1995 (6) TMI 194 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Refusal to issue declaration forms C, E-I, and E-II under rule 27AA of the Bengal Sales Tax Rules, 1941.
2. Determination of whether the sale was a subsequent sale under section 6(2) of the Central Sales Tax Act, 1956.
3. Jurisdictional authority of the Commercial Tax Officer.
4. Availability of alternative remedy for the petitioners.

Issue-wise Detailed Analysis:

1. Refusal to Issue Declaration Forms:
The petitioners, engaged in jute business, applied for declaration forms C, E-I, and E-II, which were refused by the Commercial Tax Officer (CTO). The CTO conditioned the issuance of these forms on the payment of Rs. 85,39,641, which he deemed as the tax leviable under the Central Sales Tax Act, 1956. The CTO did not accept the petitioners' claim that their sale to Jagannath Corporation in Kerala was a subsequent sale exempt under section 6(2) of the 1956 Act, thus subjecting the transaction to a 4% tax. The petitioners challenged this refusal, arguing that they had provided all necessary documents to prove the subsequent sale and that the CTO's conditional release of forms was without jurisdiction.

2. Determination of Subsequent Sale:
The core issue was whether the sale to Jagannath Corporation was a subsequent sale under section 6(2) of the 1956 Act, which would exempt it from tax. The petitioners contended that the sale by Dalhousie Jute Company to them was an inter-State sale and that their subsequent sale to Jagannath Corporation was also inter-State, thus exempt under section 6(2). The court noted that the movement of goods commenced when Dalhousie Jute Company delivered the goods to the transporter, and the consignment note supported this. The court found no evidence disputing the transfer of title from Dalhousie Jute Company to the petitioners and from the petitioners to Jagannath Corporation. The court concluded that the sale by the petitioners to Jagannath Corporation was indeed a subsequent sale, as the documents of title (consignment notes) were transferred during the movement of goods.

3. Jurisdictional Authority of the Commercial Tax Officer:
The court held that the CTO's insistence on the production of the consignor's copy of the consignment note was unwarranted. The CTO's refusal to issue the declaration forms was based on a misappreciation of law and was contradictory. The court emphasized that the rule of alternative remedy is not a jurisdictional bar but a convention. The court found that the CTO had wrongfully failed to exercise the jurisdiction vested in him by misconstruing the provisions of sections 3 and 6(2) of the 1956 Act.

4. Availability of Alternative Remedy:
The respondents argued that the petitioners had an adequate alternative remedy under the statute, citing several cases. However, the court rejected this argument, stating that the rule of alternative remedy is not a jurisdictional bar and that the case involved a question of law rather than disputed facts. The court decided not to relegate the petitioners to an alternative remedy, given the circumstances.

Conclusion:
The court allowed the writ application, quashing the impugned order dated November 30, 1992. The respondent authorities were directed to issue the necessary declaration forms in forms C, E-I, and E-II to the petitioners. The court found that the CTO's refusal was based on a misappreciation of law and was contradictory. The court emphasized that the movement of goods and the transfer of documents of title supported the petitioners' claim of a subsequent sale exempt under section 6(2) of the 1956 Act. The appeal by the State of West Bengal was dismissed, and the judgment of the learned single Judge was affirmed.