2019 (3) TMI 234 - HC - VAT and Sales Tax

Validity of remand order - remand was only for reason of the assessment order having been passed ex parte and there was a direction to consider the issues afresh after hearing the assessee - whether in an appeal from the order dated 10.03.2010, the assessee could agitate the issues, which were considered by the Assessing Officer on remand made by the first Appellate Authority and the Tribunal; by order dated 04.02.2008? Held that - It is clear that the direction was to make assessment and pass fresh orders in accordance with law. It was also directed that there shall be no rejection of the appellant s claim for exemption for trade discount, solely on the ground that the discount amounts were not shown in the sale invoices. The remand applied only to the trade discounts. Despite the High Court judgment having been given effect to by order dated 10.03.2010, necessarily, the Assessing Officer would have to further modify the assessment, insofar as the trade discount is concerned. The two issues, which were remanded by the first Appellate Authority and the Tribunal were finalised by the order dated 04.02.2008 (Annexure-F), which was not challenged in a statutory appeal. If there was such a challenge made, going by the Full Bench decision, the issues decided by the first Appellate Authority with respect to From 25A, could have been agitated before the Tribunal and the issue of stock transfer decided by the Tribunal and remanded for computation, could have been agitated in all its aspects before the High Court. The assessee failed to challenge the order dated 04.02.2008. The issues having been resolved finally and the order having acquired finality by sheer passage of time, an appeal from the order dated 10.03.2010 could not agitate those issues settled by that earlier order dated 04.02.2008. The order dated 04.02.2008 had acquired finality for no appeal having been preferred therefrom. The question of law framed, hence is answered in favour of the revenue - revision dismissed.

Issues Involved:
1. Validity of the remand orders and their implications.
2. Doctrine of merger and its applicability.
3. Requirement and verification of Form 25A for tax liability.
4. Stock transfer and the necessity of F-forms.
5. Finality of orders and the scope of appeal.

Detailed Analysis:

1. Validity of the Remand Orders and Their Implications:
The case involves multiple remand orders concerning the assessment years 2001-2002 and 2002-2003. Initially, ex parte assessments were made, followed by appeals and remands for fresh consideration. The first appellate authority remanded the matter due to ex parte assessment, directing the Assessing Officer to reconsider after hearing the assessee. Subsequent appeals led to further remands, specifically on the issues of Form 25A and stock transfer.

The court noted that the remand by the first appellate authority was limited to re-computation after verifying Form 25A declarations. Similarly, the Tribunal's remand required an enquiry into the stock transfer supported by F-forms. These remands were not open-ended but directed specific actions.

2. Doctrine of Merger and Its Applicability:
The argument of merger, where an inferior authority's order merges with that of a superior authority, was rejected. The court clarified that the orders dated 04.02.2008 and 10.03.2010 dealt with different subject matters. The former addressed Form 25A and stock transfer, while the latter dealt with trade discounts following the High Court’s judgment. Therefore, the doctrine of merger did not apply as the orders were not identical in subject matter.

3. Requirement and Verification of Form 25A for Tax Liability:
The first appellate authority had determined that Form 25A was necessary for claiming a reduced tax rate on the first sale of 5th schedule items. The remand was for verifying the genuineness and admissibility of the forms produced. The court agreed that the issue of necessity for Form 25A was settled by the first appellate authority and could not be re-agitated. The assessee’s failure to appeal the order dated 04.02.2008, which gave effect to this decision, rendered the issue final.

4. Stock Transfer and the Necessity of F-Forms:
The Tribunal had remanded the issue of stock transfer, directing the Assessing Officer to conduct an enquiry and accept F-forms as evidence unless there were reasons for suspicion. The court highlighted that F-forms became mandatory post-2002, but even before that, other evidence could substantiate stock transfers. The Tribunal’s remand required further evidence if the Assessing Officer raised suspicions about the stock transfer.

The court found that the assessee did not appeal the order dated 04.02.2008, which gave effect to the Tribunal's remand. Hence, the issue of stock transfer, including the necessity and verification of F-forms, could not be reopened in the subsequent appeal.

5. Finality of Orders and the Scope of Appeal:
The court emphasized that the issues decided in the order dated 04.02.2008 became final due to the assessee’s failure to appeal within the stipulated time. The subsequent order dated 10.03.2010, which addressed trade discounts following the High Court’s judgment, could not be used to challenge issues settled by the earlier order. The court noted that the remand by the Supreme Court was specific to trade discounts and did not encompass other issues.

Conclusion:
The court concluded that the issues settled by the order dated 04.02.2008 could not be re-agitated in an appeal against the order dated 10.03.2010. The appeal was confined to the trade discount issue, as directed by the Supreme Court. The question of law was answered in favor of the revenue, and the sales tax revisions were rejected. The parties were ordered to bear their respective costs.

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