1994 (4) TMI 380 - HC - VAT and Sales Tax

Issues:
1. Challenge to provisional demand under Rule 18(4) of the Tamil Nadu General Sales Tax Rules, 1959 for transactions relating to inter-State sales.
2. Government Order (G.O.) No. 423 dated December 31, 1993 remitting sales tax collected for transactions during assessment years 1987-1988 to 1992-1993.
3. Change in the treatment of in-transit sales causing hardship to trade associations and individual dealers.
4. Examination of the time limit for completing formalities for subsequent inter-State sales under section 6(2) of the Central Sales Tax Act, 1956.
5. Directions given by the Government regarding waiver of tax, time limit for subsequent sales, and treatment of sales after 40 days from the date of arrival of goods.
6. Interpretation of G.O. No. 423 regarding subsequent sales within and after 40 days from the date of arrival of goods.
7. Requirement for assessing authorities to re-examine provisional demands and notices in light of the G.O. and afford dealers an opportunity to prove the nature of subsequent sales.
8. Disposal of writ petitions with no order as to costs.

Analysis:
1. The writ petitions challenged the provisional demand made under Rule 18(4) of the Tamil Nadu General Sales Tax Rules, 1959, or the notices issued for provisional assessment on the grounds of inter-State sales. The State Government issued G.O. No. 423, remitting sales tax collected for transactions during specific assessment years due to difficulties in determining the nature of transactions. The petitioners raised concerns about the sudden change in treatment of in-transit sales, causing hardship to them.

2. The Government, after consultation, determined a 40-day time limit from the date of arrival of goods for completing formalities for subsequent inter-State sales under section 6(2) of the Central Sales Tax Act, 1956. The G.O. directed that sales after 40 days would be treated as local sales. This decision aimed to balance the need for formalities with the classification of sales under the tax laws.

3. The judgment emphasized the importance of re-examining provisional demands and notices in light of the G.O. No. 423. Assessing authorities were instructed to provide dealers with the opportunity to prove the nature of subsequent sales, whether within or after the 40-day period. The court highlighted the need for a fair assessment process based on the provisions of the G.O. and relevant tax laws.

4. The court concluded that until the assessing authorities re-evaluate the provisional demands and notices in accordance with the G.O. and afford dealers the opportunity to prove the nature of subsequent sales, enforcement of demands and further proceedings should be halted. The judgment did not delve into the merits of the case, leaving room for dealers to present their cases based on the G.O. provisions when the assessing authorities review the matters under the Rules.

5. Ultimately, the writ petitions were disposed of with no order as to costs, indicating that the court's decision was based on the need for a thorough re-examination of the demands and notices in line with the G.O. No. 423 and legal provisions governing inter-State sales tax issues.

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