2008 (10) TMI 601 - AAAR - VAT and Sales Tax

Summary

Issues Involved:
1. Exemption of stock transfers and consignment dispatches from inter-State sales tax.
2. Reopening of assessments by the Deputy Commercial Tax Officer.
3. Levy of penalty for alleged concealment of material facts.
4. Applicability of the Supreme Court's decision in Ashok Leyland Ltd. v. State of Tamil Nadu.

Detailed Analysis:

1. Exemption of Stock Transfers and Consignment Dispatches from Inter-State Sales Tax:
The appellant, a Milk Producers' Cooperative Society, claimed exemption for goods transferred to branches and consignment agents in other States, arguing there was no inter-State sale. The appellant provided F form declarations and sale-pattis to support this claim. The assessing authority initially allowed the exemption for most transactions but disallowed a portion due to non-production of F forms. Upon appeal and submission of the required forms, the matter was remanded for reconsideration. However, subsequent inspections revealed that goods were dispatched after receiving full payment from out-of-State buyers, leading the assessing authority to treat these transactions as inter-State sales, resulting in tax levies.

2. Reopening of Assessments by the Deputy Commercial Tax Officer:
The Deputy Commercial Tax Officer issued notices to reopen assessments based on new material gathered during inspections. The appellant objected and filed writ petitions, which the High Court directed to be resolved by the concerned authority. Revised assessments were passed, treating the previously exempted transactions as inter-State sales and levying tax and penalties. The Tribunal upheld the revised assessments but set aside the penalties, finding no suppression of turnover.

3. Levy of Penalty for Alleged Concealment of Material Facts:
The assessing authority imposed penalties for alleged concealment of material facts. However, the Tribunal found no suppression of turnover and set aside the penalties. The Tribunal observed that the inter-State movement of goods commenced as per directions from the Federation and after receiving full payment, treating these transactions as inter-State sales under section 3(a) of the CST Act.

4. Applicability of the Supreme Court's Decision in Ashok Leyland Ltd. v. State of Tamil Nadu:
The Tribunal referenced the Supreme Court's decision in Ashok Leyland Ltd. v. State of Tamil Nadu, which held that acceptance of F form declarations creates a conclusive presumption that the inter-State movement of goods was not a result of sale. The Tribunal, however, did not fully apply this precedent, failing to consider that the acceptance of F forms by the assessing authority precluded reopening the assessments except on grounds of fraud, willful suppression, or misrepresentation. The Tribunal's assumption that all payments were received before dispatch was incorrect, as detailed statements showed a significant proportion of payments were received after dispatch.

Conclusion:
The appeals were partly allowed and partly dismissed. The turnover allowed and disallowed for each year were specified, with the refund due to the appellant to be processed expeditiously. The decision emphasized that the reopening of assessments was not justified under the legal principles established by the Supreme Court in Ashok Leyland Ltd. v. State of Tamil Nadu, as there was no conclusive evidence of willful suppression or fraud. The transactions with consignment agents were not to be treated as inter-State sales, and only the turnover related to stock transfers with pre-received payments was liable to tax under the CST Act.