2016 (6) TMI 986 - HC - VAT and Sales Tax

Concessional rate of tax on the interstate sale of rice/broken rice - transaction not covered by C Forms - In respect to export, the H Forms furnished by the dealer was not supported by other documentary evidence. - Held that - As the impugned assessment order was passed in violation of the principles of natural justice, it must be and is, accordingly, set aside. Whether he assesses the petitioner to tax under the Central Sales Tax Act or under the Telangana Value Added Tax Act, the revisonal authority shall issue a fresh show cause notice along with the information obtained by him from G.I.S, or any other information which he seeks to rely upon. In case, he is of the view that the subject goods are intra-state sales, and not inter-state sales, it is open to him to issue a show cause notice under the Act. - Matter remanded back. In so far as H Forms are concerned, while the assessing authority rejected the petitioner s claim for exemption from tax, under Section 5(3) of the Act, for a turnover of ₹ 13,50,735/-, the revisional authority had denied them the benefit of exemption for an additional turnover of ₹ 4,80,000/- on the ground that the H Forms were not accompanied by supporting documents - . These are all matters which the revisional authority is required to consider on the basis of the document on record, or such other documents which the petitioner may choose to submit in addition thereto. - Matter remanded back. - Decided partly in favor of assessee.

Issues:
1. Revisional order withdrawing concessional rate of tax on interstate sale of rice/broken rice.
2. Denial of exemption on certain turnover due to lack of supporting documents.
3. Violation of principles of natural justice in passing the impugned order.
4. Dispute regarding the tax rate applicable on the sale of rice and broken rice.
5. Assessment under Central Sales Tax Act vs. Telangana Value Added Tax Act.
6. Rejection of exemption on turnover supported by 'H' Forms.
7. Consideration of supporting documents for granting exemption.

1. Revisional Order on Concessional Tax Rate:
The revisional order challenged in the writ petition withdrew the concessional rate of tax on the interstate sale of rice/broken rice not covered by 'C' Forms, levying tax at 4%. The revisional authority found discrepancies in the data submitted by the dealer, leading to the withdrawal of concessional rate on a portion of the turnover. The petitioner argued that the order was based on information obtained without their knowledge, violating principles of natural justice.

2. Denial of Exemption on Turnover:
The impugned order also denied exemption on a turnover amount due to lack of supporting documentary evidence. The petitioner contended that the revisional authority erred in rejecting the exemption claim based on 'H' Forms supported by required documents. The dispute centered on the proper evaluation of supporting documents for granting exemptions.

3. Violation of Principles of Natural Justice:
The court noted a violation of principles of natural justice in the revisional order as crucial information was obtained without being shared with the petitioner. This lack of transparency led to an unfair assessment, prompting the court to set aside the impugned order and mandate a fresh assessment process with proper notice and opportunity for objections.

4. Dispute Over Applicable Tax Rate:
A significant contention arose regarding the applicable tax rate on the sale of rice and broken rice under the Central Sales Tax Act. The petitioner argued for a lower tax rate based on Circulars, while the respondent emphasized the requirement of specific supporting evidence for concessional rates. This dispute highlighted the importance of accurate documentation in tax assessments.

5. Assessment under Different Tax Acts:
The court emphasized the distinction between assessments under the Central Sales Tax Act and the Telangana Value Added Tax Act. It was highlighted that if goods did not cross the check post and remained within Telangana, it would constitute an intra-state sale under the latter Act. The court directed a fresh assessment based on the correct tax jurisdiction.

6. Rejection of Exemption on 'H' Forms:
Regarding the rejection of exemption on turnover supported by 'H' Forms, the petitioner argued that the revisional authority erred in denying exemption despite the presence of supporting documents. The court directed a reevaluation of the exemption claim based on the documents on record and emphasized the need for a fair assessment process.

In conclusion, the High Court set aside the impugned order due to violations of natural justice and instructed a fresh assessment process with proper notice and consideration of supporting documents. The judgment underscored the importance of transparency, accurate documentation, and adherence to legal procedures in tax assessments to ensure fairness and justice.

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