2020 (3) TMI 818 - HC - VAT and Sales Tax

Validity of ex-parte assessment order - intra-state sales - applicability of provisions of Section 6-A of the Act, 1956 - HELD THAT - It is undisputed that the goods were transported from Allahabad to Calcutta. It is also admitted that for transportation of the said goods Form-F was issued by the dealer in Calcutta, the assessing authority on the basis of the above mentioned facts passed the assessment order in exercise of power under Section 21 of the Act, 1948 was done only on account of the subsequent developments and report submitted by the S.I.B. The said report of S.I.B clearly indicated that the revisionists had in fact sold the goods in question in Calcutta himself and that the provisions of Section 6-A of the Act, 1956 were not applicable in this case. The authorities were of the view that there was clear evasion of tax and second appellate order was passed. The only defect with the assessment order as has been mentioned by the counsel for the revisionist is that at best the said transaction would be inter state sale rather than intra state sale. He submits that the entire proceedings are based on a solitary material/evidence/ the report of S.I.B. If the report of S.I.B. is to be believed than the transaction was an inter state sale, the goods emanating from Allahabad were to be sold in Calcutta - It is undisputed that the report of S.I.B. clearly indicates that the goods were sold in Calcutta and the provisions of the Act, 1956 would be applicable rather than provisions of the Act, 1948. The matter is remanded to the tribunal to hear the revisionist only for the purpose of remanding the same to the appropriate assessing authority to assess the tax imposed on the revisionist on the basis of the admitted claim of the transaction - Petition allowed by way of remand.

Summary

Issues:
Challenge to Commercial Tax Tribunal order affirming assessing authority's decision on tax liability for consignment sale of foodgrains and oilseeds outside the State of Uttar Pradesh; Initiation of proceedings under Section 21 of the U.P. Trade Tax Act, 1948 based on S.I.B. report indicating sale of goods in Calcutta by the revisionist; Dispute on whether the transaction was an intra-state sale or inter-state sale; Applicability of Section 6-A of the Central Sales Tax Act, 1956; Assessment order passed against the revisionist for tax evasion; Rejection of revisionist's claims by appellate authorities based on lack of evidence; Competence of assessing authority to draw presumption of intra-state sale in absence of material; Examination of S.I.B. report indicating sale in Calcutta by revisionist; Remand of the matter to tribunal for reassessment based on admitted claim of transaction.

Analysis:
The revisionist challenged the Commercial Tax Tribunal's order affirming the assessing authority's decision imposing tax liability for consignment sale of foodgrains and oilseeds outside Uttar Pradesh. The dispute arose when proceedings under Section 21 of the U.P. Trade Tax Act, 1948 were initiated based on a Special Investigation Branch (S.I.B.) report indicating that the revisionist had sold goods in Calcutta, contrary to the claim of an inter-state sale covered under Section 6-A of the Central Sales Tax Act, 1956. The assessing authority conducted an ex-parte assessment holding the transaction as an intra-state sale, imposing a tax of ?1,31,123.

The revisionist contended that the S.I.B. report and the statement of the dealer in Calcutta confirmed the inter-state sale nature of the transaction. However, the appellate authorities rejected the revisionist's claims due to the lack of concrete evidence supporting an inter-state sale. The counsel for the opposite party argued that in the absence of evidence, the assessing authority was justified in presuming an intra-state sale, citing statutory provisions allowing such presumptions.

Upon review, the High Court found merit in the revisionist's submissions, emphasizing the S.I.B. report's clarity on the goods being sold in Calcutta. The Court held that the transaction should be treated as an inter-state sale under the Act, 1956, not intra-state under the Act, 1948. It criticized the Revenue for relying on the S.I.B. report to initiate proceedings but then attempting to shift stance without substantial evidence. Consequently, the Court set aside the tribunal's order and remanded the matter for reassessment based on the admitted inter-state sale claim, directing expeditious resolution within three months. The writ petition was allowed with these directions.