. 14: Chandradasan Salem: Rs. 5,08,595 ACTO (Enft.-V), Salem, reported that the alleged agent in his statement denied making the transactions relating to sale patti Nos. 5 and 6 and also the issuance of F form. Further the firm's name was changed to SRT Agro Foods with effect from August 10, 1999. Hence, the claim for exemption based on the above document is obviously not genuine. The appeal on this item is, therefore, dismissed. Item No. 15: Raja Ganapathi Traders, Salem: Rs. 7,74,200 ACTO (Enft.-V), Salem, furnished report to the effect that on verification it was found that 10 out of 14 consignments were received by the agent and admitted by him. Further, he reported that the agent denied three consignments relating to 3 sale-pattis and one F form. In the F form register produced by the dealer, F form No. 430126 was not found. However, the reasons for disallowing the entire claim are not discernible. On a reasonable estimate the disallowance should be restricted to Rs. 2,00,000. The appeal is allowed in respe....
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....s was necessary. It cannot be readily assumed that the statements given by those dealers are true and credible. Hence, we are inclined to allow the appeal in respect of the six items mentioned above. Item No. 18: Annamar Agencies, Erode: Rs. 2,67,812 ACTO (Enft.-V), Erode, reported that the dealer denied having received any consignments of oil from the appellant and having issued sale patties and F form. Moreover, the dealer started business in Erode only with effect from March 15, 2002. Hence, the claim was rightly disallowed and the dismissal of appeal on this item is upheld. Item No. 21: V.R. Gadda, Bidar: Rs. 3,94,520 The Commercial Tax Inspector, 1st Circle, Bidar, reported that as per the statement of proprietor, the firm in whose name the F form was purportedly issued was closed 10 years back, (i.e., in 1993) and RC was surrendered. He further stated that the agent has now started business in the name and style of Balaji General Merchant, Bidar. The assessing authority has, therefore, rightly drawn the inference that the documents including F form allegedly issued by the said dealer were bogus. The appellant did nothing to rebut the correctness of the repor....
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..... It does not appear that the contents of the letter have been verified by any sales tax official with reference to the accounts of the said dealer. Going by what is contained in the assessment order and the Tribunal's order, the dealer did not furnish any comment on the F form filed by the appellant in support of its claim. Moreover, it looks improbable that the appellant, if he had sold the oil by way of inter-State sale, would refrain from collecting C form from the purchasing dealer. C form entitles the seller to pay tax on concessional rate. When the turnover involved is large, no prudent assessee would have failed to collect the C form. Having regard to all these circumstances, the claim of the appellant should not have been disallowed by accepting the unverified communication of the above dealer in the other State. The dismissal of appeal on this item is therefore unjustified. The appeal is allowed. Item No. 32: Sri Jai Oil Industries, Salem: Rs. 7,67,400 The alleged agent in his statement dated November 14, 2003 made to the ACTO (Enft. III), Salem, stated that he did not issue the sale patties and the relevant F form. The assessing authority commented that t....
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.... the dealer not disclosing the agency sales and paying local tax. Hence, the assessing authority had no material to conclude that the sale pattis and F form were fake documents. The appeal on this item is, therefore, allowed. Item No. 40: Abhay Trading Co. Jalna: Rs. 2,49,271 The STO, Jalna, reported that the CST registration number attributed to the above dealer was, in fact, allotted to Raj Trading Co. Jalna. Hence the F forms and sale-pattis alleged to have been issued by the said dealer can be said to be fictitious. The appeal on this item is rejected. Item No. 41: Satish Seetaram, Jalna: Rs. 64,500 The STO, Jalna, reported that the above mentioned person is not a registered dealer on his rolls and the series of F form filed by the appellant were not assigned to his circle. Therefore, the conclusion of the assessing authority is justified. Hence, the appeal is rejected on this item. Item No. 42: Mangal General Agencies, Nanded: Rs. 2,09,083 The Assistant Commissioner (CT-Admn.), Nanded reported that the \alleged assignee was not registered under the CST and BST Acts. Evidently, the appellant made a false claim. Hence, the appeal is rejected in respect....
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....0 Item No. 56: B.M. Trading Co., Dhule : Rs. 32,09,147 The Assistant Commissioner of Sales Tax, Admn., Dhule, reported that the F form which covers 12 transactions relating to the said dealers was not issued by the Department. Obviously, it is a fake document. Earlier, the Sales Tax Officer, Dhule, reported that the alleged dealer was non-existing. In view of these reports and in the absence of any rebuttal evidence filed by the applicant at any stage, the claim of the appellant is liable to be rejected. The dismissal of the appeal by the Tribunal is, therefore, upheld. Item No. 57: Bidar Oil Mills, Bidar: Rs. 3,10,411 The reports of the Assistant Commissioner (CT-I), Bidar, and CTO, Bidar referred to in the assessment order would reveal that the said alleged agent disclosed only a turnover of Rs. 4,446 during the relevant year and that no such F form was issued by their office. It was also reported that the whereabouts of the dealer were not known. Hence, a verification of his record was apparently not possible. The rejection of the claim and the appeal in respect of this item is, therefore, justified. Item No. 64: Santosh Oil Mills, Bidar: Rs. ....
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.... Heavy Electricals [1997] 106 STC 604 with a view to contend that even where fixed rate of penalty is prescribed, there is a discretion vested in the assessing authority to levy lesser penalty. In that case, the Supreme Court was considering section 7(5) of the Madhya Pradesh Entry Tax Act, 1976. Section 7(5) prescribes penalty for failure to make a statement while effecting sale of "local goods" that the goods being sold were local goods. In the event of such failure, a presumption has to be drawn that the dealer has facilitated the evasion of entry tax on the local goods sold by him and he shall be liable to pay "penalty equal to 10 times the amount of entry tax payable on such goods as if they were not goods of local origin". The Supreme Court held that the assessing authorities are not bound to levy penalty equal to 10 times the tax in all cases and the assessing authority has to decide, depending upon the facts of each case, the reasonable amount of penalty to be imposed subject to a maximum of 10 times. The Supreme Court upheld the constitutional validity of the provision by reading down section 7(5) in that manner, based on the concession made by the State's counsel. We ....