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2020 (2) TMI 681 - HC - VAT and Sales TaxExemption under Entry No. 65 to Part B of the IV Schedule to the Tamil Nadu VAT Act, 2006 - sale of refined soya oil in the State of Tamil Nadu - Inter-state sales - It is the contention of the petitioner that during the period in dispute upto 12.7.2011, the dealers engaged in sale of refined oil were exempt from tax up to a turnover of ₹ 500 crores as per Entry No. 65 to Part B of the IV Schedule to the Tamil Nadu VAT Act, 2006 - HELD THAT - It has been assumed in the impugned order that in the absence of the details of complete addresses of the local buyer s/ purchaser of the petitioner and absence of their TIN number in the sale bills/invoice and in the absence of any receipt proof of payment for the sales effected in the State of Tamil Nadu, the claim of the petitioner in the sales tax return as local sales exempt could not be allowed and therefore the petitioner was liable to pay tax at 4% as not covered by C Form - It has been further stated that there were no stocks at the time of inspection on 26.9.2011 and 27.9.2011 and therefore petitioner was not only liable to pay tax as proposed in the notice but also penalty under Section 27 (3) (c) of the TN VAT Act, 2006. In the impugned order, it has been mentioned that the petitioner has not produced any documents to substantiate receipt of goods from the state of Maharashtra on the strength of Form F issued by the respondent. However, the annexures appended to various Form F give the details of the vehicle number together with the date, challan number and the number of Tin which were allegedly transported - Since this issue would require a proper examination by the respondent, the impugned order cannot be sustained. Appeal allowed by way of remand.
Issues Involved:
1. Legality of the impugned orders dated 30.06.2016 for the assessment years 2010-11 and 2011-12 under the Central Sales Tax Act, 1956. 2. Validity of the assumptions and conclusions drawn by the respondent regarding the petitioner’s sales and tax liabilities. 3. Examination of the petitioner’s claim of stock transfers from Maharashtra to Tamil Nadu and the corresponding tax exemptions. 4. Appropriateness of the penalties imposed by the respondent. Detailed Analysis: 1. Legality of the Impugned Orders: The petitioner challenged the impugned orders dated 30.06.2016, which were based on an inspection conducted by the Enforcement Wing of the respondent Commercial Tax Department on 26.09.2011 and 27.09.2011. Documents were seized, and statements were recorded. The orders concluded that the petitioner had created records to show as if the goods were sold in Tamil Nadu to claim tax exemptions. The petitioner was issued show-cause notices and was directed to pay tax at 4% for the respective assessment years. 2. Validity of Assumptions and Conclusions: The respondent concluded that the petitioner had sold goods directly in other states or within Maharashtra and falsely claimed these as local sales in Tamil Nadu. The absence of complete addresses and TIN numbers of the buyers in the invoices and the alleged receipt of payments in cash led to the petitioner being held liable to tax. The assessing officer relied on inspection reports and other material defects in records to justify the reassessment. 3. Examination of Stock Transfers and Tax Exemptions: The petitioner argued that they had stock transferred refined soya oil from Maharashtra to Tamil Nadu on the strength of Form F Declarations issued by the respondents. The Maharashtra counterpart confirmed the stock transfer for a turnover of ?38,27,01,499/-. The petitioner contended that the entire demand was based on assumptions, presumptions, and conjectures. The respondent, however, disputed the branch transfer claim, stating that the petitioner failed to produce proof of receipt of goods in Tamil Nadu. 4. Appropriateness of Penalties: The respondent imposed penalties under Section 27 (3) (c) of the TN VAT Act, 2006, based on the assumption that the petitioner closed its operations to avoid tax liability after the exemption limit was reduced. The petitioner’s failure to provide necessary documentation and details of the buyers led to the disallowance of the exemption claim and the imposition of tax and penalties. Judgment: The court observed that the impugned orders were based on assumptions and lacked concrete evidence. The respondent cannot proceed on assumptions, presumptions, and conjectures, as established by the Supreme Court in Rukumanand Bairoliya vs. State of Bihar. The court noted that the respondent’s counterpart in Maharashtra had accepted the stock transfer claims, and the respondent in Tamil Nadu should have considered this. The court set aside the impugned orders and remitted the cases back to the respondent to pass fresh orders within three months, keeping the observations in mind and after hearing the petitioner. The court also noted that if there was no receipt of goods, the respondent could only impose a penalty under Section 10 of the Central Sales Tax Act, 1956, and not recover tax. Conclusion: The writ petitions were allowed by way of remand with the direction to the respondent to pass appropriate orders in accordance with law, considering the observations made by the court. No costs were imposed, and the connected miscellaneous petitions were closed.
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