2020 (4) TMI 466 - HC - VAT and Sales Tax

Stock Transfer - failure to furnish Form F - personal hearing not availed - principles of natural justice - Transfer of equipments and machineries from one site to other site between States - HELD THAT - Even though it is stated that an opportunity of personal hearing was not availed by the petitioner, there is no averment as to the letter written by the petitioner on 25.06.2019 and that the delivery of the personal hearing notice, after the time fixed for the same. At the out set, this Court is of the view that the respondents have not complied with the principles of natural justice, as directed by this Court in its earlier order, dated 12.06.2018. On this ground alone, the impugned orders are liable to be set aside - In the instant case, tax is levied for transfer of equipments and machineries from one site to other site between States. When the requirement of the machinery is accomplished at one site in execution of the project, naturally, it will be taken to the other site, where it is required. Even in the present case, it is a clear case that the petitioner is a Contractor involved in Infrastructure construction. In the present case, he has been carrying out construction of roads for the National Highways Authority of India. Perusal of the impugned orders show that the person who transferred the goods and the consignee are one and the same. In that event, transfer of equipments and machinery will not amount to transfer of property and the process of sale or resale is not attracted in this transaction - the impugned assessment orders passed by the respondent set aside - petition allowed.

Summary

Issues:
Challenging impugned orders dated 22.07.2019 and 28.12.2018, non-compliance with principles of natural justice, tax levied for transfer of equipments and machineries between States, failure to provide opportunity of personal hearing, validity of assessment orders under TNVAT Act, 2006.

Analysis:
The writ petitioner, an EPC contractor engaged in infrastructure projects, challenged assessment orders demanding tax and penalty for non-declaration of monthly returns and failure to furnish Form F. Upon a surprise inspection, the petitioner was held liable for tax on a turnover of ?10,00,000. The High Court quashed the assessment orders for lack of personal hearing and directed the Assessing Authority to provide necessary details and afford a personal hearing.

The Assessing Authority fixed a personal hearing date, but the notice was received after the scheduled time. Despite the petitioner's request for a postponement, the Authority proceeded to pass orders. The impugned order confirmed the previous assessment, holding the petitioner liable for tax on interstate sales at 14.5%, citing non-compliance with TNVAT Act procedures and failure to declare goods under CST Act, 1956, and furnish Form F under CST Act, 1957.

The respondent justified the orders, reiterating the reasons stated therein. The Court noted non-compliance with principles of natural justice and lack of response to the petitioner's communication, setting aside the impugned orders on this ground alone. The Court emphasized that the transfer of machinery between project sites does not constitute a sale and purchase, hence not attracting tax liability.

Referring to a previous judgment, the Court highlighted that the absence of Form F does not invalidate the petitioner's case if supported by other evidence. In this case, as the petitioner was involved in infrastructure construction for NHAI and the transferor and consignee were the same, the transfer of machinery did not amount to property transfer or sale, warranting the setting aside of assessment orders.

In conclusion, the Court allowed the writ petitions, setting aside the assessment orders and closing the connected miscellaneous petitions without costs.