2019 (12) TMI 105 - HC - VAT and Sales Tax

Reopening of assessment - Validity of pre-assessment Notice issued in terms of the Central Sales Tax Act, 1956 - exemption in respect of pre-export sales and branch transfers - HELD THAT - The issue being raised by the officer is contrary to the Judgment of the Supreme Court in the case of ASHOK LEYLAND LTD. VERSUS STATE OF TAMIL NADU AND ANOTHER (AND OTHER APPEALS AND A WRIT PETITION) 2004 (1) TMI 365 - SUPREME COURT where it was held that an order passed under Sub-Section (2) of Section 6A cannot be subject matter of reopening of a proceeding under Section 16 of the State Act. Petition allowed.

Summary

Issues:
Challenge to pre-assessment notice under Central Sales Tax Act, 1956 for the period 1999-2000.

Analysis:
The petitioner contested a pre-assessment notice dated 12.03.2007 under the Central Sales Tax Act, 1956, for the period 1999-2000. The petitioner had been previously assessed to Central Sales Tax, where claims of exemption for pre-export sales and branch transfers were examined, and some disallowances were made. However, the impugned pre-assessment notice was issued despite this assessment.

Both counsels agreed that the issue raised by the officer contradicted a judgment of the Supreme Court in the case of Ashok Leyland Ltd. vs. State of Tamil Nadu [(2004) 134 STC 473]. The Supreme Court's judgment emphasized that reassessment could only be directed in cases of fraud or misrepresentation, not for mere errors of judgment. The judgment highlighted the conclusive nature of determinations made under legal fictions, emphasizing the binding effect of such determinations.

The judgment also referred to the importance of jurisdictional facts in determining the authority's jurisdiction under the Act. It cited precedents to establish that special provisions prevail over general provisions and that administrative or quasi-judicial authorities must pose and answer the right questions to determine their jurisdiction accurately. Additionally, the judgment discussed distinctions between provisions related to tax exemptions and non-liability to tax, emphasizing that non-liability to tax excludes entities from tax calculations altogether.

Furthermore, the judgment addressed the verification of declarations made in Form F and the distinction between transactions where branch offices act as conduits versus independent transactions. It clarified that orders passed under Section 6A could not be reopened under Section 16 of the State Act, based on the Supreme Court's definitive pronouncement in the Ashok Leyland case.

In conclusion, the High Court set aside the impugned pre-assessment notice dated 12.03.2007, citing the Supreme Court's clear ruling on the matter. The petitioner succeeded in their challenge, and no costs were awarded in this judgment.