1975 (3) TMI 107 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Nature of the transactions (inter-State sales vs. local sales)
2. Rejection of C form declarations in reassessment proceedings

Issue-wise Detailed Analysis:

1. Nature of the Transactions:
The petitioners, dealers in asbestos sheets, were originally assessed based on their returns. Later, the Joint Commercial Tax Officer initiated proceedings on the grounds that certain turnover relating to inter-State sales had escaped assessment. The petitioners contended that these transactions were local sales in Kerala, effected after transferring stock from their state to a depot in Kerala. Despite this, they obtained C form declarations from Kerala purchasers. The Joint Commercial Tax Officer concluded that the transactions were inter-State sales and taxable under Section 3(a) of the Central Sales Tax Act, 1956. The Appellate Assistant Commissioner and the Tribunal upheld this finding. The court, satisfied with the evidence, affirmed that the goods were despatched from the petitioners' state to buyers directly, and even at the contract stage, it was contemplated that the goods would move from the petitioners' state to out-of-state purchasers. Thus, the court upheld the Tribunal's finding that the disputed turnover related to inter-State sales.

2. Rejection of C Form Declarations in Reassessment Proceedings:
The petitioners challenged the rejection of C form declarations, which were not filed with the original returns but produced during reassessment. Section 8 of the Act provides for a concessional tax rate if certain conditions are met, including furnishing a C form declaration. Rule 5 of the Central Sales Tax (Madras) Rules, 1957, required the C form declarations to be produced with each monthly return. However, the Supreme Court in Sales Tax Officer, Ponkunnam v. Abraham held that the State Governments could not prescribe a time-limit for producing C form declarations, but they should be furnished within a reasonable time. This principle was applied by the Madras High Court, which held that declarations could be produced even at the appellate stage if there were no laches.

In this case, the petitioners did not include the disputed turnover in their Central sales tax return, believing it to be local sales. When reassessment was proposed, they procured and submitted the C form declarations. The authorities rejected these declarations, stating they were not produced before the final assessment. The court found the petitioners acted bona fide and obtained the declarations only when the transactions were disputed. There was no rule prohibiting the production of declarations at reassessment, and the finality of the original assessment was set at large by the reassessment notice. The court concluded that the authorities should have accepted the C form declarations and considered them on their merits.

Conclusion:
The court set aside the Tribunal's order for the assessment years 1961-62 to 1963-64 and remanded the matter to the Tribunal to reassess the turnover entitled to the concessional rate, considering the C form declarations. The petitioners were awarded costs for the petitions.

Petitions allowed.