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2018 (3) TMI 741 - HC - VAT and Sales TaxValidity of assessment order - TNGST Act - non-compliance of Rule 26(6)(a) and (b). Held that - The factual position which emerges from the material papers are that the petitioner was both consignment agent and del credere agent of Mr.Haldia Petrochemicals Limited and an agreement to the said effect was entered into on 01.07.2002. Having accepted that the petitioner is a del credere agent, they are bound to comply with the instructions as per Section 40(1) of the TNGST Act read with Rule 26(6)(a) of the Rules. Admittedly, the petitioner has not complied with or observed any of the conditions as contemplated under the Rule. When the Court is convinced that the show cause notices are proper and the findings recorded in the impugned assessment orders are proper and the Court having tested the correctness of the impugned orders in these writ petitions and held that the contentions advanced by the petitioner do not merit consideration, it is left with no other option, except to affirm the impugned assessment orders. The petitioner has not made out any case for interference with the impugned assessment orders and accordingly, the writ petitions fails - decided against petitioner.
Issues Involved:
1. Legality of the assessment orders under the Tamil Nadu General Sales Tax Act (TNGST Act) for the assessment years 2000-2001 and 2001-2002. 2. Validity of the show cause notices issued to the petitioner. 3. Petitioner's compliance with Rule 26(6)(a) and (b) of the TNGST Rules, 1959. 4. Nature of the relationship between the petitioner and M/s. Haldia Petrochemicals Limited. 5. Petitioner's liability for the tax and penalties imposed. Detailed Analysis: 1. Legality of the assessment orders under the TNGST Act: The petitioner, a trader in plastic raw materials, challenged the assessment orders for the years 2000-2001 and 2001-2002. The court noted that the petitioner did not avail the alternative remedy of appeal and had approached the court directly. Despite this, the court proceeded to hear the matter on merits due to the long pendency of the writ petitions since 2004. 2. Validity of the show cause notices: The petitioner argued that the show cause notices were vague, inconsistent, and issued with a closed mind. The court, however, found that the notices were clear and cogent, and that the petitioner had not raised these objections in their initial reply. The court referenced the Supreme Court's decision in Oryx Fisheries Private Limited v. Union of India, distinguishing it on the facts and holding that the notices were proper. 3. Petitioner's compliance with Rule 26(6)(a) and (b) of the TNGST Rules, 1959: The court found that the petitioner, as a del credere agent, failed to comply with Rule 26(6)(a) and (b) of the TNGST Rules. The petitioner admitted to handling the goods, but failed to maintain and furnish the required records. The court held that the petitioner could not escape liability by claiming they did not handle the goods. 4. Nature of the relationship between the petitioner and M/s. Haldia Petrochemicals Limited: The court examined the del credere agency agreement and concluded that the relationship between the petitioner and M/s. Haldia Petrochemicals Limited was on a principal-to-principal basis, not an agency basis. The court referenced the decision in Parikh Metal Corporation v. The Commercial Tax Officer, which supported this interpretation. 5. Petitioner's liability for the tax and penalties imposed: The court found that the petitioner was liable for the taxes and penalties as they had domain over the goods and failed to prove the existence of the buyer, M/s. Nandhini Polymers. The court noted that the petitioner had breached the terms of the del credere agreement by not ascertaining the financial status of the buyer and not complying with statutory requirements. Conclusion: The court dismissed the writ petitions, affirming the impugned assessment orders and holding that the petitioner had not made out any case for interference. The court found that the show cause notices were proper, and the petitioner was liable for the taxes and penalties due to their failure to comply with statutory requirements and the terms of the del credere agreement.
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