TaxTMI 
TaxTMI 
2009 (3) TMI 1097
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....ies on business in manufacturing of cast-iron casting like manhole covers, sanitary fittings etc. During the relevant periods the Petitioner sold its manufacturing goods, i.e., cast iron casting to M/s R.B. Agarwala & Co., Kolkata (hereinafter referred to as 'REA'). The RBA after receiving the goods undertook certain processings like fumigation and other tests as were found necessary to export the same out of the territory of India to foreign buyers who had placed orders upon the RBA as merchant exporters. As under Central Excise Act and Rules framed thereunder, for the limited purpose, packing, fumigation and testing amount to manufacture, RBA after exporting such goods to foreign buyers claimed the requisite Cent Vat Credit under Cent Vat Credit Rules, 2004. The regular assessments for the above assessment years were made by the Sales Tax Officer, Rourkela (II) Circle (hereinafter referred to as "the assessing officer") under Rule 12(4) of the CST (0) Rules, wherein the Petitioner's claim for deduction on account of export under Section 5(3) of the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act") was allowed by the Assessing O....
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....er the order received from the merchant exporter and sold those goods to the merchant exporter ill loose condition. The merchant exporter on receipt of the [finished goods undertook certain processings like fumigation and other tests. The process of fumigation (disinfecting) and radiation checking is carried out by the merchant exporter to meet the statutory requirements of the importing countries. After inspection, fumigation and radiation checking, the goods are packed by the merchant exporter in wooden carrots and tied with steel strips. In this way the goods become fit and presentable for sale in the international market. However, the goods supplied, i.e., C.I. Castings (Cast Articles of Iron) by it remain C.I. Castings (Cast Articles of Iron) without any change in character or property after the processings like fumigation, inspection and radiation checking is carried out on the said goods by the merchant exporter and, therefore, the pre-condition under Section 5(3) that the same very goods, i.e., "those goods" stands fully satisfied. The sale of cast iron castings by the Petitioner/manufacturer to the merchant exporter in the present case precedes the sale or purcha....
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....under bond or on payment of duty under claim of rebate. A merchant exporter may prefer to purchase excisable goods from the manufacturer on payment of excise duty and then claim rebate of excise duty from the Central Excise authorities on exportation of the goods. In such situations, the goods are cleared by the manufacturer to the merchant exporter as home clearance on payment of duty, which is later claimed by the merchant exporter as rebate. Therefore, drawing a presumption that the goods have been sold by the Petitioner for home consumption and were not made for the purpose of complying with any agreement or order placed by the foreign buyer is wholly based on assumptions and presumptions guided by misconception of law. In the impugned order, the Assessing Officer has entered a clear finding that he has perused the date of foreign buyers order and the date of dispatch of goods as given in the annexures annexed to the form H(B/L, ARE-1, foreign buyers orders etc.), which reveal that the supplies have been made against the pre-existing contracts with the foreign buyers. Therefore, the exercise of jurisdiction under Rule 80 without any cogent reason IS wholly illegal. Dr. Pal furt....
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....n properly filled up, the Petitioner is not entitled to get any exemption from payment of tax in terms of Section 5(3) of the Central Sales Tax Act. 5. On the rival contentions, the questions which fall for consideration by this Court are as follows: 1. Whether without exhausting the statutory remedy by way of appeal before the Commissioner of Sales Tax the Petitioner can approach this Court under Article 226 of the Constitution challenging the action of revisional authority who erroneously assumed to have jurisdiction conferred upon it even though it does not possess such jurisdiction? 2. Whether on the basis of self-same audit objections, which have been rejected by the Assessing Officer in the re-assessment proceeding, the Assistant Commissioner of Sales Tax can exercise his jurisdiction under Rule 80 of the Orissa Sales Tax Rules read with Rule 22 of the Central Sales Tax (Orissa) Rules merely because the Assistant Commissioner does not agree with the view taken by the Assessing Officer even though the said view is sustainable in law? 6. So far as the first question is concerned, law is well settled that if a Court or an authority wrongly assumes the existence of a jurisd....
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....s which have been rejected by the Assessing Officer in the reassessment proceeding the revisional authority cannot exercise jurisdiction under Rule 80 of the OST Rules read with Rule 22 of CST (O) Rules merely because he does not agree with the view of the Assessing Officer even though the said view is sustainable in law. In view of the above, the Writ Petition is maintainable even without exhaustion of the statutory remedy. 7. To deal with second question, it is necessary to Know what is contemplated in Rule 80 of OST Rules. Rule 80 is quoted below. 80. Revision by the Commissioner suo motu The Commissioner may on his own motion at any time within three years from the date of passing of any order by the Sales Tax Officer or within two years from the date of passing of any order by the Additional Commissioner, Special Additional Commissioner or Assistant Commissioner, as the case may be, call for records of the proceedings in which such order was passed and if he considers that any order passed therein is erroneous in-so-far-as it is prejudicial to the interest of the revenue he may after giving the dealer an opportunity of being heard and after making or causing to be made su....
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....ions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income Tax Officer the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law. A similar view was also taken by the Hon'ble Madras High Court in Commissioner of Income Tax v. Meco Industries Ltd. (2007) 294 ITR 281. 9. The jurisdiction conferred upon the Assistant Commissioner under Rule 80 of OST Rules read with Rule 22 of the CS....
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....ot exported. Besides, the exported goods have undergone further process of manufacturing since the name of the manufacturer in ARE-I Form goes by the name of the ultimate exporter. (C) Information made available from the Central Excise Range reveals that the instant manufacturer had diverted its entire product for home consumption. Thus, the sales were not make for the purpose of complying with any agreement or order in relation to export. 12. On the basis of above Audit Report, the Assessing Officer initiated re-assessment proceeding and finally dropped the said proceeding vide its Order Dated 17.2.2007. 13. The Assessing Officer rejected all the allegations made in the A.G. Audit Report in the reassessment proceeding initiated for the year 2002-03 with the following observation/reasons: After going through the observations of A.G. Audit, the books of a/c of the dealer, materials supplied during assessment and reassessment and the written submission of the advocate of the dealer, I am convinced that the goods dispatched by the dealer under assessment to merchant exporter were exported out of India. I believe so for following reasons. a) In the form 'H' submitted by....
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....al and further probe. In view of the discussions above, I am satisfied that the goods dispatched by the instant dealer for export have actually been exported. The doubts raised by audit are unfounded and uncalled for. So the proceeding is dropped. Enter NIL DEMAND. Similar reasons have also been assigned by the Assessing Officer in rejecting the allegations made in the A.G. Audit Report for the years 2003-04 and 2004-05. 14. Thereafter, the revisional authority initiated suo motu revision under Rule 80 of the OST Rules read with Rule 22 of the CST (O) Rules and revised the assessment order passed under Rule 10 of the CST (O) Rules by the Assessing Officer by sustaining the objections raised in A.G. Audit Report with the following observations: Examining the case in detail in the light of re-assessment order, record, documents, irregularities pointed out by the A.G. Audit supra and the written submission of the Ld. Advocate contesting the case it is observed that the particulars in Form ARE-I furnished by the ultimate exporter illustrates that the goods sold by the instant dealer-company to the ultimate exporter were - not exported in the same form. As per declaration in Form-....