2008 (7) TMI 551 - SC - VAT and Sales Tax

Inter-State trade and commerce unaccounted - Held that - Appeal allowed. set aside the impugned order of the Assistant Commissioner and remit the matter to him for a fresh consideration of the appeal. A bare reading of the order shows complete non-application of mind. As rightly pointed out by learned counsel for the appellant, this is not the way a statutory appeal is to be disposed of. Various important questions of law were raised. Unfortunately, even they were not dealt with by the first appellate authority.

Summary

Issues:
Challenge to order passed by Division Bench of Orissa High Court without deciding on merits due to prior order by Supreme Court in the assessment year 2001-02.

Analysis:
The appellant, a public sector undertaking, was involved in the manufacture and sale of iron, steel, chemical fertilizers, and other products in inter-State trade. An extra demand of Rs. 19,25,41,763 was raised for the assessment year 2001-02 under the Central Sales Tax Act, 1956. The appellant disclosed various sales and transfers of goods, leading to a tax levy due to the absence of certain declaration forms. The assessing officer held that sales made under the Annual Memorandum of Understanding were subject to tax as inter-State sales.

An appeal was filed before the Assistant Commissioner of Sales Tax, who directed partial payment of the demand during the pendency of the appeal. A revision application before the Commissioner resulted in a direction to pay Rs. 10 crores. The High Court ordered deposit of Rs. 2 crores, which was challenged in the Supreme Court. The Assistant Commissioner dismissed the appeal on April 19, 2006, and a second appeal was filed before the Orissa Sales Tax Tribunal, along with an application for stay. The Commissioner directed a deposit of Rs. 15 crores, which was contested before the High Court.

The High Court disposed of the petition without expressing any opinion on merits, citing the matter was under examination by the Supreme Court. The appellant argued that the appeal was dismissed in a casual manner without proper examination of the raised issues. The appellant highlighted the potential double taxation due to erroneous treatment of transactions as inter-State sales and emphasized the need for effective utilization of the Central Sales Tax Appellate Authority as provided by the Act.

The Supreme Court noted the lack of application of mind in the first appellate authority's order, emphasizing the importance of reasons in decisions. Quoting previous judgments, the Court stressed the necessity of reasons for a just and fair decision-making process. Consequently, the impugned order was set aside, and the matter was remitted to the Assistant Commissioner for a fresh consideration with a reasoned order addressing all points raised by the appellant. The Court directed the disposal of the appeal within six months and clarified that no opinion on the case's merits was expressed. The appeal was allowed without costs.