TaxTMI 
TaxTMI 
2019 (3) TMI 95
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....dated 24.01.2011, the DCST has disallowed the branch transfer claim of the appellant and reassessed the tax liability of the appellant for the tax period 01.04.2007 to 30.09.2007 raising a demand of Rs. 15,04,953.00. Brief facts of the case need to be stated. The appellant company is engaged in the manufacture and sale of M.S. Billets and Sponge Iron at their factory located At/ Po-Gurupali, Lapang, Rengali, Dist- Sambalpur Odisha. The appellant sales its finished goods in the course of intra State trade and also in the course of inter-State trade. The original audit assessment of the appellant for the year 01.07.2006 to 30.09.2007 was completed under Section 12(3) of the Rules raising 'Nil' demand but the case was reopened under Rule 12(4) of the Rules for the period 01.04.2007 to 30.09.2007 relying on a Tax Evasion Case Report (" the TECR" for short) relating to the year 2007-08 received from the Vigilance Wing Sambalpur. The TECR stated that the appellant had made consignment sales worth Rs. 1,25,41,276.00 to its consignment agent - M/s Gauri Sales, Nagpur and that the appellant had a pre-existing contract with the buyer and had projected the said sales as branch tra....
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....s in (a) Delhi Iron & Steel Co. Ltd. Vs. Commissioner of Sales Tax, UP (1989) 72 STC 294 ; (b) State of Tamil Nadu vs. PMP Iron & Steel India Ltd. (2010) 28 VST 370 (Mad); (c) CTT vs. Dharshan Olls Pvt. Ltd 2006 NTN (Vol.31)-154; (d) Associated Cement Companies Ltd. Vs. AC(CT) [2009] 23 VST 486 (Mad); and (e) State of Tamil Nadu vs. Kumaran Mills Ltd. (2010) 3 GST 408 (Mad). Counsel submitted that the Sale Order Acceptance which is made the basis for drawing adverse inference does not relate to the period under dispute and hence cannot be used for initiation of instant proceedings. In this connection, Counsel relied on Asna Cosmochems vs. State of Tamil Nadu (2010) 2 GST 165 (CSTAA- New Delhi). Counsel further submitted that the intention of the appellant would be clear from the fact that the VAT @ 4% amounting to Rs. 5,01,650.00 paid by the consignment agent in their State during the period under dispute has been reimbursed by the appellant. Further, the appellant had to reverse ITC in excess of 4% in terms of proviso (b) of section 20(3) of the Orissa Value Added Tax Act, 2004 amounting to Rs. 2,51,724.00. The VAT paid by the consignment agent and ITC reversed aggregates to Rs....
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....f Rs. 28,85,650/-. Counsel submitted that since in similar fact situation the Tribunal has upheld the stock transfer claim of the appellant, the impugned order deserves to be set aside. On the other hand, Mr. Soumyajit Pani, ld. Counsel for the State of Odisha supported the impugned order. Counsel submitted that the reassessment order 24.01.2011 is a well reasoned order. The DCST has considered all the aspects and rejected the stock transfer claim of the appellant. The Tribunal has rightly confirmed the said order. Counsel submitted that the order of the Tribunal passed in respect of subsequent period should not deter this Authority from confirming the impugned order because both the orders cover different periods. Counsel submitted that principles of res judicata do not apply to tax matters. Besides, the appellant had not drawn attention of the Tribunal to the said order. Counsel further submitted that the appellant has claimed to have reversed ITC of Rs. 2,51,724/- on the proportionate inputs used in the manufacturing of goods sold as consignment sale for the period July, 2007 to September, 2007. Counsel submitted that the said amount of reversed ITC of Rs. 2,51,724/- canno....
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....1.10.2007 to 30.09.2009 in appellant's appeal being First Appeal No. 6 (C) of 2011-12 where the Tribunal upheld stock transfer claim of the appellant in similar fact situation. Counsel submitted that the appellant has sought refund of Rs. 5,01,651/- paid as VAT on the goods sold by M/s Gauri sales. However, there is no prayer made to that effect. Counsel submitted that since appellant's stock transfer claim is genuine, refund sought by the appellant is not justifiable and tenable. TECR is of seminal importance to this case. Material contents of TECR have been explained in brief in the reassessment order. It is necessary to reproduce its gist. The gist is as follows. On 04.05.2010, the Vigilance Team, Sambalpur visited the business premises of the appellant and seized certain documents. Verification of the said documents resulted in detection of various ingredients in the nature of inter- State sale in the appellant's transactions. Shri Agarwal, Accounts Officer of the appellant clearly stated that the goods were directly moved from the factory to the ultimate buyer without being unloaded or stored by the consignment agent. So there was no appropriation of goods by the agent f....
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.... negotiated price. There is a visible contract of sale being governed by a definite sale order meant for a specific ultimate buyer. Hence the movement of goods from the factory till the delivery to the ultimate buyer forms an integrated process of an inter-State sale without there being a break in the inter-State movement of the goods. The buyer remains identified before commencement of the inter-State movement of goods. Thus these transactions from the very outset contain the ingredients of inter-State sale. It is extremely significant to note that the DCST has not blindly relied upon the TECR. The reassessment order shows independent application of mind to the facts of the case. There is a categorical statement made by the DCST that books of account produced by the appellant were verified with reference to the contents of allegations highlighted in the TECR. It revealed the nature of the sales of goods made by the appellant. It is noted that as regards proof of dispatch of these goods, the appellant has produced documentary evidence such as consignment agreement copy, original invoices, lorry receipts, copies of government waybills used and Sale Patties. It is clearly state....
