2009 (1) TMI 780 - HC - VAT and Sales Tax

Examine the issues involved in the matter afresh in the light of the decision of the Supreme Court in Ashok Leyland Ltd. v. State of Tamil Nadu and Another, 2004 (1) TMI 365 - SUPREME COURT OF INDIA Held that - Since the order of this Court dated 02.12.1997 in T.C.No.1096/1990 has already been set aside by the Hon ble Supreme Court in Civil Appeal No.943/2001, by directing this Court to decide the issue afresh, virtually, the order of the Tribunal is restored and it is only the said order which is to be considered afresh in accordance with the decision of the Supreme Court in Ashok Leyland Ltd. Case. When there is a statutory authority now functioning with jurisdiction to decide the issue relating to cases under the Central Sales Tax Act and as the matter involves other states also, it is the said Authority who alone has got jurisdiction to decide the issue. Therefore, we are of the considered view that the matter has to be decided on merits by the Central Sales Tax Appellate Authority. Tax case is disposed of by granting liberty to the petitioner to file an appeal before the Central Sales Tax Appellate Authority, New Delhi against the order dated 20.09.1989 in Appeal No.133/89 on the file of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore Bench

Summary

Issues:
1. Interpretation of sales turnover as stock transfer or inter-State sale
2. Imposition of penalty on taxable turnover
3. Jurisdiction of Central Sales Tax Appellate Authority

Interpretation of Sales Turnover:
The case involved a dispute regarding the nature of sales turnover reported by the assessee for the assessment year 1986-87. The Appellate Assistant Commissioner initially determined the turnover and imposed a penalty, considering a portion of the turnover as inter-State sales. However, the Tamil Nadu Sales Tax Appellate Tribunal later ruled that the transaction represented stock transfer, not inter-State sales. Subsequently, the High Court, in a judgment dated 02.12.1997, disagreed with the Tribunal's interpretation, holding that the goods' movement constituted inter-State sales. The matter was then appealed to the Supreme Court, which remanded the case for fresh consideration in light of the Ashok Leyland Ltd. case, emphasizing the legal fiction created by Sec.6-A(2) of the Central Sales Tax Act.

Imposition of Penalty:
The Appellate Authority had directed the Assessing Officer to verify "C" Forms related to a specific turnover and granted relief accordingly. While the penalty imposition was challenged by the assessee, the Tribunal set it aside. However, the High Court confirmed the penalty, stating that the goods' movement and subsequent sale constituted inter-State sales, justifying the penalty. The Supreme Court's remand order did not delve into the penalty issue but focused on the interpretation of the sales turnover. The Central Sales Tax Appellate Authority was not empowered to decide on the penalty matter, and the case was remanded for a fresh determination of the sales turnover nature.

Jurisdiction of Central Sales Tax Appellate Authority:
The establishment of the Central Sales Tax Appellate Authority with jurisdiction across India prompted the High Court to direct the petitioner to file an appeal before this authority. The High Court clarified that the Supreme Court's remand was specific to reconsidering the sales turnover issue in line with the Ashok Leyland Ltd. case. As the matter involved multiple states and the Central Sales Tax Appellate Authority was the appropriate forum, the High Court granted the petitioner liberty to appeal before this authority, emphasizing the need for expeditious resolution.

This detailed analysis of the judgment highlights the key issues of interpretation of sales turnover, imposition of penalty, and the jurisdiction of the Central Sales Tax Appellate Authority, providing a comprehensive overview of the legal proceedings and the rationale behind the High Court's decision.