9911796707
TMI Blog1995 (9) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... order, annexure P715, dated May 1, 1992, passed by respondent No. 2, the Excise and Taxation Commissioner-cum-Assessing Authority and impugned orders, annexure P29, dated February 18, 1993 and demand notice, annexure P30, dated February 18, 1993, respectively, being illegal and arbitrary. We propose to dispose of all the three writ petitions by this common judgment as identical questions of law and fact are involved in all the matters. Shorn of unnecessary verbiage, the facts have, however, been extracted from Civil Writ Petition No. 1898 of 1992 with some additional facts that might be necessary from the other two writ petitions. Learned counsel for the parties have also raised common questions in relation to all the writ petitions. Some additional contentions have also been raised pertaining to Civil Writ Petitions Nos. 5864 of 1992 and 5404 of 1993. The additional contentions shall be separately dealt with. As mentioned above, petitioner No. 1, Jindal Strips Limited, is a public limited company duly registered under the Companies Act, 1956 and has its registered head office at Delhi Road, Hisar. Petitioner No. 2 is a shareholder of the company having financial interest in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious years. The company expected contribution to the State as well as to the Union of India of an amount of Rs. 80 crores in the shape of revenue. To highlight its clean track record it is further pleaded that since the very inception of the company in the year 1970-71 it had always been honest to its core in the matter of payment of any revenue or taxes either to the State or to the Centre and it is only for this reason that the company had never been involved in any litigation relating to the evasion of any revenue. Similarly, the management of the company had always been champion and in the forefront of granting all types of facilities to its workers and in the matter of imparting all possible advantages of employment, bonus and other facilities, not only to its higher management executives but even to the workers engaged at the lowest level. The growth rate of the company had been increasing every year but, it is pleaded that had some atrocities, details whereof would be given hereinafter, not been committed by the present regime, the growth rate would have been much more. Since June, 1991, it is the case of the petitioner-company, the atrocities committed by the present regim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril to June, 1991 as he filed nomination papers for contesting Hisar assembly segment election as a candidate of Haryana Vikas Party headed by Shri Bansi Lal, ex-Chief Minister of Haryana, against the wishes and desires of Shri Bhajan Lal. The latter, it is stated, made his displeasure known to every one by declaring that he would contest the Hisar election by proxy and got allotted the ticket to his protege Shri O.P. Mahajan, whom he had got elected as an independent candidate after getting defeated his own party candidate Shri Munna Mal in the assembly election in the year 1987. With a view to prop up its stand that Bhajan Lal had made the Hisar election as prestige issue, it is stated that he had made it known to everybody which is also evident from the public speeches made by him during the election campaign as he put his most of the time in Hisar. Some of the public speeches, which were made during election campaign and which appeared in the press, have been enclosed with the writ as annexures P196-A to P196-C. During the election process, it is further the case of petitionercompany, Shri Bhajan Lal had made it clear that if he loses the Hisar election, it would mean chopping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner, especially brought in at Hisar as Deputy Excise and Taxation Commissioner to carry out the object when the earlier incumbent had refused to carry out the illegal objects of the Chief Minister. Thereafter, the truck union dispute was resorted to resulting in illegal detention of trucks carrying goods for and on behalf of the petitioner-company. This time also the courts came to the rescue of the company. It is further the case of the petitioner that the atrocities did not end there and thereafter for the desired results the Chief Minister pressed into service the anti-social elements who indulged in indiscriminate firing on the factories and residential areas of the employees of petitioner and they were even terrorised. The assessment proceedings for the year 1988-89 were initiated by respondents Nos. 2 and 4 for the first time on September 26, 1989, under the State Act. No separate statutory notice for initiating assessment proceedings under the Central Act was ever issued to the company by respondents Nos. 2 and 4. By September 25, 1991, respondents Nos. 2 and 4 had done only the preliminary work of verifying the goods receipts ST 38 forms, etc., as received from various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the petitioner-company to prove that the goods worth Rs. 51,66,179.26 were sent by it to its aforesaid three branches for their consumption and/or sale and the goods worth Rs. 55,45,92,345 were sent by it to