2018 (10) TMI 1364 - HC - VAT and Sales Tax

Principles of natural justice - Jurisdiction - Revision of assessment order - Interstate sale under the CST Act or not - sale of motor vehicles to the purchase outside state - exemption under section 6(2)(b) of the Central Sales Tax Act - Assessing Officer found that the disputed sale falls under section 3(a) of the Central Sales Tax Act and consequently, such sale is not exempted under section 6(2) of the Central Sales Tax Act - Maintainability of petition - availability of alternative remedy. Jurisdiction - Held that - While the petitioner claims the disputed sale as the one falling under Section 3(b), the Revenue claims the same as the one under section 3(a). Needless to say that whether the disputed sale would fall under section 3(a) or section 3(b), is purely a question of fact which needs to be considered and decided, by appreciating factual aspects of the matter and by considering the relevant documents in support of such sale - the nature of the disputed sale has to be ascertained and determined going by the manner in which it had taken place. It is evident that the nature and manner, in which, the sale was effected by the petitioner to the purchaser at the other State are certainly, crucial factors to be considered and decided as to whether the turn over has escaped assessment. Such scope of consideration, undoubtedly, is not outside the jurisdiction of the respondent, merely because the marketing Companies have got the benefit of exemption under section 6(2)(b) of the Central Sales Tax Act at the hands of their Assessing Officer at Chittoor, Andhra Pradesh. When admittedly the goods have moved from the territorial jurisdiction of the respondent, he is certainly, vested with jurisdiction under section 27 to reopen the assessment for deciding such issue, when he finds sufficient materials to do so. Power of enhancement of turn over by 25% by treating the same as sales turn over of the marketing Companies - Held that - When such issue requiring probing is within the domine of the respondent as conferred under section 27 of the Tamil Nadu value Added Tax Act, I do not think that the petitioner is justified in contending that the respondent lacks jurisdiction to pass the present impugned order. Principles of natural justice - Held that - It is evident that though the respondent indicated in the said notice as though the petitioner has to pay the tax, in effect, it is evident that it was only a proposal and not a demand as such. Therefore, it cannot be stated that the said notice was issued with pre-determination. Even otherwise, the fact remains that the petitioner has not come before this Court and challenged the said notice by raising the above issue. On the other hand, the petitioner, admittedly, submitted to the jurisdiction of the respondent, filed their objection and participated in the assessment proceedings - the above objection raised by the petitioner on the maintainability of notice of proposal, could not in anyway be construed as violation of principles of natural justice. There is no presumption that the issue dealt with in the impugned order have not been discussed at the time of personal hearing. On the other hand, the very fact that the petitioner was issued with a notice of proposal, followed by furnishing the reply by them and affording an opportunity of personal hearing twice, would only drive this Court to arrive at a reasonable presumption that the issues discussed and decided in the impugned proceedings are the issues within the knowledge of the petitioner and that those issues have been discussed at the time of personal hearing as well - there is no justification on the part of the petitioner in contending that the respondent has not followed the principles of natural justice in any manner, before passing the impugned order. Maintainability of petition - Held that - Since the disputed question of fact is to be considered and decided only by the next fact finding authority, the petitioner has to agitate the matter only by way of filing regular statutory appeal without insisting upon this Court to decide the matter as an appellate authority - this Court is of the view that the present writ petitions are not maintainable against the orders of assessment. Petitions are disposed of by granting liberty to the petitioner to file a statutory appeal before the Appellate Authority within a period of 30 days from the date of receipt of a copy of this order by observing all other statutory requirement for filing such appeal.

Summary

Issues Involved:
1. Jurisdiction of the Assessing Authority under Section 27 of the Tamil Nadu Value Added Tax Act.
2. Alleged violation of principles of natural justice.
3. Classification of disputed sales under Section 3(a) or Section 3(b) of the Central Sales Tax Act, 1956.
4. Maintainability of writ petitions without exhausting statutory appellate remedies.

Detailed Analysis:

1. Jurisdiction of the Assessing Authority under Section 27 of the Tamil Nadu Value Added Tax Act:
The petitioner contended that the Assessing Authority could only reopen the assessment if there was escapement of turnover. The petitioner argued that the amount shown in the invoice was the actual amount received, thus no amount had escaped assessment. The Revenue countered that if the disputed sale fell under Section 3(a) of the CST Act, the petitioner was liable to pay tax on the value at which the goods were sold by their marketing companies to their dealers, not the value on which the petitioner paid tax. The court found that the nature of the disputed sale, whether under Section 3(a) or Section 3(b), was a factual question requiring consideration of documents and the manner of sale. The court held that the respondent had jurisdiction under Section 27 to reopen the assessment to determine if the turnover had escaped assessment.

2. Alleged Violation of Principles of Natural Justice:
The petitioner argued that the pre-assessment notice demanded tax payment, indicating pre-judgment. However, the court noted that the notice also invited objections, making it a proposal rather than a demand. The petitioner participated in the assessment proceedings, filing objections and attending personal hearings. The court found no violation of principles of natural justice as the petitioner was aware of the issues and had opportunities to present their case.

3. Classification of Disputed Sales under Section 3(a) or Section 3(b) of the Central Sales Tax Act, 1956:
The petitioner claimed the sales were under Section 3(b), involving transfer of documents during interstate movement, thus qualifying for exemption under Section 6(2)(b). The Revenue argued that the sales fell under Section 3(a) as the goods were delivered directly to the customers of the marketing companies, making it the first sale. The court held that determining whether the sales fell under Section 3(a) or 3(b) required factual examination, which was within the jurisdiction of the Assessing Authority. The court did not express a view on the merits, leaving it to the appellate authority to decide.

4. Maintainability of Writ Petitions Without Exhausting Statutory Appellate Remedies:
The court emphasized that in fiscal matters, aggrieved parties should first exhaust statutory appellate remedies before approaching the court. Exceptions include lack of jurisdiction, violation of principles of natural justice, or errors apparent on the face of the order. The court found that the petitioner had not shown such exceptions. The court held that the writ petitions were not maintainable as the petitioner had an effective alternative remedy of appeal. The court granted liberty to the petitioner to file a statutory appeal within 30 days, directing the appellate authority to consider the appeal on merits and restraining the respondent from taking coercive steps until the appeal was filed.

Conclusion:
The court dismissed the writ petitions, granting liberty to the petitioner to file a statutory appeal within 30 days and directing the appellate authority to consider the appeal on merits. The court also restrained the respondent from taking coercive steps against the petitioner until the appeal was filed. The court did not express any view on the merits of the assessment.