2008 (3) TMI 629 - HC - VAT and Sales Tax

Whether Tribunal totally erred in deciding a new issue altogether, that too without giving proper opportunity to the petitioner in addressing the arguments relating to the said issue? Held that - In the light of the specific stand taken by the learned senior counsel representing the petitioner that, for the first time, the Tribunal had decided altogether a new question, which, in fact, had not been, before either the preliminary authority or the appellate authority, this court is inclined to set aside the impugned order and remand the matter to the Tribunal to give an opportunity to both the parties to advance their submissions on this question, which had been argued before this court, and also the incidental or the ancillary questions, if any, which may be argued, and decide the matter afresh, in accordance with law, as expeditiously as possible, preferably within a period of two months from the date of receipt of a copy of this order. Revision allowed.

Summary

Issues:
1. Interpretation of section 6(2) of the CST Act regarding exemption on inter-State sales.
2. Tribunal's decision on whether the goods sold qualify as transit sales under section 6(2) of the Act.
3. Allegation of the Tribunal deciding a new issue without proper opportunity to the petitioner.

Analysis:
1. Interpretation of section 6(2) of the CST Act:
The case involved a dispute regarding the interpretation of section 6(2) of the CST Act, which provides conditions for exemption on inter-State sales. The first sale must either occasion the movement of goods from one State to another or be effected by a transfer of documents of title during their movement. The Tribunal emphasized that for subsequent sales to be exempt, the first sale must meet one of these conditions, as clearly outlined in the Act.

2. Qualification of goods as transit sales:
The petitioner claimed exemption under section 6(2) for transit sales totaling Rs. 14,91,959. However, the assessing authority and subsequent appellate bodies disagreed, leading to an appeal to the Sales Tax Appellate Tribunal. The Tribunal, in its decision, focused on whether the sales in question qualified as transit sales under the Act. It found that the petitioner's transactions did not meet the criteria specified in section 6(2) as the goods were already consigned to a predetermined buyer before moving between states, thus ruling out their classification as transit sales.

3. Allegation of deciding a new issue without proper opportunity:
The petitioner alleged that the Tribunal erred by deciding a new issue without allowing adequate opportunity to address the arguments related to it. The Tribunal's decision deviated from the primary question of whether the turnover was covered by E1 forms, instead focusing on the nature of the sales themselves. This led to the petitioner challenging the Tribunal's decision, claiming a lack of proper notice and opportunity to present arguments on the new issue.

In light of the arguments presented, the High Court, citing a precedent, set aside the Tribunal's order and remanded the matter for a fresh decision. The Court emphasized the need for both parties to have the opportunity to present their submissions on the key issue and any related questions. The Court directed the Tribunal to reevaluate the case in accordance with the law, ensuring a fair hearing for all parties involved within a specified timeframe.