its different consignment agents for effecting the sale of the said goods on consignment sale basis. True copies of form "F" sent by M/s. Jindal Steel Agency, Madras, have been attached with the writ petition, details whereof have been given in annexure P295. Similarly, true copies of form "F" sent by M/s. Orbit Steel (India) Ltd., Bombay, have been attached with the writ as annexures P77 to P97. On the basis of these documents and goods receipts besides other documents and accounts, it is argued, the Assessing Authority should have finalised the assessment of the company on November 13, 1991, itself holding therein that the branch transfers were genuine and admissible under law and that the despatches made by the petitioner to its various consignment agents were genuine and admissible under law. However, respondent No. 2/4 adjourned the proceedings for November 20, 1991, for extraneous considerations. A bunch of documents, such as G.Rs., consignment despatch advice, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner-company, that the consignment sales worth Rs. 55,45,92,345 were genuine consignment sales admissible under law. However, respondent No. 2/4 instead of finalising the assessment holding as above, kept the assessment proceedings pending. It is pleaded that intention of respondent No. 2/4 came to light in the present case when they issued notice dated December 10, 1991, served on the petitionercompany on December 16, 1991, for its reply and appearance on December 17, 1991. In this notice, respondent No. 2/4 doubted the genuineness of the consignment sales worth Rs. 55,45,92,345 of the goods sent by the petitioner-company to its various agents outside the State of Haryana and goods transferred by the company to its branches worth Rs. 51,66,179.26 outside the State of Haryana and called upon the company to show cause as to why the said entire consignment sales and branch transfers be not rejected and tax be levied under the Central Act considering the consignment sales and branch transfers as inter-State sales. It is stated that from the contents of the notice it would be clear that respondent No. 2/4 sought the information which was otherwise available with them on the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made by respondent No. 2/4 were denied. Along with the reply, the company also submitted documents in support of its contention that the branch transfers were genuine and were not inter-State sales and that the said two firms, namely, M/s. Jindal Steel Agency, Madras and M/s. Orbit Steel (India) Ltd., Bombay, were in existence in the relevant year 1988-89 and till date and that the goods worth Rs. 18,89,37,392 and Rs. 6,45,38,342 were sent by the petitioner-company to these concerns for effecting sales of the said goods on consignment sale basis. Despite this, it is pleaded, respondent No. 2/4, without perusing the documents and other evidence brought on records, without affording opportunity of cross-examination of witnesses to the petitioner-company and in violation of the principles of natural justice, passed the impugned order, annexure P194, vide by which an additional demand of Rs. 2,04,13,895 was created on the ground that the branch transfers worth Rs. 17,30,756 were not genuine and were liable to tax and that the transfers other than by way of sales (consignment sales) amounting to Rs. 18,89,37,392 to M/s. Jindal Steel Agency, Madras and Rs. 6,45,38,342 to M/s. Orbit St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year as these firms were stated to be not in existence: Rs. (i) M/s. Jindal Steel Agency, Madras 18,89,37,392 (ii) M/s. Orbit Steel (India) Ltd., Bombay 6,45,38,342 Total ... 25,34,75,734" After dealing with the defence of the petitioner-company regarding existence of the aforesaid two firms, in Madras and Bombay, the authority concerned went on to observe that "while examining the genuineness of the above two firms aspects of storage facility with them were also examined being an essential for functioning as an agent on some one's behalf. There is no denying a fact that consignee-firm shall not be in a position to receive the goods in bulks in the absence of storage facilities for storing of goods received for sales as transfers other than by way of sales (consignment sales). The dealer failed to give any proof regarding the godowns, etc., owned or hired by the consignee-firms at places of business in Madras and Bombay. The despatch of consignments as shown in the books are in bulk quantities so in the absence of storage facilities it shall not be possible to contain and keep this stock for effecting sales in future. In such circumstances, one can easily reach a conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... despatch to their branches outside the State of Haryana. It is also against the principles of the profit oriented trade. If these goods were actually meant for their branches then these goods could be directly purchased by the branches themselves, thus, saving the unnecessary expenses incurred by Hisar office. The branches are also managed by qualified independent staff and know their requirements. Actually these goods were not transferred to branches but moved as inter-State sales to various destinations and not to