2024 (11) TMI 117 - HC - VAT / Sales Tax

Challenge to order of Sales Tax Appellate Tribunal - no C-Form register - transactions in respect of which the assessee has claimed exemption under Section 6(2) of the Central Sales Tax Act, 1956 challenged on the ground that the transactions were transit sales - HELD THAT - In the absence of any records such as the C Form Register or the communication from the assessing authority of Sattur Assessment Circle, it is not inclined to disbelieve the claim of the petitioner. There are no reason to disallow the C Forms produced. No doubt, it is for the assessee to establish its claim of exemption. In this case, primary particulars such as the details of selling dealers and the C Forms issued by the officer have been produced. The presumption is, no doubt, rebuttable, and the Department is at liberty to establish that the particulars produced are false. Though the Department has alleged so, it has failed to prove the falsity of the claim, as it alleges. There is nothing to disprove the C Forms produced by the petitioner. As regards the cancellation of the registration of the selling dealers, the factum of cancellation was not available in public domain as it is today, and the petitioner cannot be made to suffer on this count. Their burden hence stands discharged. The appellate authority has rendered a categoric finding that there was no willful default on the part of the assessee in claiming the exemption and reliance is placed on the C Forms produced. Hence, the existence of the C Forms, and their genuineness has been accepted in the deletion of penalty and this order has been accepted by the Commercial Taxes Department - the impugned order is set aside and this writ petition is allowed.

Summary

Issues:
Challenge to Sales Tax Appellate Tribunal order regarding denial of exemption under Section 6(2) of the Central Sales Tax Act, 1956 based on transit sales transactions.

Analysis:
The petitioner contested an order by the Sales Tax Appellate Tribunal (STAT) concerning transactions claimed as exempt under Section 6(2) of the CST Act, asserting they were transit sales. The assessing authority suspected transactions with Logesh Enterprises and Surya Enterprises, alleging camouflaged transactions with unregistered dealers. The authority proposed denying exemption and imposing penalties. The petitioner provided Form C issued by the assessing authorities of the entities, urging verification of genuineness. The first Appellate Authority conducted an inquiry confirming non-assessment of the entities by the assessing circle and rejected the exemption claim, setting aside the penalty due to no wilful evasion. The turnover was treated as interstate sales, and the Forms were disregarded as their source was unknown.

The petitioner appealed to the STAT, which upheld the assessing officer and first appellate authority's findings, deeming the Forms non-genuine and confirming cancellation of registration certificates of the entities. During the hearing, the Court directed the Revenue to produce communication between assessing officers and the C Form Register to verify the Forms' authenticity. However, no such records were available, leading the Court to accept the petitioner's claim based on produced C Forms. The Department failed to prove the Forms' falsity, and the burden of proof was deemed discharged by the petitioner.

The Court noted the absence of supporting material for the exemption denial allegations, drawing adverse inference due to insufficient record maintenance. The first Appellate Authority's deletion of penalty based on the Forms' existence was highlighted, emphasizing the lack of wilful evasion and acceptance of the Forms' genuineness. The Court set aside the impugned order, allowing the writ petition and closing the case without costs.