TaxTMI 
TaxTMI 
2018 (10) TMI 1364
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Sales Tax Act, 1956. The petitioner sold the motor vehicles to two of its sister Companies which are marketing Companies and separate entities. The said marketing Companies namely, M/s.Renault India Private Limited and M/s. Nissan Motor Private Limited, are separate business entities and are engaged in the activities of marketing, distribution and selling the motor vehicles manufactured by the petitioner. Those two Companies, besides having stockyard in the State of Tamil Nadu, also have stockyard in Andhra Pradesh. They purchase motor vehicles from the petitioner on payment of appropriate tax on principle to principle basis and sell the same to the dealers, with whom those Companies have business arrangements, on payment of appropriate tax. Those dealers, thereafter, sell the motor vehicles to users on payment of appropriate tax. (b) In the regular course of business, the marketing Companies place purchase orders on the petitioner with delivery instructions. Those purchase orders are placed by the marketing Companies on the basis of the orders received by them from their dealers. The purchase orders are placed in respect of local sales as well as inter-State sales with deliv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by "C" declaration forms and higher rate of tax in respect of interstate sales turnover not covered by "C" declaration forms. Likewise, exemption was granted on export sales under section 5(1) and 5(3) of the CST Act, 1956. The respondent also disallowed the turnover, for which documents and Form ''H'' declaration had not been filed. However, on filing of those documents, revised assessment orders dated 14.02.2017 and 28.03.2017 were passed by the respondent. (d) While so, the respondent issued notice dated 24.01.2017 contending that goods have moved from Tamil Nadu directly to the dealers in pursuant to the orders placed by them on M/s. Nissan India Private Ltd., and M/s.Renault India Private Ltd., who claimed exemption as second and subsequent sale under section 6(2)(b) of the CST Act, 1956 and therefore, it is a sale falling under section 3(a) of the CST Act and not under section 3(b) of the CST Act. Thus, the respondent claimed that the petitioner is liable to pay the tax on the value at which the goods were sold to the purchasers and not the value on which the petitioner paid tax in CST Act, 1956. The petitioner filed its reply on 24.02.2017 explaining....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the movement is under the contract, whereas for the sale under section 3(b), the contract comes into existence only after commencement and before termination of the inter-State movements of the goods. Thus, to attract exemption under Section 6(2), it is essential that the sale must be subsequent to inter-State movement and should be preceded by a prior inter-State sale during transit. The exemption granted under Section 6(2)(b) by the Assessing Authority in other State, would not prevent the respondent from revising the assessment. The decision of the Supreme Court delivered in A & G Projects & Technologies Ltd., vs. State of Karnataka reported in 2009(19) VST 239 is in support of the respondent. The Telungana and Andhra Pradesh High Court in Larsen and Toubro case has followed the decision of the Supreme Court rendered in A & G Projects and Technologies Ltd. case and therefore, it is binding on the respondent. 4. A rejoinder is filed by the petitioner wherein it is stated as follows: The enhancement of the value of transaction was based on a mere change of opinion and wrong interpretation of law. The question of redetermination of turn over would arise only when there is any s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment order, the respondent concluded that the subsequent sale should have happened during the movement of goods and that the buyers should not have been identified before the movements of goods. Thus, it is clear that the ground now putforth by the respondent in the impugned proceedings that the sale is a pre-determined sale is not at all mentioned in the show cause notice. The pre-determined sale is prescribed only in respect of the claim under Section 6-A of the CST Act for branch transfer/consignment sales. However, in respect of the inter-State sale, there is no such legal stipulation. The sale stipulated under section 3(b) is only for the purpose of reducing the cascading tax effect. It is not the case of the respondent that the petitioner has received any money over and above its invoice prices so as to make an adhoc addition of 25% to the taxable turnover. No opportunity was given to the petitioner regarding the vital issue about the so called pre-determined sales. Therefore, it violates the principles of natural justice. (b) On the question of jurisdiction, it is to be seen that section 27 of the Tamilnadu Value Added Tax Act empowers reopening of the assessment only ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....spondent. The petitioner has been given sufficient opportunity and during personal hearing, their objections have been dealt with in detail and the respondent has passed a well reasoned order based on judicial decisions. Therefore, both on the ground of principles of natural justice and on the ground of jurisdiction, the writ petitioner is not entitled to maintain the present writ petition. On the other hand, they have to only file a statutory appeal before the appellate authority. The writ petitioner does not satisfy the conditions of section 3(b) of CST Act as there was no subsequent sale during the movement of the goods or in transit, to qualify for exemption as envisaged under section 6(2)(b) of the CST Act. The ultimate buyer has been identified before the goods started its movement from its location. Therefore, the Assessing Authority has enhanced the sales turn over declared by the petitioner, taking into account, the ultimate price charged on them which is the actual value of the goods sold. The petitioner failed to furnish the difference between the turn over which they paid tax and the value which were realised from the ultimate buyers. As the second sale in this case h....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 9. Heard Mr.R.L.Ramani, learned senior counsel appearing for the petitioner and Mrs.Narmadha Sampath, learned Additional Advocate General appearing for the respondent. Perused the materials placed before this Court and given my careful consideration to the submissions made on behalf of the parties. 10. Both the writ petitions are filed against the orders of assessment passed in respect of the assessment years 2014-15 and 2015-16 dated 28.07.2017. 11. I have already narrated in detail the facts and circumstances, which warranted the writ petitioner to file these writ petitions, the contentions of the respondent against these writ petitions and the submissions made on behalf of both parties. Therefore, I am not reiterating the same once again hereunder to avoid multiplication, except to reproduce few facts for the purpose of justifying my conclusion. 