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2025 (4) TMI 174 - HC - VAT / Sales TaxReopening of the assessment for the year 1996-97 under the CST Act based on the alleged new material or change in circumstances - inter-state sales under Section 3(a) of the CST Act or consignment sales under Section 6A of the CST Act - HELD THAT - The indisputable fact is that the show cause notice does not describe what was the new material based on which the assessment was proposed to be re-opened. Moreover admittedly assessment has already been carried out for the AY 1996-97 and an assessment order dated 26.11.1998 has been passed. Indisputably during the course of assessment cash book ledger purchase and sales bills were called for and checked. Indisputably for the assessment F Forms copy of agreement between petitioner and Bhuwalka Trade Links (P) Limited copies of sale pattials copies of lorry receipts have been verified. The other connected records have also been verified. After verification of records the assessment order has been passed. The Apex Court in Ashok Leyland Limited 2004 (1) TMI 365 - SUPREME COURT held that once a declaration has been accepted and acted upon by the Revenue unless and until on further enquiry made thereto the particulars furnished were found to be incorrect or untrue the assessment once made based on Form F cannot be re-opened. The Apex Court went on to hold that if such a declaration is filed and on an enquiry made pursuant to or in furtherance of 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. Furthermore 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 Act but also for the purpose of invoking power of re-opening assessment contained in Section 9(2) of the Central Act as well as Section 16 of the State Act. These are nothing but bald allegations with no evidence to speak of. When in the original assessment the Assessing Authority had satisfied himself as to the claim of the assessee by way of verifying the details in Form F apart from the agreement as well as accounts of the Assessee in the absence of any other material to discredit the details in Form F the claim could not be rejected under Section 16 proceedings. There is not even a whisper questioning the truthfulness of the contents in Form F . The assessment order is conclusive for all purposes and therefore re-opening cannot be permitted merely on change of opinion and revenue be given a second innings. Conclusion - The reopening of the assessment is quashed the transactions are confirmed as consignment sales and the High Court s jurisdiction is affirmed. Petition allowed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include: 1. Whether the reopening of the assessment for the year 1996-97 under the CST Act was justified based on the alleged new material or change in circumstances. 2. Whether the transactions in question constituted inter-state sales under Section 3(a) of the CST Act or consignment sales under Section 6A of the CST Act. 3. Whether the High Court has jurisdiction to entertain the writ petition under Article 226 of the Constitution against the order passed by the Appellate Authority constituted under the CST Act. ISSUE-WISE DETAILED ANALYSIS 1. Reopening of Assessment Relevant Legal Framework and Precedents: The reopening of assessments is governed by Section 16 of the TNGST Act, read with Section 9(2) of the CST Act. The Supreme Court in Ashok Leyland Limited v. State of Tamil Nadu established that reopening cannot occur without new material or evidence of fraud, collusion, or misrepresentation. Court's Interpretation and Reasoning: The Court found that the show cause notice lacked any new material or evidence of fraud, collusion, or misrepresentation. The reopening was based on mere proximity of dates and quantities in consignment and sales invoices, which were considered insufficient grounds for reopening. Key Evidence and Findings: The original assessment had verified all necessary documents, including 'F' forms, agreements, and sale pattials. No new evidence was presented to justify reopening. Application of Law to Facts: The Court applied the principles from Ashok Leyland Limited, concluding that the reopening was unjustified as it was based on a change of opinion rather than new evidence. Treatment of Competing Arguments: The petitioner's argument that reopening was based on a change of opinion was upheld, while the respondent's claim of new material was dismissed due to lack of evidence. Conclusions: The reopening of the assessment was deemed unjustified and was quashed. 2. Nature of Transactions: Inter-State vs. Consignment Sales Relevant Legal Framework and Precedents: Section 3(a) of the CST Act defines inter-state sales, while Section 6A pertains to consignment sales. The legal distinction hinges on whether goods movement is occasioned by a sale contract. Court's Interpretation and Reasoning: The Court found that the transactions were consignment sales, as originally assessed, and not inter-state sales. The proximity of invoice dates and identical quantities were insufficient to prove otherwise. Key Evidence and Findings: The original assessment had accepted the transactions as consignment sales based on verified documentation. Application of Law to Facts: The Court reaffirmed the original assessment's classification, noting the lack of evidence to support a reclassification as inter-state sales. Treatment of Competing Arguments: The Court dismissed the respondent's argument of inter-state sales camouflage due to lack of supporting evidence. Conclusions: The transactions were confirmed as consignment sales, eligible for exemption under the CST Act. 3. Jurisdiction of High Court under Article 226 Relevant Legal Framework and Precedents: Article 226 of the Constitution allows High Courts to exercise judicial superintendence over decisions of statutory bodies. Precedents like Columbia Sportswear Company v. Director of Income Tax affirm this jurisdiction. Court's Interpretation and Reasoning: The Court held that it had jurisdiction to hear the petition, as the Appellate Authority is a statutory body under the CST Act, and its decisions are subject to High Court scrutiny. Key Evidence and Findings: The Court relied on constitutional provisions and Supreme Court precedents to assert its jurisdiction. Application of Law to Facts: The Court applied constitutional principles, rejecting the argument that the petition should be filed in the Supreme Court. Treatment of Competing Arguments: The Court dismissed the respondent's jurisdictional challenge, affirming its authority to hear the case under Article 226. Conclusions: The High Court has jurisdiction to entertain the writ petition against the Appellate Authority's order. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "In the absence of any other material to discredit the details in Form 'F', the claim could not be rejected under Section 16 proceedings. There is not even a whisper questioning the truthfulness of the contents in Form 'F'." Core principles established: Reopening of assessments requires new material or evidence of fraud, and mere change of opinion is insufficient. The High Court has jurisdiction under Article 226 to review decisions of statutory tribunals. Final determinations on each issue: The reopening of the assessment was quashed, the transactions were confirmed as consignment sales, and the High Court's jurisdiction was affirmed. The petition was allowed, and the impugned order was set aside.
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