2015 (12) TMI 643 - HC - VAT and Sales Tax

Levy of penalty under Section 10-A of the Central Sales Tax Act - Writ petition - violation of the principles of natural justice - Held that - Court will not normally entertain writ petitions against orders, in respect of which an effective, alternative remedy is provided by the statute. But this rule is not without exceptions. In cases where there is gross violation of the principles of natural justice, and in cases where the very jurisdiction of the officer is questioned, this Court is not powerless to interfere with the orders so passed. Therefore these types of cases have to be examined with reference to the nature of the grievance of the assessees/dealers and the extent to which they are able to convince about the validity of such grievance - Additional Government Pleader produced the xerox copies of the certificate of registration issued to the appellant. The certificate of registration shows that the wooden strips, wooden insert cap, grey board, rose board, PVC sheeting, stamping foil etc., are also included in the certificate of registration issued to the appellant. Therefore, straight-away, the very basis on which the proposals were made under Section 10-A, is found to be shallow - Even the exports covered by Form-H, have not been taken note of by the assessing officer. They are also packing materials, which were covered against Form-H - levy of penalty set aside - Decided in favour of assessee.

Summary

Issues:
- Challenge to imposition of penalty under Section 10-A of the Central Sales Tax Act.
- Jurisdiction of the assessing officer questioned.
- Violation of principles of natural justice.
- Interpretation of certificate of registration and its coverage of purchased items.
- Applicability of Full Bench decision in State of Tamil Nadu v. Nu-Tread Tyres.

Analysis:

The judgment by the High Court of Madras involved a series of appeals arising from a common order dismissing writ petitions challenging penalties imposed under Section 10-A of the Central Sales Tax Act. The appellant, a manufacturer of leather products, faced penalties for purchasing materials without including them in the certificate of registration. The assessing officer issued notices based on an inspection, leading to separate orders confirming penalties for various assessment years.

The appellant contended that their purchases were covered by the certificate of registration and exports were made against Form-H, invoking the benefit recognized in the Full Bench decision of State of Tamil Nadu v. Nu-Tread Tyres. The Court, upon review, directed the Additional Government Pleader to verify the certificate of registration, which revealed that the purchased items were indeed included. The Court found the basis for the penalties to be unfounded, especially since the assessing officer disregarded the binding Full Bench decision and instead relied on a different court's ruling.

Emphasizing the assessing officer's obligation to adhere to jurisdictional court rulings, the Court concluded that the penalties were erroneous. The assessing officer failed to consider exports covered by Form-H and misinterpreted the coverage of purchased items. Consequently, the Court allowed the writ appeals, set aside the penalties, and closed the related motions without costs. The judgment highlighted the importance of upholding legal principles and ensuring proper application of relevant precedents in tax matters.