2019 (1) TMI 896 - AAAR - VAT and Sales Tax

Inter-state sale or not - appellant claimed deduction towards consignment sales - suppression of facts - reopening of assessment - Held that - The Assessing Officer came to a conclusion on inspection that inter-state sale under Section 3(a) of the CST Act has been camouflaged as consignment sale under Section 6A of the CST Act. Thus it is only when the Assessing Officer came to a conclusion that there was deceit or misrepresentation that it sent a notice of revision. Therefore no fault could be found with the revision of assessment proceeding. However, taking an overall view of the matter I feel that the Tribunal while remanding the matter to the Assessing Officer should have left the Assessing Officer free to come to his conclusion after taking into consideration all the relevant circumstances independently and in accordance with law - In all fairness, after remand the matter needs to be examined independently and in accordance with law. It is, therefore, necessary to give a direction to the Assessing Officer to carry out the exercise independently and in accordance with law after taking into consideration relevant documents and all attendant circumstances. Penalty - Held that - The turnover relating to consignment sales is reflected in the books of accounts of the appellant and the appellant has claimed exemption in respect thereof in monthly returns. It is urged that because the Assessing Officer takes a different stand in the assessment order to reverse the claim that cannot be a valid ground to impose penalty under Section 12(3)(b) of the TNGST Act. This submission will have to be taken into account by the Assessing Officer. It appears that this submission was made before the Tribunal but it did not receive proper attention from the Tribunal. It needs to be independently considered. The Assessing Officer is directed to consider the individual transactions of the appellant with Bhuwalka Trade Links (P) Limited afresh independently and in accordance with law - matter on remand.

Issues Involved:
1. Rejection of exemption claimed on consignment sales.
2. Treatment of transactions as direct inter-state sales.
3. Imposition of penalty under Section 9(2A) of the CST Act read with Section 12(3) of the TNGST Act.
4. Validity of reopening of assessment.
5. Remand order by the Tribunal for reassessment.

Detailed Analysis:

1. Rejection of Exemption Claimed on Consignment Sales:
The appellant, a manufacturer of Iron and Steel products, claimed deductions towards consignment sales for the years 1995-96 and 1996-97. The Assessing Officer, after inspection, rejected these exemptions, treating the transactions as direct inter-state sales. The Tribunal noted that in 1995-96, consignment sales were made through several agents, including Bhuwalka Trade Links (P) Limited, and in 1996-97, only through Bhuwalka Trade Links (P) Limited. It was observed that goods were consigned directly to Bhuwalka Steel Industries, a sister concern of Bhuwalka Trade Links (P) Limited, thus suspecting the legitimacy of the consignment sales.

2. Treatment of Transactions as Direct Inter-State Sales:
The Assessing Officer proposed to treat the transactions as direct inter-state sales liable to be taxed at 8%. The Tribunal upheld this view for transactions involving Bhuwalka Trade Links (P) Limited, noting that the goods were consigned directly to Bhuwalka Steel Industries, indicating pre-existing orders from ultimate buyers. However, for other agents, the Tribunal found no clinching evidence to corroborate the findings of inter-state sales, thus allowing deductions on consignment sales for those transactions.

3. Imposition of Penalty:
The Tribunal observed that there was an intention to evade tax and suppression of facts, warranting penalty under Section 12(3)(b) or 16(2) of the TNGST Act for transactions where goods were sent straight to Bhuwalka Steel Industries but claimed as consignment sales. However, for genuine transactions with Bhuwalka Trade Links (P) Limited, penalty could not be levied. The Tribunal set aside the penalty for transactions confirmed by respondent no. 3.

4. Validity of Reopening of Assessment:
The appellant argued that the reopening of the concluded assessment was illegal. The Tribunal, however, noted that the reassessment was initiated based on material discovered during inspection, indicating that inter-state sales were camouflaged as consignment sales. The Tribunal found no fault with the revision of assessment proceedings, as the Assessing Officer's conclusion was based on deceit or misrepresentation.

5. Remand Order by the Tribunal for Reassessment:
The Tribunal remanded the matter to the Assessing Officer to independently examine the transactions involving Bhuwalka Trade Links (P) Limited. The Tribunal directed the Assessing Officer to consider relevant documents and all attendant circumstances independently and in accordance with law. The remand was limited to transactions with Bhuwalka Trade Links (P) Limited for both years, while the rest of the transactions' deductions were confirmed.

Conclusion:
The appeals were dismissed, and the Assessing Officer was directed to reassess the transactions with Bhuwalka Trade Links (P) Limited independently and in accordance with law. The Tribunal's remand order was upheld, emphasizing the need for a thorough and fair reassessment based on all relevant documents and circumstances. The Tribunal did not express any final opinion on the merits of the case, leaving all contentions to be examined independently.

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