2010 (4) TMI 1006 - HC - VAT and Sales Tax

Whether when the goods are sold in form XVII, the Revenue cannot take action against the seller who has no obligation to enquire into whether the buyer is engaged in process of manufacture or utilised the goods sold for the abovesaid purpose? Held that - No hesitation in allowing the writ petition with a direction to the petitioner to deposit the entire tax within a period of ten days from today. On such deposit, the appellate authority shall take up the appeal on file and hear the same on the merits. In the meantime, there shall be a stay of recovery of penalty imposed on the petitioner under section 16(2) of the Act. In the circumstances, the writ petition is allowed by quashing the recovery proceedings initiated by the second respondent subject to compliance with the above stated condition.

Summary

Issues:
Challenge to assessment order based on court decision, validity of form XVII transactions, demand raised by revenue, imposition of penalty under section 16(2) of Tamil Nadu General Sales Tax Act, appeal rejection by Appellate Assistant Commissioner, admissibility of appeal, rectification of assessment, appeal provisions, refixing of turnover, recovery proceedings.

Analysis:

The petitioner challenged an assessment order based on a previous court decision related to form XVII transactions. The court had set aside the original order and remitted the matter back to the assessing officer to determine the turnover covered by valid form XVII. A revised order was passed, refixing the turnover, and a demand was raised by the revenue, including a penalty under section 16(2) of the Tamil Nadu General Sales Tax Act. The petitioner's appeal before the Appellate Assistant Commissioner was rejected, questioning the admissibility of the appeal based on a previous judgment. However, the petitioner argued that the appeal was rightly filed following the court's order setting aside the assessment.

The Additional Government Pleader contended that the impugned order was passed in compliance with the court's direction to reconsider the form XVII turnover, and therefore, there was no cause of action to challenge the assessment order on other issues. Reference was made to a previous judgment where the rectification of assessment was deemed not appealable. However, the court distinguished the current case from the cited judgment, emphasizing that the entire assessment had been set aside, and the refixing of turnover and penalty imposed could not be viewed as mere consequential orders.

The court held that the order refixing the turnover in its entirety was not a mere consequential order but a significant decision affecting the assessment as a whole. The petitioner was directed to deposit the entire tax within a specified period for the appeal to be heard on its merits. Recovery proceedings initiated by the revenue were quashed, subject to compliance with the court's conditions. The writ petition was allowed, with a stay on the recovery of the penalty imposed under section 16(2) of the Act. No costs were awarded, and connected matters were closed.