branches." The other reason given while rejecting the branch transfers to the tune of Rs. 3,47,71,200 by the Assessing Authority was that there were anomalies and manipulations in information given and accounts produced which could not face the test of verification and probing, so assessment is framed on the basis of facts noted and verified as discussed above, not relying on the accounts produced by the dealer. In the ultimate analysis, the Assessing Authority allowed deductions on account of finished goods transfers worth Rs. 3,42,76,000 whereas remaining were disallowed being inter-State sales to the tune of Rs. 3,47,71,000. While dealing with consignment sales, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e so-called consignment agents, then how M/s. Jindal Strips Ltd., Hisar, claimed that property in goods vested with it. It was also observed that the so-called consignment agents had charged tax under the Central Sales Tax Act on their bills for local sales which was a clear indication that there were inter-State sales of M/s. Jindal Strips Ltd., Hisar. It was also observed that some of the consignment agents were themselves the buyers of the goods and example of Marudhar Industries, Bangalore, was given in this connection. It was also observed that none of the consignment agent had supplied authenticated copy of the registration certificate of their firm which might prove that the consignment agents were having approved godowns for storing the goods. In that connection also, some examples were given. In the ultimate analysis, it was held that sales worth Rs. 86,64,86,832 were inter-State sales out of the total claimed consignment sales and the said sales were taxed accordingly. In so far as assessment order dated February 18, 1993, giving rise to Civil Writ Petition No. 5404 of 1993 is concerned, no additional grounds have been pointed out by learned counsel appearing for the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the petitioner-company to the extent of Rs. 25,34,75,734 relating to M/s. Jindal Steel Agency, Madras and M/s. Orbit Steel (India) Ltd., Bombay. On the point of consignment sale, the petitionercompany also submitted "F" forms to claim deductions to the tune of Rs. 25,34,75,734 and in support of its claim, the company stated that the goods were on consignment basis through the consignment agents M/s. Jindal Steel Agency, Madras. The company produced documents which showed that the goods worth Rs. 18,89,37,392 and Rs. 6,45,38,342 were sent to M/s. Jindal Steel Agency, Madras and M/s. Orbit Steel (India) Ltd., Bombay, respectively. Form "F" did not contain the name of station from which the goods were despatched in respect of goods purported to have been despatched to M/s. Jindal Steel Agency, Madras whereas the station of despatch in respect of goods sent to M/s. Orbit Steel (India) Ltd., Bombay, was indicated as New Delhi. The documentary evidence produced by the company was not, thus, found convincing as the firms named above were not in existence. It is further pleaded that the company effected branch transfers to the extent of Rs. 53,90,500 and claimed deductions on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of otherwise than by way of sales to its agents outside the State of Haryana, bulk of goods have been sent for sale on consignment basis of M/s. Jindal Steel Agency, Madras and M/s. Orbit Steel (India) Ltd., Bombay. The consignor and consignee, in their affidavits, submitted in the office have mentioned that the goods have been despatched from Hisar but the "F" forms submitted by M/s. Orbit Steel (India) Ltd., Bombay, shows that the goods had been despatched from New Delhi and the appropriate column in respect of "F" forms issued by M/s. Jindal Steel Agency, Madras, is blank, i.e., the name of station from which the goods were despatched had not been mentioned. The transport facilities for carriage of goods all over India were available at Hisar. However, the documents submitted by the company showed that the goods were despatched to M/s. Jindal Steel Agency, Madras, by a transport company at Hisar which actually did not exist at Hisar. The company had not produced any evidence regarding the two consignment agents, i.e., Jindal Steel Agency, Madras and Orbit Steel (India) Ltd., Bombay, where they kept the goods transferred by petitioner-company, Hisar. In that way, the consignme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnment sales may not be rejected and tax be levied under the Central Act being interState sales. The company submitted its reply to the show cause notice on December 17, 1991. Shri M.L. Gupta, Accounts Executive, also appeared before the respondent No. 2 along with account books, etc., and the case was adjourned to December 18, 1991. The company was given another notice on December 17, 1991, as the examination of account books as well as the goods transferred to the branch offices and goods sent on consignment basis revealed that store goods worth Rs. 17,30,356.26 had been transferred to various branches outside the State of Haryana during the year 1988-89 after purchasing the same within the State of Haryana which was not admissible under law as also that consignment sale to M/s. Jindal Steel Agency, Madras, worth