1980 (11) TMI 149 - HC - VAT and Sales Tax

Issues Involved:
1. Reopening of assessments for the years 1972-73 and 1973-74.
2. Inclusion of disputed transactions in the taxable turnover for the years 1974-75 and 1975-76.
3. Determination of the true nature of the relationship between the assessee and M/s. Peirce Leslie India Ltd.
4. Legality and jurisdiction of the reassessment proceedings.
5. Request for certificates under Article 133(1) of the Constitution for appeal to the Supreme Court.

Detailed Analysis:

1. Reopening of Assessments for the Years 1972-73 and 1973-74:
The assessments for the years 1972-73 and 1973-74 were originally completed with taxable turnovers of Rs. 94,062.12 and Rs. 70,587.32, respectively. The assessments were reopened under Section 19 of the Kerala General Sales Tax Act on the basis of entries in the books of M/s. Peirce Leslie India Ltd., suggesting that certain transactions had escaped assessment. The assessee requested to cross-examine the representative of M/s. Peirce Leslie India Ltd., which was initially denied but later allowed on remand. The reassessment added Rs. 6,94,560 and Rs. 13,03,760 to the taxable turnover for 1972-73 and 1973-74, respectively.

2. Inclusion of Disputed Transactions in the Taxable Turnover for the Years 1974-75 and 1975-76:
For the years 1974-75 and 1975-76, the assessments included Rs. 34,83,850 and Rs. 42,13,270, respectively, representing disputed transactions. The assessee contended that it acted only as a del credere agent for M/s. Peirce Leslie India Ltd., who were agents for M/s. Inkemex India Ltd., the sole selling agents of M/s. Travancore Chemical & Manufacturing Co. Ltd. The assessee produced agreements and certificates to support this claim, but the assessing authority overruled these contentions.

3. Determination of the True Nature of the Relationship:
The core issue was whether the assessee had dominion over the goods and effected sales or merely acted as an agent. The Tribunal relied on invoices and a resolution dated 5th April, 1975, but the High Court found these materials irrelevant for determining the nature of transactions for the years 1972-73 and 1973-74. The evidence from the Assistant Manager of M/s. Peirce Leslie India Ltd. indicated that the assessee acted only as a del credere agent, responsible for canvassing orders and ensuring payment from buyers.

4. Legality and Jurisdiction of the Reassessment Proceedings:
The High Court concluded that there was no material to warrant the reopening of assessments for 1972-73 and 1973-74 under Section 19 of the Act. The materials relied upon by the assessing authority were deemed irrelevant and extraneous. Consequently, the reassessment proceedings for these years were held to be illegal and without jurisdiction.

5. Request for Certificates under Article 133(1) of the Constitution:
The State Government's request for certificates under Article 133(1) to appeal to the Supreme Court was rejected. The High Court determined that the cases did not involve a substantial question of law of general importance requiring a pronouncement by the Supreme Court.

Conclusion:
The High Court allowed the revision petitions for the years 1972-73 and 1973-74, setting aside the orders of the Tribunal, the Appellate Assistant Commissioner, and the assessing authority. For the years 1974-75 and 1975-76, the High Court remanded the cases to the Tribunal for fresh disposal in accordance with the observations made in the judgment. The request for certificates under Article 133(1) was denied as the cases did not involve substantial questions of law of general importance.

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