1988 (3) TMI 439 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the assessment order dated 28th March, 1974.
2. Misconception of facts in the assessment.
3. Non-service of the assessment order.
4. Liability for sales tax on the sale of scrap material.
5. Recovery proceedings initiated by the department.

Issue-wise Detailed Analysis:

1. Validity of the assessment order dated 28th March, 1974:
The petitioner challenged the assessment order dated 28th March, 1974, which assessed him to sales tax on a turnover of Rs. 80,254.88 for the assessment year 1969-70. The assessment was based on a sale allegedly made to M/s. Viswanatha Rupa & Company. The assessment order did not specify the period for which M/s. Viswanatha Rupa & Company was assessed, which was crucial to the petitioner's case.

2. Misconception of facts in the assessment:
The petitioner contended that the assessment was made on a misconception of facts. He provided a detailed background, explaining that he had purchased a wrecked ship, "ss. Stamatis," and entered into a financial arrangement involving several financiers. A Joint Commissioner was appointed by the court to oversee the sale of the ship's components. An agreement was made with M/s. Viswanatha Rupa & Company, allowing them to dismantle and remove the ship's components. The petitioner argued that the assessing authority incorrectly treated the exercise of rights by Viswanatha Rupa & Company as a sale by him, leading to an erroneous assessment.

3. Non-service of the assessment order:
The petitioner claimed he did not receive the assessment order dated 28th March, 1974, and only became aware of it when prosecuted for non-payment of tax. Due to the non-service, he lost the right to appeal within the stipulated 30 days, compelling him to seek relief under Article 226 of the Constitution of India.

4. Liability for sales tax on the sale of scrap material:
The department, in its counter-affidavit, stated that the revision of assessment was made under section 55 read with section 16(2) of the Tamil Nadu General Sales Tax Act, 1959, based on the sale of scrap material from the ship "ss. Stamatis." The Sales Tax Appellate Tribunal observed that M/s. Viswanatha Rupa & Company purchased iron scrap from the petitioner and thus became the second dealer, making the petitioner liable as the first dealer. The petitioner failed to provide evidence to refute the transaction. The agreement and subsequent actions, including the dismantling and removal of the ship's components, were deemed to constitute a transfer of property by way of sale, making the petitioner liable for sales tax.

5. Recovery proceedings initiated by the department:
The department initiated recovery proceedings to realize a sum of Rs. 2,407.65 assessed as tax payable under the impugned order. The court found that the transactions, as evidenced by the bills of sale issued by Viswanatha Rupa & Company, involved the sale of iron scrap, white metal, lead scrap, and brass lead scrap. These sales were liable for assessment at the hands of the purchaser from the petitioner. The court concluded that the impugned order was correct and dismissed the writ petition, finding no merit in the petitioner's arguments.

Conclusion:
The court dismissed the writ petition, upholding the assessment order dated 28th March, 1974. The court found that the petitioner was liable for sales tax on the sale of scrap material from the ship "ss. Stamatis" and that there was no merit in the petitioner's claims of misconception of facts or non-service of the assessment order. The recovery proceedings initiated by the department were deemed valid. There was no order as to costs.