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2019 (2) TMI 128 - AT - VAT and Sales TaxClassification of supply - stock transfer or inter-state sale? - issuance of Form VI-B / Form F under the CST Act - case of the Revenue is that the business audit conducted at the appellant s business premises between 06.05.2008 to 08.05.2008 disclosed facts adverse to the appellant - Held that - It is clear from the show cause notice that it is based on goods sold to M/s Omni Auto Ltd. in March 2008. It is clearly stated that all the goods dispatched to the branch during this period have been sold to only one purchaser namely, M/s Omni Auto Ltd. The show cause notice clearly mentions that on the basis of material submitted by the appellant it can be inferred that the dispatches are as per the pre-existing order received from M/s Omni Auto Ltd. When the show cause notice is based entirely on the sale to one purchaser namely, M/s Omni Auto Ltd. it is not understood why the reasons given in the assessment order do not even mention M/s Omni Auto Ltd. The assessment order is blissfully silent about any sales to M/s Omni Auto Ltd. No doubt, it is the case of the Revenue that the appellant was asked to produce the purchase order for the year 2007-08, but the appellant did not produce any purchase order. The appellant should have produced purchase orders if they were in existence. But for that reason the Assessing Authority could not have used purchase order of Tata Steel to come to a conclusion that the branch transfer claim made by the appellant deserves to be rejected - Without even referring to M/s Omni Auto Ltd., the Assessing Authority has stated that it has considered the dispatch proof, consignment notes, F forms etc. produced by the appellant and after verification it has come to the conclusion that in spite of production of F forms, the claim of branch transfer is not allowable. Whether all this material was with respect to transactions with M/s Omni Auto Ltd. is not clear, because there is no reference to M/s Omni Auto Ltd.. It was necessary for the Assessing Authority to first lay a firm foundation by specifically referring to individual transactions with M/s Omni Auto Ltd. since the purchase orders were not before it. As already noted in Tata Engineering and Locomotive Co. Ltd. the Supreme Court has stressed the need to examine individual transaction while deciding whether it constitutes inter-State sale. This is more so here because there is no purchase order as was before the Assessing Authority when it passed assessment order for the year 2006-07. It is necessary to mention that the appellant s Counsel has contended that in any case during the year 2007-08, the appellant has sold goods worth ₹ 23,87,389/- to Tata Steel. Assuming that reliance placed on purchase order of Tata Steel is right, the disallowance could only be to the extent of ₹ 23,87,389/- and not the entire claim of ₹ 32,24,63,898/for which there is no purchase order. This contention needs to be looked into - the matter needs to be remanded to the Assessing Authority with a direction to pass a fresh assessment order independently and in accordance with law after giving opportunity to the appellant to place its case before the Assessing Authority. Appeal allowed by way of remand.
Issues Involved:
1. Disallowance of stock transfer claims. 2. Treatment of transactions as inter-State sales. 3. Assessment for the years 2006-07 and 2007-08. 4. Penalty under section 9(2A) of the CST Act r/w Section 29(3) of the MVAT Act. 5. Examination of individual transactions. 6. Requirement of passing a reasoned order. Detailed Analysis: 1. Disallowance of Stock Transfer Claims: The appellant, a manufacturer of automobile components, challenged the disallowance of its stock transfer claims by the Maharashtra Sales Tax Tribunal. The audit conducted by the Sales Tax Department revealed that the appellant's claim of stock transfer to its branch in Jamshedpur was not sustainable. The appellant argued that the purchase order from Tata Steel dated 26.04.2006 was only a tentative requirement, and subsequent monthly indents were confirmed orders. However, the Tribunal and the Assessing Authority found that the transactions were predetermined sales and not branch transfers. 2. Treatment of Transactions as Inter-State Sales: The Tribunal concurred with the Assessing Authority that the transactions were inter-State sales. The purchase order from Tata Steel detailed delivery dates, quantities, and specifications, establishing a direct link between the appellant and Tata Steel. The Assessing Authority concluded that the movement of goods from Maharashtra to Jamshedpur was in pursuance of the purchase order, thus constituting inter-State sales. The Tribunal upheld this view, confirming the disallowance of the stock transfer claim for goods worth ?12,96,54,243/- for the year 2006-07. 3. Assessment for the Years 2006-07 and 2007-08: For the year 2006-07, the Tribunal found that the Assessing Authority had wrongly disallowed the entire stock transfer claim of ?37,19,60,952/- based on the purchase order from Tata Steel, which was only for ?12,96,54,243/-. The Tribunal set aside the disallowance of the remaining ?24,23,06,709/- and remanded the matter to the Assessing Authority for fresh assessment. For the year 2007-08, the Tribunal noted that the show cause notice was based on sales to M/s Omni Auto Ltd. in March 2008. However, the assessment order did not mention M/s Omni Auto Ltd. and relied on the purchase order from Tata Steel for 2006-07. The Tribunal set aside the entire assessment order for 2007-08 and remanded the matter for fresh assessment. 4. Penalty under Section 9(2A) of the CST Act r/w Section 29(3) of the MVAT Act: The Tribunal deleted the penalty imposed under section 9(2A) of the CST Act r/w Section 29(3) of the MVAT Act for both years, and there was no appeal against this deletion by the respondent. 5. Examination of Individual Transactions: The Tribunal emphasized the need for the Assessing Authority to examine each individual transaction to determine whether it constituted an inter-State sale. The Tribunal cited the Supreme Court's judgment in Tata Engineering and Locomotive Co. Ltd. versus Assistant Commissioner of Commercial Taxes, which stressed the importance of examining each transaction individually. 6. Requirement of Passing a Reasoned Order: The Tribunal found that the assessment orders lacked clarity and specific references to other buyers. The orders contained vague statements and did not provide detailed reasons for disallowing the stock transfer claims. The Tribunal directed the Assessing Authority to pass fresh, reasoned orders after examining the transactions independently and giving the appellant an opportunity to present its case. Conclusion: The Tribunal confirmed the disallowance of the stock transfer claim for ?12,96,54,243/- for the year 2006-07 and set aside the disallowance of ?24,23,06,709/-, remanding the matter for fresh assessment. The assessment order for 2007-08 was set aside entirely, and the matter was remanded for fresh assessment. The Tribunal directed the Assessing Authority to conduct the assessment independently, in accordance with law, and after giving the appellant an opportunity to be heard. The entire exercise was to be completed expeditiously, preferably within six months.
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