2017 (9) TMI 1471 - HC - VAT and Sales Tax

Validity of assessment order - Form F declarations - request for consideration of Form F declarations with proof of dispatch of goods filed by the petitioner under Section 6A of the Central Sales Tax Act, 1956 - penalty u/s 12(3)(b) of the TNGST Act - Held that - The particulars required to be furnished in Form F clearly manifest that the proof required is as to whether the goods were factually transferred to the assessee himself or his branch office or his agent and not to any third party. Any other enquiry is beyond the realm of the assessing authority. Once a declaration had been accepted and acted upon by the Revenue, unless and until on further enquiry made thereto the particulars furnished were found to be incorrect or untrue, the assessment once made based on Form F, could not be reopened. Unless the details were found to be writ with fraud, collusion or misrepresentation or suppression of material facts, on a mere change of opinion, the findings could not be disturbed under Section 16 of the Act. When the original assessment rested on the findings of enquiry with reference to the details in Form F and the finding on Form F thus remained undisturbed even in the reassessment proceedings, the reassessment order revoking the exemption granted under Section 6A of the Central Sales Tax Act could not sustained. Penalty - Held that - It is a settled legal position that if the turnover is culled out from the books of accounts of the dealer and the conduct of the dealer is not contumacious or there is any mala fides with intent to evade payment of tax, the said provision would not stand attracted. Therefore, in the event, the second respondent proposes to rake up the issue relating to penalty, the petitioner is entitled to raise objections and the second respondent shall take note of the legal principles laid down in a catena of cases as to under what circumstances penalty is leviable. The second respondent is directed to furnish the copies of the seized documents, which have been marked as book D and E within a reasonable time on costs being remitted by the petitioner for making out such copies - the second respondent shall verify the entire records provided, afford an opportunity of personal hearing, verify the records and decide the issues - petition allowed by way of remand.

Summary

Issues Involved:
1. Validity of the Form F declarations.
2. Appropriation of goods.
3. Levy of purchase tax on the purchase of fly ash.
4. Proposal to levy penalty under Section 12(3)(b) of the TNGST Act.

Detailed Analysis:

1. Validity of Form F Declarations:
The petitioner challenged an assessment order under the Tamil Nadu General Sales Tax Act, 1959, for the year 1998-1999, seeking consideration of Form F declarations under Section 6A of the Central Sales Tax Act, 1956. The court noted that the Form F declarations had been furnished to the second respondent and that there was no allegation of non-production. The Supreme Court's decision in Ashok Leyland Limited Vs. State of Tamil Nadu emphasized that an enquiry must be held by the assessing authority upon submission of Form F. The particulars in Form F should confirm that the goods were transferred to the assessee or his branch office and not to any third party. The Division Bench in Ashoka Sweets v. State of Tamil Nadu reiterated that once Form F declarations are accepted, they cannot be reopened unless found to be fraudulent or misrepresented.

2. Appropriation of Goods:
The petitioner contended that the goods were appropriated at the Pondicherry Depot before being dispatched to customers, arguing that the actual movement of goods commenced from Pondicherry Depot, not the manufacturing unit in Tamil Nadu. The court highlighted the necessity for the second respondent to examine the Form F declarations and render a finding on the appropriation of goods. The Supreme Court's decision in TATA Engineering and Locomotive Co. Limited v. Assistant Commissioner of Commercial Taxes was referenced, which stated that appropriation occurs at the stock-yards, and movement of goods is not necessarily tied to a specific contract of sale.

3. Levy of Purchase Tax on Fly Ash:
The petitioner had filed a separate writ petition concerning the levy of purchase tax on fly ash, which was allowed by a Division Bench following the precedent set in State of Tamil Nadu v. Associated Cement Companies Limited. Therefore, this issue was not addressed in the current writ petition.

4. Proposal to Levy Penalty under Section 12(3)(b) of the TNGST Act:
The court noted that the provision for penalty cannot be invoked without evidence of mala fide intention or contumacious conduct by the dealer. The petitioner argued that the turnover was reported in the CST returns and disclosed in the books of accounts, indicating no intent to evade taxes. The second respondent's assessment order referred to the records and returns filed by the petitioner, noting discrepancies in stock transfer figures. The court directed that if the issue of penalty is revisited, the petitioner should be allowed to raise objections, and the second respondent should consider the legal principles governing the imposition of penalties.

Conclusion:
The court allowed the writ petition, setting aside the impugned order and directing the second respondent to:
1. Furnish copies of the seized documents (books D and E) to the petitioner.
2. Allow the petitioner 30 days to submit objections upon receipt of the documents.
3. Verify the records, provide a personal hearing, and decide on the issues of Form F declarations and appropriation of goods based on legal principles.

The court emphasized that the second respondent must address the twin issues of Form F declarations and appropriation to determine the nature of the transactions. If the penalty issue is revisited, it should be based on the conduct of the petitioner and relevant legal precedents.