TaxTMI 
TaxTMI 
2019 (5) TMI 125
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....y of Pondicherry is respondent No. 5. In CST Appeal Nos. CST / 8 / 2014 and CST / 9 / 2014, the Union Territory of Delhi, the State of Karnataka, the State of West Bengal, the State of Andhra Pradesh and the State of Maharashtra are respondents nos. 6 to 10 respectively. By order dated 21.12.2017 of this Authority the Union Territory of Delhi/ Government of National Capital Territory of Delhi has been deleted from the array of respondents. The appellant has challenged orders of the Tribunal in all these appeals. It would be appropriate to treat CST /10 /2014 as the lead case because the re-assessment order dated 29.08.2000 passed in revisional proceedings out of which this appeal arises is first in point of time. It is also the basis of all the other assessment orders out of which the present appeals arise. In all the assessment orders the same material has been relied upon and the reasoning is also identical. It is, therefore, necessary to discuss reassessment order dated 29.08.2000 out of which CST/10/2014 arises at length. Facts could be also gathered from the said order. Gist of the facts is as follows: On 09.07.1997, a lorry (TAN 8895) carrying 40 barrels each contain....
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.... : Details of dispatches of goods to their Pondicherry Branch with reference to Form XX, delivery challans, etc. Consignee at Coimbatore Agro : Details of goods received from Tvl. Tropical Pondicherry were gathered. The area sales Manager deposed that the purchase orders were placed by their Head Office at Chennai and the factory at Coimbatore directly receive the goods from Pondicherry on freight paid basis. Corporate Office of the Consignor at Chennai : Following details were gathered: • The Company is a manufacturer of pesticides and insecticides formulations. Raw materials were purchased both from interstate against 'C' forms and locally against form XVII. No separate stock accounts is maintained for the raw material purchases against Form XVII. • The company is having 12 Branches sales depots in other states. One such sales depot is at Pondicherry, functioning from 24.02.95. Usually, the company is not receiving any indents from their Pondicherry Branch showing their specific requirements of stock. iii)The particulars regarding the goods transferred to Pondicherry and sales effected i....
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.... 3148/ 08.06.97 i. Truck No. TN-45-Y-5047 TN-45-Y-5047 ii. Packages 34 barrels 34 barrels iii. Goods Fenvelerate Fenvelerate iv. Value 8,56,824/- 8,56,824/- v. Consignor Tropical Agro, Chennai Tropical Agro, Pondicherry vi. Consignee Tropical Agro, Pondicherry Zeneca ICI Coimbatore vii. Documents Inv 21 DC No. 1023 Form XX/0114115 Inv. 13 DC no. 54 Form XX-64900 viii. Remarks Door Delivery Door Delivery On the basis of the above the Assessing Officer has concluded that 34 barrels of Fenvelerate had been transported from Chennai to Coimbatore via Pondicherry in the same lorry bearing No. TN 45 Y 5047 and two Consignment Notes had been prepared in Chennai at the time of movement of goods on 07.06.1997 itself. The Assessing Officer has quoted the record created by the appellant for the above movement of goods. It is described as under:- First, for the stock transfer to Pondicherry : Stock Transfer invoice 21 and DC No. 1023/ 07.06.97 for Rs. 8,56,824.00 Second, for the sale to consignee : Invoice No. 13 and DC No. 54/08.06.97 for sales value of Rs. 8,70,400.00 It has also been noted that in th....
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....e buyers in various places. The documents further revealed that the stock transferred had been billed by the branch in Pondicherry immediately on arrival in the exact quantity consigned from Chennai and this reveals an attempt to evade tax under TNGST Act and CST Act due to Tamil Nadu. The Assessing Officer has placed reliance on Explanation 2 to Section 3 of the Central Sales Tax, 1956 ("the CST Act") which reads as under: 3. xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx Explanation 1: xx xx xx xx xx xx xx xx xx xx xx xx xx xx xx Explanation 2- Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State." In the light of the above provision, it is observed by the Assessing Officer that the goods which commenced journey from the factory premises of the dealers at Chennai reached in the same lot at the premises of the ultimate buyers via Pondicherry. Mere passage of the goods through Pondicherry without the goods even being unloaded at Pondicherry ....
