1994 (7) TMI 325 - HC - VAT and Sales Tax

Issues Involved:
1. Jurisdiction to reopen assessment for the year 1979-80.
2. Justification for remanding the case for the year 1980-81.

Issue-wise Detailed Analysis:

1. Jurisdiction to Reopen Assessment for the Year 1979-80:
The primary contention revolves around whether the assessing authority had the jurisdiction to reopen the assessment for the year 1979-80. The turnover of the assessee, a biscuits manufacturing company, was initially assessed at about rupees six crores, with exemptions granted. The successor Commercial Tax Officer, based on inspections conducted, issued a show cause notice to reopen the assessment and reassess the exempted turnover.

The legal basis for this action was Rule 14-A(8) of the CST (AP) Rules, read with Section 9(2) of the CST Act and Section 14(4)(cc) of the APGST Act. Rule 14-A(8) allows the assessing authority to determine the correct turnover and assess tax on escaped or under-assessed turnover after issuing a notice to the dealer. Section 14(4)(cc) specifically empowers the authority to assess the correct amount of tax payable if any deduction or exemption has been wrongly allowed.

The court referred to several precedents, including R.S. Narayana Shenoi v. State of Kerala and State of Andhra Pradesh v. Sreenivas Trading Co., to establish that the assessing authority has the power to reopen assessments in cases of escaped turnover due to wrongly granted exemptions. However, the court emphasized that such power must be exercised based on fresh material, not merely a change of opinion.

In this case, the Tribunal found no fresh material that was not available at the time of the original assessment. The material collected during the inspections was already considered, and thus, the reopening of the assessment was deemed illegal and unjustified. Consequently, T.R.C. No. 151 of 1985 failed.

2. Justification for Remanding the Case for the Year 1980-81:
The second issue pertains to whether the Tribunal was justified in remanding the case for the assessment year 1980-81. The Tribunal found that certain factual aspects were not determined by the authorities and remanded the matter for de novo examination.

The court examined the provisions of Section 6-A read with Sections 2(dd) and 3 of the CST Act, which define inter-State sales and the conditions under which goods moved from one State to another are not considered sales. The assessee had filed "F" forms to prove that the movement of goods was not due to sales but transfers to other business places or agents.

The Tribunal noted that the assessing authority failed to categorize and scrutinize each transaction to determine whether it was exigible to tax under Section 3(a) of the CST Act. The Tribunal found that the assessment orders lacked specific findings on whether all instances of transactions were considered, suggesting the possibility of more instances than recorded.

The Tribunal concluded that barring certain transactions, other transactions did not qualify as inter-State sales under Section 3(a) of the CST Act. Therefore, it remanded the case to the assessing authority for a de novo examination of each transaction, allowing the assessee to file "C" forms for transactions deemed inter-State sales.

The court upheld the Tribunal's decision to remand the case, finding it justified based on the need for a detailed examination of each transaction. Consequently, T.R.C. No. 154 of 1985 was dismissed, and the remand was affirmed.

Conclusion:
Both tax revision cases, T.R.C. Nos. 151 and 154 of 1985, were dismissed. The court upheld the jurisdiction of the assessing authority to reopen assessments but found the reopening unjustified due to the lack of fresh material. The remand for the assessment year 1980-81 was affirmed to allow a comprehensive examination of transactions.

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