Rs. 18,89,37,392 and Rs. 6,45,38,342 to M/s. Orbit Steel (India) Ltd., Bombay, during the course of inquiry, it was found that both the firms were not in existence. The company was, thus, required to appear before respondent No. 2/4 on December 18, 1991, to show cause as to why the transactions regarding branch transfers/consignment sales be not treated as inter-State sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been made by him under the Haryana General Sales Tax Act and the Central Sales Tax Act and he had nothing to do with it. He had not directed the Assessing Authority to make any assessment. The petitioners had remedy against the order by way of appeal up to the Tribunal and reference to the High Court and even to the Supreme Court. The allegations made against him in the stay application and the writ petition have been controverted on facts. It is pleaded that allegations made against him were mala fide and malicious as he was a political opponent of Shri Jindal, who was making false allegations to escape the liability of tax. If Mr. Jindal had committed any offence under any law or had violated any law, the authorities of the State were competent to deal with and the remedies are equally available to a person in accordance with law. He never asked any authority to initiate any proceedings. It is further the case of Shri Bhajan Lal that it is wrong that the DETC was acting under his directions. He had put no pressure to cripple the business of the petitioner-company. The DETC was a statutory authority and could initiate action under the State Act. If he had given any notice to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em under article 226 of the Constitution of India before this Court. For his aforestated contention, learned counsel relies upon Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315 (SC); AIR 1983 SC 603, Assistant Collector of Central Excise, Chandan Nagar, West Bengal v. Dunlop India Ltd. [1985] 154 ITR 172 (SC); AIR 1985 SC 330, K.B. Handicrafts Emporium v. State of Haryana [1993] 90 STC 477 (SC); JT (1993) 4 SC 545. Mr. Shanti Bhushan, learned senior advocate, appearing on behalf of the petitioners, however, controverts the contention of learned counsel for the respondents and besides placing reliance upon L. Hirday Narain v. Income-tax Officer, Bareilly [1970] 78 ITR 26 (SC); AIR 1971 SC 33, Ram Chander Singh v. State of Punjab AIR 1968 Punj 178, Ram and Shyam Company v. State of Haryana AIR 1985 SC 1147, M.G. Abrol, Additional Collector of Customs, Bombay v. Shantilal Chhotelal and Co. AIR 1966 SC 197, Joharmal Murlidhar and Co. v. Agricultural Income-tax Officer, Assam [1971] 79 ITR 6 (SC); AIR 1970 SC 1980, Filterco v. Commissioner of Sales Tax, M.P. [1986] 61 STC 318 (SC); AIR 1986 SC 626 and Century Spinning & Manufacturing Co. Ltd. v. Ulhasnagar Municipal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al justice." "In support of the S.L.Ps., the submissions advanced by the learned counsel for the petitioners were resting purely on procedural irregularities or touch upon the merits of the assessments. Broadly speaking, the contentions were that: (1) The learned Sales Tax Officer had no authority or jurisdiction while making an assessment under rule 15 of the Central Sales Tax (Orissa) Rules, 1957, to treat the gross turnover as returned by the petitioners to be their taxable income/ turnover. (2) He was not justified in disallowing the claim for deduction of Rs. 6,74,99,085.65 representing sales to registered dealers and departments of Government as well as of Rs. 28,24,224.42 on account of tax collected from the purchasers from the gross turnover of sales in the course of inter-State trade and commerce amounting to Rs. 7,13,94,903.63. (3) He wrongly denied the petitioners the benefit of the concessional rate of tax at 4 per cent merely because they failed to furnish the requisite declarations in form 'C'. (4) He could not, for similar reasons, while making an assessment under sub-section (4) of section 12 of the Orissa Sales Tax Act, 1947, treat the gross turnover of inside sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court. It was, however, held that no question of vires, in the facts of the said case, was involved and on the other hand the challenge was only to the regularity of proceedings before the Sales Tax Officer as also the authority to treat the gross turnover to be taxable turnover. In paragraph 10 (at pages 320-321 of STC), while dealing with another decision of the Supreme Court in State of U.P. v. Mohammad Nooh AIR 1958 SC 86, it was observed that the said decision was clearly distinguishable as in that case there was total lack of jurisdiction and in the present case there was no suggestion that the Sales Tax Officer had no jurisdiction to make an assessment. It was also observed that in the facts of the case in hand it could not be contended that the officer had acted in breach of the rules of natural justice as he was admittedly served with a notice of the proceedings and was afforded an opportunity to place his case. In Assistant Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172; AIR 1985 SC 330 the apex Court, while relying upon a number of judgments, held that "article 226 is not meant to short-circuit