2017 (10) TMI 488 - HC - VAT and Sales Tax

Re-determination of the turnover in respect of the stock transfer - Form F Declaration - whether such documents can be insisted upon, and what would be the scope of enquiry that could be conducted by the Assessing Officer on submission of Form F Declaration? - Held that - if a declaration is filed and on an inquiry made pursuant thereto, or in furtherance thereof, the particulars furnished are found to be correct by the Assessing Authority, the result thereof, which is evidenced by the expression thereupon shall, in view of the legal fiction created, would be a transaction otherwise than as a result of an inter-state sale. Once such a legal fiction is drawn, the same would continue to have its effect, not only while making an order of assessment in terms of the State law, but also for the purpose of invoking the powers of the assessment contained in section 9 (2) of the Central Sales Tax Act. The legal fiction continues to have effect even in relation to the powers of reassessment contained in the State Tax Law. e.g., Section 16 of the TNGST Act, 1959. There is no allegation of fraud, misrepresentation, collusion levelled by the respondent against the petitioner/dealer. In the absence of such allegation, the scope of enquiry cannot be extended to conduct roving enquiry in the matter and such, enquiry, at best, can be conducted only on the ground of fraud, or misrepresentation, or collusion, etc - petition allowed in part.

Summary

Issues: Re-opening of assessment after 15 years, validity of re-determination of turnover in stock transfer, requirement of additional documents for Form 'F' Declaration, scope of inquiry by Assessing Officer.

Analysis:
The petitioner, a registered dealer under TNGST Act and CST Act, challenged the re-opening of assessment after 15 years for the assessment year 1999-00 under the CST Act. The main issue raised in the Writ Petition was the re-determination of turnover in stock transfer amounting to ?79,58,112. The respondent revised the assessment, questioning the sufficiency of the Form 'F' Declaration submitted by the petitioner, demanding additional documents like Stock Transfer Invoice, Transport Documents, and Extract of Stock Book to support the declaration.

The Court referred to a Supreme Court case stating that if a transaction is determined not to be an inter-state sale but a transfer of stock, it is conclusive and cannot be reopened unless there are grounds like fraud, misrepresentation, or collusion. The legal fiction created by the submission of Form 'F' Declaration continues to have effect even for reassessment under the State Tax Law. In the absence of allegations of fraud or misrepresentation against the petitioner, the scope of inquiry cannot be extended beyond specific grounds like fraud or collusion.

Applying the above legal principles to the case, the Court held that since there were no allegations of fraud or misrepresentation against the petitioner, the re-assessment of turnover on stock transfer was unjustified. The impugned order revising the assessment was set aside, and the Writ Petition was partly allowed with no costs. The Court emphasized that without specific allegations of fraud or misrepresentation, the Assessing Officer cannot conduct a roving inquiry, and the assessment revision must be based on valid grounds as per the law.