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.... Rs.75706013.00 The taxable turnover is subjected to varying rate of tax as shown below:- Taxable turnover Rate of tax Tax due Rs. 902000.00 3.6% Rs. 32472.00 Rs.13725247.00 10% Rs.1372525.00 Total due Rs.1404997.00 Paid Rs. 32472.00 Balance Rs.1372525.00 Being aggrieved by this order, the appellant preferred CST / 156 / 2000 before the Appellate Assistant Commissioner who by his order dated 11.10.2002 allowed the appeal. Being aggrieved by order dated 11.10.2002, the State of Tamil Nadu preferred appeal being Appeal No. 100/03 to the Tribunal. By order dated 12.10.2012, the Tribunal partly allowed the said appeal. The appellant has filed CST/10/2014 being aggrieved by the said order. So far as assessment year 1996-97 is concerned, the appellant was assessed vide original assessment order dated 06.06.1998 at a total and taxable turnover of Rs. 11,62,28,830 and Rs. Nil respectively. When the above mentioned incident of interception and evidence collected by the Enforcement Officers were brought to the notice of the Assessing Authority, to find out whether the appellant had....
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....1.10.2000. Both relate to assessment period 1997-98. One of them relates to the TNGST Act and the other relates to the CST Act. The assessment order out of which CST/8/2014 arises relates to the TNGST Act and the assessment order out of which CST/9/2014 arises relates to the CST Act. We shall first turn to CST/8/2014. For the assessment period 1997-98, the appellant reported total and taxable turnover of Rs. 68,80,831.00 under the TNGST Act. The accounts of the appellant were called for and checked with the following results. Gross Sales related to Tamil Nadu : Rs. 70,36,697.32 Less Sales return : Rs. 3,53,786.35 Net sales : Rs. 66,82,928.97 The Assessing Officer has noted that out of sales returns of Rs. 3,53,758.35, the appellant claimed exemption only on a turnover of Rs. 1,29,286.00. The appellant did not claim exemption on a turnover of Rs. 2,24,502.35 as time barred. Therefore the total turnover of the appellant for consideration under the TNGST Act was as follows: Total sales (Tamil Nadu as per accounts): Rs. 70,36,697.00 Less: 1) Sales return claimed : Rs. 1,29,266.00 2) CST Sales (Direct) : Rs. 26,800.00 Taxable turnover under T....
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....d CST No. 41 of 2001 before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner by a common order dated 11.10.2001 allowed both the appeals i.e. Appeal No. 101 of 2001 and Appeal No. 41 of 2001. Being aggrieved by the order dated 11.10.2001 passed by the Appellate Assistant Commissioner for the assessment year 1997-98 in respect of disputed turnover of Rs. 4,12,18,506/- the State of Tamil Nadu preferred STA - 98/03 to the Tribunal. Being aggrieved by the order passed by the Appellate Assistant Commissioner for the assessment year 1997-98 in respect of disputed turnover of Rs. 2,78,90,022.00 the State of Tamil Nadu preferred STA No. 99/2003 before the Tribunal. The Tribunal by its order dated 12.10.2012 disposed of STA 98/03. The applicant has preferred CST / 8 / 2014 challenging the said order. The Tribunal by its order dated 12.10.2012 disposed of STA No. 99/03 along with STA No. 100/2003 and STA No. 101/2003. The appellant has filed CST/9/2014 challenging order of the Tribunal dated 12.10.2012 to the extent it disposed of STA 99/2003. The journey of each assessment order upto this Authority could be summarized for ready reference as follows- ....
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....me day, that cannot be construed as inter-State sales in the absence of any conceivable link between the movement of goods and delivery of the goods at the other end. Relevant paragraph of the judgment reads as under: " Thus, the Hon'ble Sales Tax Appellate Tribunal (Main Branch) in TA. No. 176/98 and 236/98 has held that the goods transported in the same lorry and sold on the same day cannot be construed as inter-state sales in the absence of any conceivable link between the movement of goods and the delivery of the goods to the customers at the other end and the Hon'ble Sales Tax Appellate Tribunal (M.B.) has also held that the Department should produce the documentary evidences to prove that the goods have moved based on the prior orders. The Assessing Officer or the Enforcement Wing officials have not produced any documents or records to show that there is a conceivable link between the movement of goods and the delivery of the goods to the ultimate purchaser. The Pondicherry Branch has independently acted on their own and the goods were received from Chennai in the regular course of stock transfer and the same were sold to the local Pondicherry customers and to the cu....
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....er relying on the Madras High Court judgment in M/s Associated Cement Companies Ltd. 23 VST 486, it is urged that if the goods were transported without unloading at Pondicherry to a customer in Tamil Nadu no inference can be drawn that it is an inter-State sale, because such a mode is adopted to save expenses towards loading and unloading and cost of providing storage space. It is also urged that tax planning as opposed to tax evasion has legal sanction. Relying on Madras High Court judgment in V.N. Narasimhan AIR 1961 Madras 504 and in Bank of Chettinad Ltd. 1940 (8) ITR 522, it is submitted that there is no legal impediment in a party adopting a particular form of transaction to minimize the expenses. It is submitted that this is exactly what has been done by the appellant and hence the appellant should not have been subjected to such treatment. It is submitted that in the circumstances, the impugned orders deserve to be set aside. Ms. Rama Ahluwalia, Ld. Counsel for the State of Maharashtra has filed written submissions. Counsel reiterated the said submissions. Counsel submitted that the appellant's F-Forms for the Assessment Years 1997-98, 1995- 96 and 1996-97 have been wron....