or circumvent statutory procedures. It is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te sale, an export sale within the meaning of section 5(1) or a penultimate sale within the meaning of section 5(3), or otherwise, was always a question of fact to be decided by the appropriate authority in the light of the principles enunciated by courts". The facts of the case aforesaid would reveal that for the assessment year in question the sales tax authorities of Haryana levied purchase tax on the purchase of raw materials made by the petitioner, following the decision of the Punjab and Haryana High Court in Murli Manohar & Co., Panipat v. State of Haryana (C.W.P. No. 1227 of 1980) under section 9 of the Haryana General Sales Tax Act, 1973. However, the Assessing Authority computed the tax with reference to the purchase value of the goods exported against form H. The petitioners did not choose to file an appeal but directly approached the Supreme Court by way of writ petition on the ground that in view of the decision of the Punjab and Haryana High Court in Murli Manohar (C.W.P. No. 1227 of 1980), there was no point in their pursuing the remedies under the Act in that State. It is significant to mention here that appeals carried against the decision of this Court in Murli Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. He contends that the matter was admitted to be decided by a Division Bench of this Court way back in 1992, i.e., about three years ago. The first petition (C.W.P. No. 1898 of 1992) came to be instituted on February 1, 1992. Thereafter, the two subsequent petitions were filed in this Court which were ordered to be heard along with earlier writ (C.W.P. No. 1898 of 1992). In the first and third petitions the additional liability as assessed by the Assessing Authority was stayed whereas in the second petition the order declining stay was set aside by the Supreme Court, thus, for all this while, there has been a complete and comprehensive stay operating in favour of the petitioners. It is being argued that it would be wholly iniquitous Reported as Murli Manohar & Co. v. State of Haryana [1991] 80 STC 79 (SC) at this stage to relegate the petitioners to an alternative remedy particularly when there are serious allegations of mala fides against the present Chief Minister Shri Bhajan Lal, who continues to hold the said office and the main allegation is that not only the impugned orders but various other orders affecting adversely the petitioners and Shri O.P. Jindal were passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Indian Income-tax Act, 1922. Hirday Narain then applied for rectification of a mistake in the order of assessment which he claimed was apparent from the records but the Income-tax Officer declined to give the relief holding that for the period November 19, 1949 to September 30, 1950, Hirday Narain should have been assessed as an individual. Hirday Narain then moved a petition before the High Court of Allahabad under article 226 of the Constitution challenging the order of the Income-tax Officer. A single Judge of the said High Court rejected the petition holding that at the stage of original assessment, the question that the income was not liable to be assessed under section 16(3)(a)(ii) of the Incometax Act, was not raised and that the assessee had not applied in revision to the Commissioner under section 33-A of the Act. A Division Bench of the High Court confirmed that order in appeal, observing that the rectification under section 35 of the Act was discretionary and if the Income-tax Officer thought that proceedings were substantially fair, he was not bound to rectify the assessment on technical grounds. A special leave petition then came to be filed by Hirday Narain in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act by going to the Registrar in appeal against the Returning Officer's impugned order. Nor would the remedy by way of revision to the State Government be anything but a farce if one of the main allegations which the petitioner intended to make was about undue influence having been exercised by the Minister himself against the interests of the petitioner". It was further observed that "the time for preferring an appeal under section 55(2) of the Act having expired, we do not think it proper to refuse to grant the relief to which the petitioner is entitled in the case on the technical ground". It is significant to mention that while dealing with the allegations of mala fides the Division Bench observed that on the material placed before the court it was not possible to hold that the Returning Officer excluded the petitioner from contest to contest the office of chairman of the society on account of mala fides or interference by the Minister. It is how the matter was dealt with: "Returning Officer is vehement not only in denying his mala fides but in alleging that the charge levelled against him by the petitioner is itself vitiated by malice. I do not think that on the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed upon the petitioner was first deposited". The firm in the said case had obtained an export licence from the Iron and Steel Controller permitting them to export from the port of Bombay 900 long tons of steel skull