TaxTMI 
TaxTMI 
2009 (4) TMI 843
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....ed with, in view of the nature of the disposal that I propose to give to the writ petitions. Admittedly, the petitioner is a registered dealer, manufacturing cement and effecting both local sales as well as inter-State sales. They have a factory at Madukkarai in Coimbatore District. The petitioner claims that the cement manufactured at Madukkarai is despatched, by way of stock transfer to their warehouses and depots located in the States of Kerala and Karnataka and also in the Union Territory of Pondicherry and that thereafter, it is sold in the respective States and Union Territory, after paying local sales tax in the respective States. On the basis that the cement manufactured in Tamil Nadu is despatched to their warehouses and depots in other States and sold only thereafter, the petitioner made a claim for exemption on the turnover relating to branch/ stock transfer. But suspecting the claim of the petitioner to be untrue and claiming that the petitioner was moving goods to other State buyers from the factory site itself to reach the ultimate buyers in other States, the first respondent started issuing pre-assessment notices. Though the petitioner filed form "F" declara....
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....still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged..." The same principles are reiterated in Popcorn Entertainment v. City Industrial Development Corpn. [2007] 9 SCC 593 and in M.P. State Agro Industries Development Corpn. Ltd. v. Jahan Khan [2007] 10 SCC 88. In Union of India v. Hindalco Industries [2004] 135 STC 281; [2003] 1 RC 88; [2003] 5 SCC 194, the Supreme Court held as follows: "12. There can be no doubt that in matters of taxation, it is inappropriate for the High Court to interfere in exercise of jurisdiction under article 226 of the Constitution either at the stage of show-cause notice or at the stage of assessment where alternative remedy by way of filing a reply or appeal, as the case may be, is available but these are the limitations imposed by the courts themselves in exercise of their jurisdiction and they are not matters of jurisdictional factors..." In State of H.P. v. Gujarat Ambuja Cem....
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.... even an opportunity to show cause against the proposed penalty, the first respondent passed the impugned orders of assessment and that therefore there was violation of the principles of natural justice. However, the first respondent has filed a counter-affidavit, giving graphic details of the number of opportunities allegedly provided to the petitioner, in respect of each of these assessment years, viz., 2001-02, 200203 and 2003-04. Paragraph 8 of the common counter-affidavit filed by the first respondent contains these details and they are extracted as follows: OPPORTUNITIES IN RESPECT OF THE ASSESSMENT YEAR 2001-02 12-8-2009 Summons issued to produce accounts on 12-2-2009. Accounts books produced on 18-22009. 31-12-009 Final assessment orders passed. OPPORTUNITIES IN RESPECT OF THE ASSESSMENT YEAR 2002-03 Date Details Remarks 4-16-2004 Summons issued fixing the date of hearing on 26-4-2004. No reply. 10-10-2006 Summons issued fixing the date of hearing on 10-11-2006. No reply. 1-25-2007 Notice issued fixing the date of hearing on 28-2-2007. On 27-2-2007, the petitioners asked for more time. 8-10-2007 Best judgment notice issued granting time up to 2....
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....copies of D7 records on 24-10-2008. The petitioner filed reply on 26-12-2008 for the notices issued on 7-8-2008 along with some declaration forms. 1-30-2009 Pre-assessment notice issued granting 15 days time. On 16-2-2009, the petitioner sought 15 days time. On 2-3-2009 he filed letter to cross-examine the transporter and further asked for three weeks time. 3-9-2009 Final assessment order passed. In response to the overwhelming details furnished by the first respondent, in paragraph 8 of the common counter, which is extracted above, the petitioner filed a common rejoinder contending as follows: (i) As regards the CST assessment for 2001-02, all the summons referred to in paragraph 8 of the counter were issued under the Tamil Nadu General Sales Tax Act and not under the Central Sales Tax Act. The only show-cause notice issued for assessment of stock transfer to levy, under the Central Sales Tax Act, was the one dated January 13, 2009. This notice did not allege either non-co-operation or non-production of books. Therefore the notices issued under the State Act (Tamil Nadu General Sales Tax Act) cannot be taken to be sufficient opportunity provided for an assessment ....