12. The petitioner is a manufacturing Company of motor vehicles situated at the State of Tamilnadu. They are the registered dealer on the file of the respondent both under Tamilnadu Value Added Tax Act, 2006 and Central sales Tax Act, 1956. The petitioner Company is having two marketing Companies namely, M/s. Renault India Private ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... referred to under section 3(a) of the Central Sales Tax Act 1956, which disentitle the manufacturing Company to claim exemption, as envisaged under section 6(2)(b) of the Central Sales Tax Act. 15. The Assessing Officer found that the disputed sale falls under section 3(a) of the Central Sales Tax Act and consequently, such sale is not exempted under section 6(2) of the Central Sales Tax Act. 16. There is no dispute to the fact that as against the said order of assessment, a statutory appellate remedy is available before the first Appellate Authority, namely, the Joint Commissioner (Appeal), Chennai-6. It is well settled that in fiscal matters, the aggrieved party should first approach, avail and exhaust the statutory appellate remedy, more particularly, when such Appellate Authority is, undoubtedly, a fact finding authority as well. Straight away coming to this Court and filing writ petitions against the orders of assessment made by the Assessing Authority or the orders in original made by the Adjudication Authority, without exhausting the alternative remedy of appeal, should not be entertained or encouraged, as, otherwise, this Court, exercising jurisdiction under Article 226....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te authority, only to avoid the statutory obligation of making pre-deposit of the tax/duty liability while filing such appeal. Certainly, such practice should be discouraged since the liability having been fixed by the original authority after following due process, cannot be allowed to be questioned, without showing the bonafide of the assessee by making such pre-deposit, a mandatory statutory requirement. 19. Keeping the above principles in mind, let me first consider whether the present writ petitions are maintainable and if so, whether this Court has to interfere with the impugned orders of assessment. 20. Fairly, it is contended on behalf of the writ petitioners that the petitioner is not challenging the impugned assessment orders on its merits. This stand is made very clear in their written submission. Thus, it is evident that the impugned assessment orders are challenged only on two grounds, namely, violation of principles of natural justice and want of jurisdiction. Needless to say that jurisdictional issue has to be considered first as it goes to the root of the matter. Only when this Court finds that the respondent has jurisdiction to pass the impugned order, then the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n over as shown by the petitioner, being the sale price received from its marketing company. On the other hand, if the case of the petitioner is to be accepted that the sale would fall under section 3(b), since the second sale was effected by transfer of document of title to the goods during the movement from one State to another, certainly, the petitioner is entitled to get exemption under section 6(2)(b) of the Central Sales Tax Act. Therefore, it is evident that the nature and manner, in which, the sale was effected by the petitioner to the purchaser at the other State are certainly, crucial factors to be considered and decided as to whether the turn over has escaped assessment. Such scope of consideration, undoubtedly, is not outside the jurisdiction of the respondent, merely because the marketing Companies have got the benefit of exemption under section 6(2)(b) of the Central Sales Tax Act at the hands of their Assessing Officer at Chittoor, Andhra Pradesh. When admittedly the goods have moved from the territorial jurisdiction of the respondent, he is certainly, vested with jurisdiction under section 27 to reopen the assessment for deciding such issue, when he finds sufficient....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... over of the business has escaped assessment of tax, the power is vested on the authority to subject the escaped turn over to assessment. There is no quarrel about the said proposition. However, in view of the discussions made supra, I do not think that the above decision on the general proposition of law would in any way help the petitioner, based on the present facts and circumstances. On the other hand, as I found that the Assessing Officer has jurisdiction under section 27, the said decision is not helping the petitioner in any manner and on the other hand, it only supports the case of the Revenue. 28. Thus, the next question that arises is on the alleged violation of the principles of natural justice. It is contended by the petitioner that even while issuing the pre-assessment notice dated 24.01.2017, the respondent called upon the petitioner to pay tax on the value at which the marketing Companies sold the goods to the dealers, though the said notice called upon the petitioner to file their objection along with documentary evidence, if any. Perusal of the said notice, no doubt, shows that the respondent had requested the petitioner to pay such tax. However, while concluding ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ated from the petitioner, cannot be stated as new materials or contents of such invoices cannot be termed as new facts referred to in the impugned proceedings. In fact, a sample invoice was placed before this Court by the Revenue to show that two entries are made one by showing the marketing company as the buyer and other by showing the respective distributor/dealer as the consignee. I am not going to express any view on the effect of such entries made in the said invoice, as any observation or view expressed by this Court on the same, at this stage, would certainly affect the mind of the next fact finding authority, namely, the first Appellate Authority while deciding the issue as to whether the disputed sale falls under section 3(a) or 3(b) of the said Act. 30. There is no dispute to the fact that in pursuant to the said notice of proposal, the petitioner had given a detailed explanation where they clearly stated that mere indication of dealers' name of the marketing Company in the invoice, should not be construed as a direct delivery form the petitioner to dealers of the marketing Company. This statement of the petitioner would show that they are fully aware of the issue wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cts and documents placed. Only the next fact finding authority viz., Appellate Authority has to consider and decide whether such reasoning of the Assessing Officer out of such probe can be justified or not. 32. Since the disputed question of fact is to be considered and decided only by the next fact finding authority, I am of the view that the petitioner has to agitate the matter only by way of filing regular statutory appeal without insisting upon this Court to decide the matter as an appellate authority. Needless to say that jurisdiction vested on this Court under Article 226 of the Constitution of India is a discretionary jurisdiction and therefore, it is not necessary to exercise such jurisdiction, even though the petitioner has made out a case. At the same time, I am not saying even for a minute that this Court is powerless under Article 226 of the Constitution of India. The question is whether such power has to be exercised under the given facts and circumstances. It is well settled that the writ jurisdiction is to be exercised only to find out as to whether the decision making process was in order and not the very decision itself. 33. Considering the above stated facts an....