2004 (3) TMI 730 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Condonation of delay in filing revisions.
2. Liability for sales tax for the assessment years 1986-87 and 1987-88 under the KGST Act and CST Act.
3. Validity of the assessments made against the petitioner and the lessee.
4. Application of Section 19C of the KGST Act.

Detailed Analysis:

1. Condonation of Delay in Filing Revisions:
The petitioner initially filed only one revision and later realized the need to file additional revisions to avoid the doctrine of res judicata. The delay in filing the additional revisions was condoned by the court despite objections from the State, considering the common questions involved and the fact that the revisions were prepared together but not filed due to the single copy of the Tribunal order.

2. Liability for Sales Tax for the Assessment Years 1986-87 and 1987-88:
The petitioner had leased out its distillery unit to another company, M/s. Eagle Distillery (P) Ltd., and contended that the lessee should be liable for the sales tax dues for the years in question. The court noted that the lessee had applied for separate sales tax registration but used the petitioner's registration till December 31, 1985. Despite the lease, the petitioner continued to allow the use of its registration certificate and related documents, which indicated that the business was being conducted by the petitioner with the lessee's connivance.

3. Validity of the Assessments Made Against the Petitioner and the Lessee:
The Tribunal upheld the assessments made against both the petitioner and the lessee, finding that they were colluding to evade tax. The court observed that the lessee did not respond to notices or challenge the assessment orders, leading to their finality. The petitioner was found to have employed a device to escape tax liability, and the assessments were justified.

4. Application of Section 19C of the KGST Act:
Section 19C, which provides for joint and several liability for tax dues, was noted by the court, although it was inserted after the relevant assessment years. The principles behind the section were considered relevant, supporting the joint liability of the petitioner and the lessee.

Conclusion:
The court upheld the assessment orders for the years 1986-87 and 1987-88 under both the KGST Act and the CST Act, confirming the joint and several liability of the petitioner and the lessee. However, the court directed the assessing authority to first proceed against the lessee for the recovery of dues and, if unsuccessful, to proceed against the petitioner, who was required to furnish security for the dues. The tax revision cases were disposed of accordingly.