1996 (7) TMI 500 - HC - VAT and Sales Tax

Issues Involved:
1. Scope, purport, and effect of Section 6A of the CST Act.
2. Legal efficacy and binding force of orders passed under Section 6A(2) of the CST Act.
3. Taxability of transactions as inter-State sales under the CST Act.
4. Jurisdiction of the High Court to entertain writ petitions involving other State Governments.
5. Reassessment powers of the assessing authorities under Section 16 of the TNGST Act.

Detailed Analysis:

1. Scope, Purport, and Effect of Section 6A of the CST Act:
The petitioners sought an adjudication on the scope and purport of Section 6A of the CST Act, which deals with the burden of proof in cases of transfer of goods claimed otherwise than by way of sale. The court noted that Section 6A(1) places the burden on the dealer to prove that the movement of goods was not due to a sale but was a stock transfer. This is done by submitting a declaration in Form F, along with evidence of dispatch. Section 6A(2) allows the assessing authority to make an order based on the inquiry into the truth of the particulars in the declaration, deeming the movement of goods to be otherwise than as a result of sale for the purposes of the CST Act.

2. Legal Efficacy and Binding Force of Orders Passed Under Section 6A(2) of the CST Act:
The court held that an order passed under Section 6A(2) is a step in the assessment process and does not confer any special immunity from reassessment or revision under the CST Act or the TNGST Act. The order is subject to the provisions of Sections 16, 32, and 55 of the TNGST Act, which allow for reassessment and revision based on new evidence or discovery of material facts. The court rejected the petitioners' argument that such an order should be treated as final and immune from further scrutiny.

3. Taxability of Transactions as Inter-State Sales Under the CST Act:
The petitioners argued that the movement of vehicles from Tamil Nadu to their regional sales offices in other states was not an inter-State sale but a stock transfer. The court noted that the determination of whether a transaction is an inter-State sale or a stock transfer involves examining the facts and circumstances of each case. The court did not make a determination on this issue, leaving it open for the assessing authorities to decide based on the evidence presented.

4. Jurisdiction of the High Court to Entertain Writ Petitions Involving Other State Governments:
The court held that it does not have jurisdiction to entertain claims for refund of taxes paid to other State Governments under their local sales tax laws. The petitioners must seek relief from the appropriate authorities or courts in those states. The court sustained the objections of the other respondent-States and dismissed the writ petitions to the extent they sought relief against those states.

5. Reassessment Powers of the Assessing Authorities Under Section 16 of the TNGST Act:
The court affirmed the powers of the assessing authorities to reassess transactions under Section 16 of the TNGST Act if new evidence or material facts come to light. The court emphasized that the assessing authority must be satisfied of the existence of prerequisites for reassessment and must follow due process, including giving the assessee an opportunity to be heard.

Conclusion:
The court concluded that:
- The writ petitions seeking refunds from other State Governments are not maintainable before this Court.
- Section 6A of the CST Act is an ordinary legislative provision and does not confer any special status.
- Orders under Section 6A(2) are part of the assessment process and are subject to reassessment and revision.
- The merits of whether transactions are inter-State sales or stock transfers are left open for determination by the assessing authorities.
- The petitioners have 30 days to make representations or file appeals/revisions against the show cause notices or final orders, which the authorities must consider on merits without the obstacle of limitation.

The writ petitions were disposed of accordingly, with no costs.

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