TaxTMI 
TaxTMI 
2017 (10) TMI 258
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....les by the respondent. The case of the petitioner is that for the financial years 2006-07 to 2015-16, the petitioner effected sales to M/s.ALL, who are involved in manufacture of chassis for trucks and buses in their factories located at Ennore and Hosur in the State of Tamil Nadu. The sales of tyres were effected by the petitioner from their factory at Mysore. The nature of the transaction adopted by the petitioner has been stated as follows: "(i) The petitioners state that prior to the commencement of sales from their factory located at K.R.S.Road, Metagalli, Mysore-570 016, ALL placed purchase order. This purchase order is placed by ALL located at Ennore and Hossur, on the factory of the petitioners located at K.R.S.Road, Metagalli, Mysore-570 016. This purchase order mentions the model of tyre to be supplied. This purchase order also fixes the price for a given model of the tyre. (ii) The petitioners state that when a new model of chassis is to be manufactured by ALL, the petitioners will provide drawings of the tyre to be manufactured to suit the specification of the chassis to be manufactured by ALL. Once this is approved, the manufacturing operations commences at the f....
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....t K.R.S.Road, Metagalli, Mysore-570 016." 3. The petitioner's case is that invariably all the deliveries are effected to the factories of M/s.ALL without any interim storage, but on few occasions, due to inability of ALL to handle consignments continuously, at their request, the tyres which were invoiced and despatched from their factory at Mysore, were kept at the godown of the transporter, which have been hired by the transporter themselves. The petitioner's further case is that the web portal of M/s.ALL provides for a facility of periodical delivery at their request. While there is a monthly schedule and invoicing despatch as per monthly schedule, on account of the fact that M/s.ALL is not able to handle the consignments continuously and at their request, the title has passed in terms of Section 4 of the CST Act, 1956 in the State of Karnataka, the tyres are temporarily kept in the godown of the transporter. The web portal of M/s.ALL provides for downloading of a document called Advance Shipping Notification (ASN) . M/s.ALL has a facility for placing periodical indents to receive delivery from the godown of the transporter and these indents are titled as Schedule-line....
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....submitted by them on 02.12.2016, in which also they supplied further details. In the said reply, the petitioner made an offer that if further document is required, they may be put on notice. 6. On receipt of the additional reply, the respondent issued notice dated 26.12.2016, calling for further details of values of supplies for the years 2006-07 to 2015-16. These details, as sought for were furnished by the petitioner vide their reply dated 30.12.2016, for the period from April 2015 to March 2016. Subsequently, by another letter dated 17.01.2017, the petitioner furnished details for the period 2012-13, 2013-14 & 2014-15 and by letter dated 30.01.2017, the petitioner furnished the details for the period 2011-12. 7. However, the impugned assessment order dated 30.01.2017 was served on the petitioner on 01.02.2017. The petitioner, on going through the impugned order, found that the respondent has issued summons to their purchaser M/s.ALL to appear in person to explain the supply chain management and has recorded a statement from two officials of M/s.ALL. This according to the petitioner, was not informed to them and such statements were recorded behind them and the same cannot ....
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....ade as and when the buyers made request to supply the tyres. 12. The respondent stated that the materials brought from the other States are being stored in the transporter's place and supplies are being made from their godown with a condition to supply the tyres just in time . This, according to the respondent, has to be construed as local sale and taxable at higher rate of tax at 14.5% under the TNVAT Act. Thus, in the show cause notice, the respondent did not dispute the fact that the tyres were manufactured outside the State of Tamil Nadu and dispatched from the place of manufacturer and retained in the transporter's godown. The crucial question would be, for the transaction to qualify as an interstate sale, the test would be as to where the appropriation of goods took place. In fact, the proposal in the show cause notice does not seriously dispute or contest the place of appropriation, as there is no clear indication as to what has passed in the minds of the assessing officer. 13. However, the doubt, which appears to have arisen in the mind of the Asssessing Officer is that the tyres are not supplied directly from the factory outside the State to the purchaser, bu....
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....ave given statements. 16. Further, the gist of the statements having been referred to by the respondent in the impugned order, not even a copy has been given to the petitioner, but few observations stated to have been given by the officers of the purchaser have been referred to. This material, which has been relied on and referred to in the impugned order has not been taken note of by the assessing officer, when revision notice was issued to the petitioner, hence this could not be the basis for completing the assessment. Even assuming that the respondent was justified in calling upon the purchaser to appear before them and give statement., when the statement is said to be used against the dealer/petitioner, they are entitled to have an opportunity to purforth their objections or offer their clarification. 17. Thus the assessment order appeares to have been completed in a very hasty manner, without analysing the nature of transaction as projected by the petitioner. As mentioned earlier, the respondent does not dispute the fact that the purchase order has been placed by the purchaser with the factory at Karnataka. The question would be as to whether merely because, the goods ar....
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....em to appear in person and after collecting the full details and analysing the procedure adopted, held that by the time the valid agreement/contract is made, the tyres are made available from the transporter's godown within the State of Tamil Nadu. Therefore, it cannot be a CST transaction, but a local sale. 22. After elaborately hearing the learned counsels, this Court is fully convinced that there are serious flaws in the decision making process, which would render the impugned order not sustainable in law. Firstly, as pointed out, the impugned order has proceeded beyond the proposal made in the show cause notice. The endeavour made by the assessing officer during the assessment proceedings by issuing summons to the purchaser and obtaining certain details from them, without notice to the petitioner, is a serious error and amounts to a gross violation of principles of natural justice. The petitioner had no opportunity to rebut such stand or explain their position on the factual basis. Thus, this procedural error render the impugned proceeding as bad in law. 23. The learned counsel for the petitioner placed reliance on the decision of the Hon'ble Division Bench of thi....
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....rtheless, since the respondent has passed an order refusing to accept the certificate, this Court has to consider the correctness of said order. The only reason given in the said order is that the certificates were issued in the name of the Mysore plant and not in the name of Chennai plant. At the first instance, the respondent had failed to take into consideration that the allegation against the petitioner itself is that the tyres which were manufactured in the Mysore plant were brought into the State of Tamil Nadu as interstate sale, kept in the transporter's godown and supplied to the purchaser as and when required, which was said to be treated as interstate sale. Thus, for all practical purposes, if the purchaser has to issue industrial input certificate, obviously it shall be issued in the name of manufacturer at the Mysore plant, and not to the Chennai plant which came to be in existence only during the year 2012. On the issue, it is relevant to take note of the decision of the Delhi High Court in the case of C.Jairam Pvt. Ltd. vs. Commissioner of Sales Tax, New Delhi reported in 1981 vol.52 STC 318, wherein while considering a similar issue in respect of D forms under th....