2017 (12) TMI 1765 - HC - VAT / Sales Tax

Reopening of assessment - Exemption from sales u/s 5(3) of the CST Act, 1956 - sales effected by M/s.Tea Serve to exporters in the auction center - rejection of benefit on the ground that petitioners have not complied with G.O.Ms.876 dated 29.07.1982 - HELD THAT - The issue decided in the case of M/S. THE UNITED NILGIRI TEA ESTATES CO. LTD., M/S. STANES AMALGAMATED VERSUS THE COMMERCIAL TAX OFFICER (FAC) , THE STATE OF TAMIL NADU 2017 (12) TMI 689 - MADRAS HIGH COURT where it was held that fulfilment of condition as specified in the notification is mandatory. The impugned order is quashed and the matter is remanded to the first respondent for redoing the assessment in accordance with law.

Summary

Issues:
1. Claim of exemption under Section 5(3) of the CST Act, 1956 for sales to exporters by an Industrial Co-operative Society.
2. Rejection of exemption claim by the first respondent based on non-compliance with G.O.Ms.876 dated 29.07.1982.
3. Justification of re-opening assessment by the first respondent.
4. Comparison of stipulated Form H declaration under G.O.Ms.876 with the Form H declaration under the CST Act.
5. Requirement of communication of forms by auctioneers/tea brokers after registration under TNGST Act/CST Act.
6. Impact of re-opening assessments on the benefit of exemption granted by the Government.
7. Error in issuing notice for assessment year 2000-01 despite production of Form H declaration.
8. Legal position and agreement by the Additional Government Pleader on the issue.

Analysis:

1. The petitioner, an Industrial Co-operative Society, sought exemption under Section 5(3) of the CST Act, 1956 for sales to exporters through M/s.Tea Serve. The claim was rejected by the first respondent citing non-compliance with G.O.Ms.876 dated 29.07.1982, which led to the dispute.

2. The Court referred to a similar case involving M/s.The United Nilgiri Tea Estates Co. Ltd., where the exemption claim was allowed based on fulfilling conditions related to sales for export under Section 5(3) of the CST Act. The Court emphasized the importance of meeting specific obligations for exemption eligibility.

3. The Court examined the necessity of re-opening assessments by the first respondent, considering the submission of Form H declaration by the exporter and the verification of export documents, bills of lading, and foreign buyers' orders. The Court questioned the justification for proposing to re-open assessments based on non-filing of the declaration form as stipulated in G.O.Ms.876.

4. The comparison between the stipulated Form H declaration under G.O.Ms.876 and the Form H declaration under the CST Act was crucial in determining the validity of the exemption claim. The Court found that the Form H declaration provided to the auctioneers contained all necessary details for verifying actual export and granting exemption.

5. Communication of forms by auctioneers/tea brokers after registration under TNGST Act/CST Act was highlighted as a requirement for claiming exemption. The Court noted that the auctioneers had obtained registration and issued necessary certificates for tax payment, confirming the validity of the exemption claim.

6. The Court emphasized the potential negative impact of re-opening assessments on the benefit of exemption granted by the Government to support the tea industry and ensure competitive rates. It stressed the importance of recognizing compliance with registration and verification processes by the auctioneers.

7. An error in issuing a notice for the assessment year 2000-01 despite the production of Form H declaration was pointed out, indicating a lack of consistency in assessment procedures by the first respondent.

8. The Court, following the legal position established in the M/s.The United Nilgiri Tea Estates Co. Ltd. case, allowed the writ petition, quashed the impugned order, and remanded the matter to the first respondent for reassessment in accordance with the law. The Additional Government Pleader concurred with the legal position presented in the case.