2017 (3) TMI 4 - HC - VAT and Sales Tax

Natural justice - Whether the learned tribunal was right in law in rejecting the claim of consignment sales outside the State without considering the supporting proofs and evidences produced by the appellants? - Held that - As per section 6A of the CST Act, the burden is upon the dealer to prove by producing evidence / prescribed particulars in the prescribed Form obtained from the appropriate authority (F Form), if the dealer claims that he is not liable to pay tax under CST Act. The dealer did produce F-Forms containing prescribed particulars. However, on inquiry it was found by the Sales Tax Officer that F-Forms produced by the dealer were fake and forged one. Therefore, the dealer could not prove and/or substantiate that on the transactions in question the dealer is not liable to pay CST and/or could not prove that the transactions were not inter-State sale - it cannot be said that the authorities below have committed any error which calls for interference of this Court in excise of the appellate jurisdiction - appeal dismissed - decided against appellant.

Issues:
1. Validity of re-assessment order under Central Sales Tax Act.
2. Legality of re-assessment vis-a-vis provisions under Section 67 for revision.
3. Rejection of claim of consignment sales outside the State.
4. Penalty imposition and its consequential nature.

Validity of re-assessment order under Central Sales Tax Act:
The judgment addressed the issue of the validity of the re-assessment order under the Central Sales Tax Act. The dealer contended that the re-assessment order was passed without issuing a legal statutory notice in Form VI-B under Rule 9(A) of the Central Sales Tax (Gujarat) Rules, 1970. The tribunal upheld the legality of the re-assessment order without deciding the legality of re-assessment vis-a-vis provisions under Section 67 for revision. The court analyzed the arguments presented and dismissed the appeals, concluding that no substantial question of law arose in this regard.

Legality of re-assessment vis-a-vis provisions under Section 67 for revision:
The judgment also delved into the legality of the re-assessment order vis-a-vis provisions under Section 67 for revision. The tribunal was questioned for not deciding the legality of re-assessment under Section 44. However, the court found that the authorities below did not commit any error in treating the transactions as inter-State sales, especially since the F-Forms produced by the dealer were found to be fake and forged. Consequently, the appeals were dismissed as no substantial question of law was found to warrant interference.

Rejection of claim of consignment sales outside the State:
The issue of rejecting the claim of consignment sales outside the State was extensively discussed in the judgment. The dealer had argued that the transactions were consignment sales and not inter-State sales, supported by F-Forms. However, upon inquiry, it was discovered that the F-Forms were fake and forged. The court emphasized that under Section 6A of the CST Act, the burden is on the dealer to prove the non-liability to pay tax. As the dealer failed to substantiate that the transactions were not inter-State sales, the rejection of the claim by the tribunal was upheld, leading to the dismissal of the appeals.

Penalty imposition and its consequential nature:
Regarding the penalty imposition and its consequential nature, the judgment highlighted that the penalty was imposed by the Sales Tax Officer for the consignment sale and interest was demanded under section 47(4B) of the Act. The dealer challenged this penalty, but the appellate authorities upheld it. The court, after considering the arguments from both sides, found no error in the penalty imposition, as the dealer could not prove the transactions were not inter-State sales. Consequently, the appeals were dismissed, and no costs were awarded in the case.

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