2021 (3) TMI 1187 - HC - VAT / Sales Tax

Suo motu revisional power - Levy of sales tax on turnover - local sales or interstate sales - the appellate authority concluded that the transaction effected by the petitioner cannot be treated as interstate sale and they are only local sales and After more than 18 months, the revisional authority issued show cause notice - HELD THAT - The show cause notice was solely based upon a decision of the Hon'ble Supreme Court in Co-operative Sugars (Chittur) Ltd. 1993 (4) TMI 270 - SUPREME COURT wherein, it was held that when the movement of goods was an incident of sale/purchase, it amounted to interstate sales/purchase. The first respondent has not mentioned in the show cause notice as to how the said decision would apply to the case of the petitioner especially when, the first appellate authority has examined the factual position and granted relief to the appellant. In the said decision of the Hon'ble Supreme Court, the facts were that the appellant therein had it sugar factory in Kerala State and pursuant to a Government Order issued by the Tamil Nadu Government, specifically permitting them to open office in Coimbatore and Pollachi Taluks only with a view to and exclusively for the purpose of transporting to their factory in Kerala, the Hon'ble Supreme Court held that such sale was an interstate sale. As rightly contended by the learned counsel for the petitioner, the facts dealt with in the said decision were peculiar and the first respondent was not justified in issuing show cause to exercise his suo motu power solely based on the said decision, which dealt with on different factual position - The first appellate authority after examining the invoices and the delivery challan, has recorded a finding of fact that a sale was completed in Tamil Nadu and any transportation, which had taken place after the sale at the instance of the buyer from Tamil Nadu to any other State, cannot bring it under the purview of interstate sale in the hands of the petitioner. One more important aspect which has been appealed is whether the revisional authority while exercising suo motu revisional powers can order for restoration of the original assessment orders on the grounds, which were not contained therein. The answer to the said question should be against the Revenue, because in the original assessment order, there is no reference to the decision of the Hon'ble Supreme Court and seeking to revise the order passed by the first appellate authority by referring to a decision, which was not subject matter of the original assessment order is impermissible. The Revenue was clearly barred from directing the original assessment order to be restored on grounds, which were not contained in the original assessment order. The first respondent could not have exercised his suo motu revisional powers to interfere with the order passed by the first appellate authority dated 20.01.1997 - Petition allowed.

Summary

Issues Involved:
1. Legality of the suo motu revisional power exercised by the first respondent.
2. Entitlement of the petitioner to a refund of excess tax paid along with interest.
3. Validity of the rejection of the miscellaneous petition filed to rectify the impugned order.

Issue-wise Detailed Analysis:

1. Legality of the suo motu revisional power exercised by the first respondent:
The petitioner challenged the order dated 25.08.2003, wherein the first respondent exercised suo motu revisional power, setting aside the appellate authority's order that favored the petitioner by classifying the transactions as local sales under the TNGST Act instead of interstate sales under the CST Act. The appellate authority had relied on the case of S.K.Shanmugavelu vs. State of Tamil Nadu, determining that the sales were local since the goods were delivered in Chennai, and the buyers transported them to Pondicherry. The revisional authority, however, based its decision on the Supreme Court's ruling in Co-operative Sugars (Chittur) Ltd. vs. State of Tamil Nadu, which held that the movement of goods as an incident of sale amounted to interstate sales. The court found that the revisional authority erred in applying this decision without considering the specific facts of the petitioner's case, where the sale was completed in Tamil Nadu, and any subsequent transportation was at the buyer's responsibility. The court concluded that the first respondent exceeded its jurisdiction by expanding the scope of the original assessment order based on a decision not relevant to the petitioner's case, thereby setting aside the impugned order and restoring the appellate authority's order.

2. Entitlement of the petitioner to a refund of excess tax paid along with interest:
The petitioner sought a writ of mandamus directing the assessing officer to pay ?1,36,768/- with interest from 13.05.2003. After the appellate authority allowed the petitioner's appeal, the assessing authority revised the assessment, ordering a refund of ?2,42,405/-. Despite this, the refund was not processed, leading the petitioner to file a writ petition, which resulted in a court order directing the refund with 12% interest. The department refunded ?2,22,818/- but did not pay the interest. The court noted that the department's refusal to pay interest based on the Joint Commissioner's order, which was now set aside, was untenable. The court directed the respondent to refund 50% of the excess tax paid back by the petitioner and re-compute the interest, ensuring compliance with the earlier court's direction to pay 12% interest.

3. Validity of the rejection of the miscellaneous petition filed to rectify the impugned order:
Given that the court set aside the order passed by the first respondent in W.P.No.35839 of 2003, which was the basis for the rejection of the miscellaneous petition, the court found no need for separate orders in W.P.No.9363 of 2004, effectively closing the petition.

Judgment Summary:
(i) W.P.No.35839 of 2003 was allowed, setting aside the first respondent's order dated 28.05.2003, and restoring the appellate authority's order dated 20.01.1997.
(ii) W.P.No.9363 of 2004 was closed in light of the decision in W.P.No.35839 of 2003.
(iii) W.P.No.6254 of 2004 was allowed, directing the respondent to refund 50% of the excess tax paid back by the petitioner within 30 days, re-compute the interest, and pay the interest amount within specified timelines.