2011 (4) TMI 1244 - HC - VAT and Sales Tax

Whether the appeals are filed against the orders passed under section 9(2) of the CST Act for which section 18A(1) of the CST Act has no application therefore, the impugned order is illegal and requires to be set aside? Held that - If the appellate authority is not willing to adopt, either of these two methods it is open to them to dispose of the appeal on merits. However the impugned order saying that the appeal which is validly preferred against an order under section 9(2) of the Act as not maintainable in view of insertion of section 18A(1) of the Act is not proper. Therefore, the entire approach of the appellate authority is erroneous, contrary to statutory provisions and liable to be set aside. Accordingly, the impugned order is hereby set aside. Matter is remitted back to the appellate authority to follow any of the modes that is set out above in this order and then pass appropriate orders.

Summary

Issues Involved:
1. Appeal against the order passed under section 9(2) of the CST Act.
2. Interpretation of section 18A(1) of the CST Act.
3. Applicability of section 6A(2) of the CST Act in the case.
4. Assessment of tax for non-production of F forms.

Analysis:

1. The appellant, a company registered under the KVAT Act, appealed against orders passed under section 9(2) of the CST Act related to the transfer of stock to various branches and agents. The assessing authority granted exemption based on form F submissions but demanded taxes for transfers lacking form F support. The appellant's appeal under section 62 of the KVAT Act was dismissed, citing section 18A(1) of the CST Act. The appellant challenged this decision through a writ petition which was rejected, leading to the current appeal.

2. The crux of the issue revolves around the interpretation of section 18A(1) of the CST Act, inserted with effect from June 1, 2010. The appellate authority contended that since the appeal was filed post the appointed day, it was not maintainable. The dispute pertained to tax levied for non-production of F forms, falling under section 6A(2) of the CST Act. The appellant argued that section 18A(1) did not apply to appeals against orders passed under section 9(2) of the Act.

3. Section 6A(2) of the CST Act empowers the assessing authority to make orders concerning the correctness of declarations filed by dealers to claim exemptions. In cases where form F support is lacking, the assessing authority may proceed to assess taxes. The appellant contended that the enquiry under section 6A(2) was not relevant when form F was not produced to substantiate the claim for exemption.

4. Upon reviewing the impugned order, it was found that the assessing authority had accepted some F forms but demanded taxes for turnovers not supported by form F. The appellant appealed against this specific portion of the order. The appellate authority was criticized for not considering the form F submitted during the appeal process. The court held that the appellate authority had the option to either assess the form F during the appeal or remand the matter to the assessing authority for proper assessment under section 6A(2).

In conclusion, the court set aside the impugned order, directing the appellate authority to follow the correct procedures outlined in the judgment and make appropriate decisions based on the evidence presented.