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....ssioner (CT), Chennai (North) Division, Greams Road, Chennai. Counsel urged that the appeals be dismissed. It may be stated here that the Union Territory of Pondicherry (Respondent No. 5 ) was initially represented by Mr. V.G. Prakasham. However, no counteraffidavit was filed on behalf of the Union Territory of Pondicherry. No one appeared for this respondent thereafter. Hence by order dated 17.05.2018, it was directed that the Union Territory of Pondicherry be proceeded against exparte. The States of Karnataka, West Bengal and Andhra Pradesh have also not filed any counter-affidavits. From the submissions of the appellant one thing is clear that the appellant has not disputed the manner in which the goods have moved from Tamil Nadu to Pondicherry and from Pondicherry to Tamil Nadu and other States. The appellant has admitted that same lorry was used. The appellant's case is that a party can always select and adopt a particular form of transaction to minimize the expenses and there is no legal impediment obstructing the party from doing so. A party can always plan its transaction in such a manner that it pays less tax. There is no tax evasion in such a case. In our opin....
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....uch as stock transfer invoices, sales invoices made at Pondicherry, transfer documents etc. revealed the following position. i. The movement of goods commenced at Chennai and terminated only at the place of the ultimate buyers; ii. The goods were mostly carried in the same vehicle from Chennai to the places of the buyers; iii. Bills were appeared to have been raised in the Branch immediately on arrival of vehicles in the Branch; iv. The goods were sold immediately in the same quantity and same lot generally on same date as received from the Head office; v. The goods were never unloaded at the Branch and were not stocked there; vi. The movement must have commenced from Chennai based on prior orders of the buyers in Tamilnadu and other states, as seen from the pattern of transactions as evidenced by the records maintained by the dealers themselves. In our opinion from the available record the Assessing Officer has rightly concluded that the appellant has circuitously transferred the goods to their already identified purchasers in various places in Tamil Nadu and other States via Pondicherry so as to evade payment of tax. The As....
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....at the appellants claim that the dispatches from Chennai are not intended for ultimate buyers but only to their own branch at Pondicherry is disproved by the fact that the goods were transported in the same lorry from Pondicherry to the ultimate buyers without being unloaded at Pondicherry. Note is also taken of the fact that the appellant has not controverted the glaring circumstance that the transporter has charged one single composite freight for the movement of the consignment from Chennai to the place of destination of the ultimate buyers albeit through Pondicherry. Significantly it is observed by the Assessing Officer that the above instance is cited only as an addition to the other corroborative evidences and the payment of freight by the Chennai Branch alone is not the basis for rejecting the stock transfer claim made by the appellant. Thus it is clear that the Assessing Officer has not merely relied on the illustrative cases cited in the order but has considered voluminous corroborative evidence. There is intrinsic evidence of application of mind in the lucid and reasoned order of the Assessing Officer. We have already quoted Explanation 2 to Section 3 of the CST Act....
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....n these observations are attracted to the facts of this case. It was submitted that since the appellant has filed Form F declarations the deeming provision contained in Section 6-A(2) of the CST Act will spring in action and the movement of goods to which the Form F declarations relate shall be deemed to have been occasioned otherwise then as a result of sale. It is urged that conclusive presumption contained in Section 6-A(2) of the CST Act having come into force, the Assessing Officer could not have reopened the concluded assessments which could be reopened only on limited grounds of fraud, collusion, misrepresentation and willful suppression of facts as laid down by the Supreme Court in Ashok Leyland (II) which is not the case here. It is not possible to accept this submission. The reassessment order dated 29.08.2000 provides answer to this submission. It is clear from the order that the Assessing Officer was alive to the legal position and effect of filing of Form F declarations by the assessees. This is what he has studied. "It is true that once Form-F declaration is filed by the dealers, the scope of enquiry before the assessing authority is to find whether the....
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....e 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) of the Central Sales Tax Act is limited to this extent, namely, to verify whether the particulars contained in the declaration (F forms) furnished by the dealer are 'true'. It means, the assessing authority can conduct an enquiry to find out whether the particulars in the declaration furnished are correct, or dependable, or in accord with facts or accurate or genuine. That alone is the scope of the enquiry contemplated by Section 6-A (2) of the Act. On the conclusion of such an enquiry, he should record a definite finding, one way or the other. As to what should be the nature of the enquiry, that can be conducted by the assessing authority under Section 6-A(2) of the Act, is certainly for him to decide. It is his duty to verify and satisfy himself that the particulars contained in the declaration furnished by the ....