2013 (5) TMI 30 - HC - VAT and Sales Tax

Provisional assessment challenged - petitioner is registered under the Tamil Nadu General Sales Tax Act, 1959 and Central Sales Tax Act, 1956 importing Superior Kerosene Oil and suppling to various industries - as per department the sale had occasioned inside the State of Tamil Nadu and it is not a case of inter-State sale - Held that - The order of provisional assessment suffers from total non-application of mind as well as non-consideration of the documents and records produced by the petitioner. The authority states that she had examined the objections and copies of records and therefore the production of records is not in dispute. If the records were taken for consideration, it is not clear as to how the authority can state that no evidence was filed to show the movement of goods from other States to the local purchasers based on the covenant. This statement appears to be a fallacy, as the purchase orders had already been produced showing the origin of goods from Cochin to the purchaser at the State of Tamil Nadu. No evidence to show that the purchase orders were transmitted to the Cochin branch is not acceptable as the petitioner has submitted the central excise records to show the delivery of goods after import and the payment of central sales tax at 4% supported by the certificate issued by the Assistant Commissioner (Assessment), Special Circle-II, Commercial Taxes Department, Ernakulam. Those records have not been taken into consideration by the authority. Records have been camouflaged to show that they were inter-State sales from Cochin is also rejected as the authority has not taken pains to state as to which document has been camouflaged and in what manner to show the inter-State sales from Cochin. It is, therefore, clear that all these allegations are mere conjectures and surmises on the part of the authority, without analysing the documents produced by the petitioner and what makes the matter worse is that, there are no reasons recorded as to which of the documents are invalid under law and which of the documents have been camouflaged to show the inter-State sales and how those documents are inadmissible in law. The question of suppression, which is also the reason for levy of penalty, appears to be unsupported by any material. Thus the first respondent-Commercial Tax Officer has passed a non-speaking order, bereft of reasons, without application of mind to the records produced. The entire findings are in the realm of conjectures and surmises and, therefore, the petitioner was justified in approaching this Court to interfere with the same - the impugned order is set aside and the matter is remitted to the first respondent-authority for re-consideration of the entire issue with a direction to pass a reasoned order on merits after affording opportunity to the petitioner - in favour of assessee.

Issues Involved:

1. Legitimacy of the provisional assessment order dated 18.2.2004.
2. Determination of whether the sales were inter-State or local.
3. Consideration of evidence provided by the petitioner.
4. Justification for the imposition of penalty under Sec.12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959.

Detailed Analysis:

1. Legitimacy of the Provisional Assessment Order:

The petitioner contested the provisional assessment order dated 18.2.2004 passed by the Commercial Tax Officer, Adyar-I Assessment Circle, Chennai. The petitioner, an importer of Superior Kerosene Oil (SKO) and a registered dealer under both the Tamil Nadu General Sales Tax Act, 1959 (State Act) and the Central Sales Tax Act, 1956 (Central Act), argued that the assessment order was flawed due to non-application of mind and non-consideration of the documents and records produced. The court found that the order lacked detailed reasoning and was based on conjectures and surmises without proper analysis of the documents submitted by the petitioner.

2. Determination of Whether the Sales Were Inter-State or Local:

The core issue was whether the sales of SKO were inter-State sales covered by 'C' forms or local sales within Tamil Nadu. The petitioner claimed that the sales were inter-State, originating from Cochin and delivered to purchasers in Tamil Nadu. The first respondent, however, argued that the sales were local, as the goods were received at the Coimbatore depot before being delivered to the buyers. The court noted that the respondent's conclusion was based on assumptions rather than concrete evidence. The petitioner had provided purchase orders, central excise documents, and a certificate from the Assistant Commissioner (Assessment), Special Circle-II, Commercial Taxes, Ernakulam, which were not adequately considered by the respondent.

3. Consideration of Evidence Provided by the Petitioner:

The petitioner submitted various documents, including purchase orders and central excise records, to prove that the goods were dispatched from Cochin to Tamil Nadu and had already suffered 4% central sales tax in Kerala. The court observed that the respondent failed to properly examine these documents and dismissed them without sufficient reasoning. The court emphasized that an administrative authority exercising quasi-judicial functions must record clear and explicit reasons for its decisions, which was not done in this case.

4. Justification for the Imposition of Penalty:

The first respondent proposed a penalty under Sec.12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, asserting that the petitioner had camouflaged local sales as inter-State sales to avoid local tax. The court found this allegation to be unsupported by any material evidence. The respondent's claim of camouflage was deemed a figment of imagination, as there was no analysis of the documents to substantiate this serious allegation. The court highlighted that the findings were based on conjectures and surmises, and the imposition of penalty was unjustified without concrete evidence of suppression.

Conclusion:

The court concluded that the provisional assessment order was a non-speaking order, bereft of reasons, and passed without proper application of mind. The court set aside the impugned order and remitted the matter back to the first respondent for reconsideration. The respondent was directed to pass a reasoned order on merits after affording the petitioner an opportunity to present their case. Consequently, W.P.No.7747 of 2004 was allowed by way of remand, and W.P.No.7748 of 2004 was closed with no further directions required.

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