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....by the petitioner in the rejoinder, were only under the State Act and not under the Central Act. But the question of compliance with the principles of natural justice cannot be judged on the basis of the number of opportunities granted and the number of notices issued, but is to be judged only on the basis of sufficiency of opportunity. Sufficiency of opportunity can be measured both from the circumstances and from the status of the person who complains of violation of natural justice. Tamed horses and wild horses react differently to the same command and hence the scales with which one would measure the sufficiency in both cases would differ. Keeping the above principles in mind, if we look into the notices issued (referred to in paragraph 8 of the common counter-affidavit), the picture that emerges can be projected in a tabular statement as follows: FOR THE ASSESSMENT YEAR 2001-2002 Summon dated 16-5-2003 Under the TNGST Act, in form XII. Summon dated 10-6-2003 Under the TNGST Act, in form XII Summon dated 2-12-2003 Under the TNGST Act, in form XII Summon dated 3-2-2004 Under the TNGST Act, in form XII Summon dated 10-10-2006 Under the TNGST Act, in form XII Sum....
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....e books on 12-2-2009 is issued. Notice dated 28-1-2009 to produce books on 12-2-2009 issued. Admittedly, a reply was sent by the petitioner on 27-1-2009 and the books were produced on 18-2-2009 Notice dated 2-3-2009 By this notice a proposal to levy penalty under section 9(2) read with 12(3)(b) is made. The petitioner seeks time of 2 weeks to react to this proposal, but an order is passed on 11-3-2009. FOR THE YEAR 2002-2003. Summon/notice dated 1-6-2004 Under the TNGST Act, form XII Summon/notice dated 10-10-2006 Under the TNGST Act, form XII Summon/notice dated 2512007 Under the TNGST Act, form XII Summon/notice dated 16-4-2007 Under the TNGST Act, form XII Best-of-judgment notice dated 10-8-2007 Though it was captioned as one under the TNGST Act, this notice specifically dealt with branch transfer and the contention of the department that the goods moved from Madukkarai were not unloaded at Palakkad, but continued their journey in the same vehicle to the buyers under the control of the RMO and that the depot was acting only as a conduit. Therefore there was a proposal to disallow exemption on branch transfer and also to impose penalty Pre assessment notice dated....
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....charitable on the part of the petitioner to contend that there was any violation of the principles of natural justice. The petitioner is not a petty dealer. It is a company having a wide network and was represented before the assessing officer, every time, by professionally qualified persons as seen from the replies sent by them. They understood what these notices purported to be. Therefore, I am of the considered view that the allegation of violation of natural justice, made by the petitioner cannot be accepted. Non-compliance with section 6A of the CST Act: Apart from the allegation of violation of the principles of natural justice, the petitioner also alleges violation of the mandatory provisions of section 6A of the Central Sales Tax Act, 1956. The contention of the petitioner is that once an assessee has produced form F declarations, the assessing authority is duty-bound to conduct an enquiry in accordance with section 6A(2). But the first respondent obviously did not hold any such enquiry. Therefore, according to the petitioner, the impugned orders of assessment suffer from a serious error of jurisdiction, in the light of the law declared by the Division Bench of this court ....
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....e the assessing authority is satisfied, the second limb of sub-section (2) requires him to make an order to that effect. Though sub-section (2) uses the expression "he may", it appears that (i) the scrutiny of the declaration, (ii) conduct of an enquiry, (iii) arriving at a satisfaction and (iv) then making an order, are all essential requirements, to be satisfied before the assessee can be held to have failed to discharge the burden of proof cast upon him under sub-section (1) of section 6A. In A. Dhandapani v. State of Tamil Nadu [1995] 96 STC 98, a Division Bench of this court held (in paragraph 3.4 of its judgment) that "the failure to render a finding that the particulars contained in the declaration are untrue, before foisting liability would vitiate the assessment and that the enquiry with regard to the declaration is mandatory". Such a view was taken by the Division Bench, even at a time, (before the amendment Act 20 of 2002), when the filing of form F declaration was only optional and not mandatory. In Ashok Leyland Ltd. v. State of Tamil Nadu [2004] 134 STC 473, the Supreme Court pointed out in paragraph 32 that prior to the amendment of section 6A, the filing of form F....
