2010 (2) TMI 1055 - HC - VAT and Sales Tax

Whether imposition of tax under CST on the appellant is sustainable in law? Whether the lower authorities and Appellate Tribunal have taken into consideration the language of Section 8(2-A) of CST Act? and Whether the quantum of turnover could be fixed purely based on the statement without any corroborative material? Held that - In the absence of any detailed discussion by the Tribunal, the issues raised as to the applicability of the notification in question, in the facts of the given case, must be considered by the Tribunal once again. To this extent, the appeal should be remitted. Accordingly, the first and second questions are answered only to the extent that the matter is remitted to the Tribunal for consideration. From the assessment order, it is seen that only an oral agreement was arrived at and there was no written agreement with agents for stock transactions as could be seen from Serial Nos.4, 7, 9 and 10 of the assessment order. The above material would also be sufficient for the assessing officer to disallow the exemption. Accordingly, we do not find any merit to interfere with the order of the Tribunal and the Appellate Assistant Commissioner as both the orders including the orders of the Assessing Officer are well supported by sufficient materials and not on the basis of the statements said to have been given by the Chairman of the appellant-assessee. Accordingly, we answer the third question against the appellant-assessee and in favour of the Revenue.

Summary

Issues:
1. Interpretation of Section 8(2-A) of the CST Act 1956 for imposition of tax.
2. Consideration of language of Section 8(2-A) by lower authorities and Appellate Tribunal.
3. Determination of turnover based on statement without corroborative material.

Issue 1: Interpretation of Section 8(2-A) for Tax Imposition:
The case involved appeals related to assessment years 1999-2000 and 2000-2001 concerning the imposition of tax under CST Act. The appellant claimed exemption based on a notification under Section 17 of the TNGST Act, stating that turnover was below the specified limit of Rs.100 crores. The assessing officer did not agree, leading to appeals. The High Court analyzed notifications increasing the limit to Rs.300 crores and Section 8(2-A) of the CST Act, which allows exemption under certain conditions. The court remitted the matter to the Tribunal for detailed consideration, indicating the need for a thorough review.

Issue 2: Examination of Lower Authorities' Consideration of Section 8(2-A):
The appellant's counsel argued that the exemption notification should apply despite specified conditions, while the Special Government Pleader contended that the exemption is only available for general conditions, not conditional ones. The court noted the lack of detailed discussion by the Tribunal on these submissions, leading to a remittance for further consideration. The judgment highlighted the need for a comprehensive review of the applicability of the notification in the case.

Issue 3: Determination of Turnover Based on Statement Without Corroborative Material:
Regarding the denial of exemption based on a statement, the court observed that the Chairman's statements were supported by records of deposits in employees' names. The appellant argued that the statements were retracted, citing an Income Tax Appeal decision. However, the court found that the assessing officer had sufficient materials to support the denial of exemption, including lack of a written agreement for stock transactions. Consequently, the court ruled against the appellant on this issue, affirming the decisions of the lower authorities.

In conclusion, the High Court partially allowed the tax case appeals, confirming the assessment order but remitting the matter regarding the exemption under Section 17 of the TNGST Act back to the Tribunal for further review. The judgment emphasized the importance of detailed consideration and supportive materials in tax assessment cases.