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....er data fed to the forms are irrelevant relating to the consignment sales. As because there is a common package for sale, some datas have to be fed, therefore our concerned person has fed irrelevant datas to generate the forms". He went on to state that he was unaware of despatch of goods in the same lot, same quantity and in the same vehicle by the appellant's agent as despatched from the appellant's factory. Mr. Pati's statement does not inspire confidence. But it appears that his statement being contrary to what Mr. Agrawal had stated the DCST went through the contents of the Sale Order Acceptance form and noted his observations as under: (a) It is addressed to M/s Gauri Sales, Nagpur whose name appears both as buyer and Consignee. (b) It bears Sale Order No. and Sale Order Date as above. (c) It bears Customer Reference and Customer Reference Date i.e. 330 for sale order No. SM - 07Y-00032 and Nil for sale order No. SM-07Y-00030. (d) It has mention of Agent's name as RAVI (BROKER) with code ERA01. (e) It has also mention "Freight basis" as "TO BE BILLED" (f) It has full description of goods, order quantity, unit, rate and ....
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....onclusion that the appellant has suppressed material facts and the Tribunal has concurred with the same. I have no reason to defer from the view taken by the Assessing Authority and the Tribunal because it is based on proper analysis of the documents and other evidence. Pertinently the most vital documents i.e. the Sale Order Acceptances were not produced by the appellant before the audit team at the time of tax audit. They were not produced at the time of regular assessment for verification. This is, therefore, a case of suppression of material facts. There is undoubtedly misrepresentation of relevant facts. Reopening of the assessment therefore cannot be faulted. Moreover, Rule 12(4) of the Rules also permits the Assessing Authority to reopen the assessment in such circumstances. It must be remembered that the case of the Revenue does not rest on any solitary circumstance. Several telltale circumstances establish that the transactions in question are inter-State sales. At the cost of repetition, it is necessary to re-state those circumstances. They are- (a) Sale Order Acceptance forms contain Customer references which represent the name of the buyer who has placed pur....
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....s of Vigilance Wing detected the modus operandi adopted by the appellant. The said modus operandi is stated in the TECR and it is recorded that the appellant's transactions during the relevant period are inter-State sales though projected as stock transfers. It bears repetition to state that the DCST has not totally relied on the TECR. The DCST has examined all documents independently. He has verified them and observed that the appellant has misrepresented the facts and that there is suppression of vital facts. The DCST has recorded that the appellant has manipulated and fabricated the documents to give a camouflage look of consignment sales to otherwise CST sales to evade legitimate CST tax dues. The DCST has, on a proper analysis of all the documents and circumstances, observed that allegations made in the TECR submitted by the Vigilance Wing stand established. After stating this, the DCST has recorded that accordingly statutory declaration F Forms submitted by the appellant to claim exemption under section 6A of the CST Act are rejected. Against the backdrop of the above facts, it is not possible in this case to say that the Assessing Authority i.e. the DCST has not conducted....
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....ority himself. He may pass an order on such declaration before the assessment or along with the assessment. Once an order in terms of sub-section (2) of Section 6- A of the Central Act is passed, the transactions involved therein would go out of the purview of the Central Act. In other words, in relation to such transactions, a finding is arrived at that they are not subjected to the provisions of the Central sales tax. It is not in dispute that thereunder no appeal is provided thereagainst. The Supreme Court has also quoted with approval following observations of the Kerala High Court in C.P.K. Trading Company vs. Additional Sales Tax officer And....1990 76 STC 211 Ker. The relevant extract is as follows- "A plain reading of Section 6-A(2) of the Central Sales Tax Act points out that in cases where the dealer exercises the option of furnishing the declaration (F forms), 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'. The scope or frontiers of enquiry, by the assessing authority under Section 6-A(2) ....
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....Tribunal has set aside similar order passed by the DCST in similar fact situation and upheld the appellant's claim of stock transfer. Counsel submitted that therefore the impugned order deserves to be set aside on the reasoning of the Tribunal recorded in order dated 15.03.2017. This submission will also have to be rejected. Admittedly, during the hearing of Appeal No. FA 2 (C) of 2011-12, the appellant did not draw the Tribunal's attention to the impugned order. Had the impugned order been shown to the Tribunal, the Tribunal might have followed it. Unfortunately, even the Revenue did not draw the attention of the Tribunal to the impugned order. Conduct of both sides needs to be deprecated. The appellant has not drawn the attention of the Tribunal to the impugned order obviously because it was against it. More callous is the approach of the Revenue in not pointing out this order to the Tribunal when it was in its favour. In Radhasoami Satsang, Saomi vs. Commissioner of Income Tax 1992 AIR 377 while dealing with assessment under the Income-tax Act, the Supreme Court has observed that each assessment year being a unit what is decided in one year may not apply in the following year....