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....pondent (i) due to the alleged failure on the part of the petitioner to file statements and records in terms of rule 4(3A) of the CST (Tamil Nadu) Rules, 1957 and (ii) on the basis of inspection findings and scrutiny of D7 records. There is no indication whatsoever, that any kind of inquiry, even a perfunctory one, was conducted by the first respondent, before coming to the above conclusion. Neither the impugned orders of assessment nor even the common counter-affidavit, contains a claim that any such inquiry was ever conducted. Therefore there is no escape from the conclusion that the first respondent committed a serious error of jurisdiction, in terms of section 6A(2) of the Act. As stated above, the non-filing of the statements and records prescribed in rule 4(3A) of the CST (Tamil Nadu) Rules, 1957, is one of the grounds on which the first respondent rejected the claim for exemption on branch transfer. But in A. Dhandapani's case [1995] 96 STC 98, the Division Bench of this court held that rule 4(3A) is only directory and not mandatory and that when form F declaration is filed, the dealer chooses or elects the mode of proving that the transfer is otherwise than by way of s....
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....ds Act, 1930, creates a deeming fiction by holding that the delivery of the goods by the seller to a carrier, whether named by the buyer or not, in pursuance of a contract of sale, to be a delivery of the goods to the buyer. However, sub-section (2) creates certain obligations on the part of the seller to make such contract with the carrier as would be reasonable, having regard to the nature of the goods and other circumstances. Today, with the development of on-line trading and such other electronic methods, a transfer of title in movable property can take place both without the actual payment of the price and without actual delivery taking place. It takes place at times without even the buyer and the seller knowing or ever meeting each other. Today, many transactions are initiated, conducted and closed at the click of the mouse, as the operators in the field of trade and commerce, have also got into "mouse-traps". Therefore, the mere fact that the goods sent from Madukkarai were not unloaded at the Palakkad depot and that after taking delivery receipts, the transporter proceeded further, cannot by itself, create a conclusive presumption that it was a case of inter-State sale. As....
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.... actual delivery of goods for the purpose of article 286. Moreover, in business transactions attracting fiscal statutes, the motive or substance is of little consequence than the form in which they take place. In Board of Revenue, Madras Chief Controlling Revenue Authority v. N. Narasimhan AIR 1961 Mad 504, it was held by the Full Bench of this court as follows: (page 510) "31. In the application of a taxing enactment to a subject, the emphasis on the so-called substance of the transaction in antithesis to the form of it should be made with a good deal of caution. In Bank of Chettinad Ltd. v. Commissioner of Income-tax [1940] 8 ITR 522 at page 526; AIR 1940 PC 183 at page 185, Sir Lancelot Saunderson delivering the judgment of the Board observed thus: 'Their Lordships think it necessary once more to protest against the suggestion that in revenue cases, "the substance of the matter" may be regarded as distinguished from the strict legal position. In Inland Revenue Commissioners v. Duke of Westminster [1936] AC 1 disapproval of this doctrine was expressed in the opinions of Lord Tomlin and Lord Russel of Killowen. A passage from the opinion of Lord Russel of Killowen at....
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....he decision of the Privy Council in Bank of Chettinad [1940] 8 ITR 522; AIR 1940 PC 183 which were followed by the Full Bench of this court in Board of Revenue, Madras Chief Controlling Revenue Authority v. N. Narasimhan AIR 1961 Mad 504. Therefore, tax planning as opposed to tax evasion, has legal sanction. If a dealer plans his transactions in such a manner that he pays less tax, it is not open to the Revenue to subject him to a conscience audit or moral assessment. The power to lift the veil, has to be exercised with great care and caution. In the case on hand, the dealer has a factory in Tamil Nadu and he claims exemption in this State on stock transfer made to his branches in other States. In an exact reversal of the situation, another dealer having a factory in other States, may make similar claims in those States on the basis of the stock transferred to a branch in Tamil Nadu and the tax paid here under the local sales tax law. While the State is deprived of revenue in the former situation, it is benefited with revenue in the latter situation. It would be embarrassing for the State to take different positions in these two situations. I am not for a moment deciding the meri....