scrap. The firm had purchased scrap iron from various sources at rates varying from Rs. 95 to Rs. 207 per ton. After they brought the goods to the docks, the officer authorised by the Iron and Steel Controller and the representative of the Regional Joint Scrap Committee certified the goods as steel skull scrap fit for export under the said export licence and the necessary endorsements to that effect were made on the shipping bills in respect of the said goods. Thereafter the goods were taken to the customs authorities for the purpose of exporting the same. The customs authorities took the view that the part of the goods was not steel skull scrap and the matter was referred to the Iron and Steel Controller. By orders dated March 18, 1957, the Controller informed the customs authorities that the rejected buffers, plungers and casings were furnace rejects and formed part of skull scrap, etc. By order dated March 26, 1957, the customs authorities seized the entire good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Income-tax Officer [1971] 79 ITR 6; AIR 1970 SC 1980, the Supreme Court, on the plea of alternative remedy, held that "that is undoubtedly a good ground for refusing to give the relief to the assessee but all the same, taking into consideration, the amounts involved and the simple nature of the proof required to be adduced by the assessee, we direct as follows: The assessing officer shall issue a fresh notice to the assessee calling upon him to produce his income-tax assessment orders for the relevant assessment years. The assessee shall produce those orders within a month of the receipt of the notice. If he produces those orders, the impugned assessment orders shall stand cancelled and the assessing officer shall assess the assessee afresh. If the assessee fails to produce those orders, the impugned assessment orders shall stand and further steps may be taken on the basis of those orders." In Filterco v. Commissioner of Sales Tax [1986] 61 STC 318 (SC); AIR 1986 SC 626, where the High Court had dismissed the petition in limine, it was observed by the Supreme Court that "we are of the opinion that the High Court should have examined the merits of the case instead of dismissing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial precedents, enumerated above, this Court is of the considered opinion that availability of an alternative remedy for nonentertainment of a petition under article 226 of the Constitution cannot be of universal application. It is true that ordinarily when the statute provides an alternative remedy, and particularly when there is complete machinery for adjudicating the rights of the parties, which by and large depend upon the facts, the High Court should refrain from entertaining and adjudicating upon the rights of the parties, but to this principle, there are certain exceptions and a citizen, who can successfully cover this case in either of the exceptions, cannot be shown the exit door of his entry to the High Court and be compelled to go before the authorities concerned. Some of the exceptions under which a petition may lie under article 226 of the Constitution before the High Court without availing of an alternative remedy are when the very provisions of the statute are challenged as being ultra vires of the Constitution or repugnant to the Act itself. Obviously, the authorities constituted under the Act having jurisdiction to entertain an appeal or revision, howsoever high i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atever might have been the reason for admitting the matters to Division Bench, the stark fact is that the matters have remained pending before this Court for a period of three years and elaborate exhaustive oral and written submissions have been made by the parties spanning over approximately a period of six months, actual hearings being for about 15 days. The matter could not be heard continuously as learned counsel for the parties were not available to argue the matter in one go. That apart, a huge tax has been imposed upon the petitioner-company by way of holding the branch transfers or consignment sales to be inter-State sales. We are told that the tax imposed for a period of three successive years would be about twenty crores. Concededly, deposit of tax is a condition precedent for hearing the appeals on merits under the provisions of the Act, be it the State Act or the Central Act. We are quite conscious of the fact that it is permissible for the appellate authority to entertain an application for stay and grant the same during the pendency of the appeal but we are equally conscious of the fact that in majority of the cases such a stay is not granted and if granted, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 10(d) or imposition of a penalty in lieu of prosecution under section 10-A of the Central Act, contends the learned counsel. Section 8 of the Central Act, in so far as the same is relevant, reads thus: "8(1). Every dealer, who in the course of inter-State trade or commerce: (a)........... (b) sells to a registered dealer, other than the Government goods of the description referred to in sub-section (3); shall be liable to pay tax under this Act, which shall be four per cent of his turnover. 8(3)(b)........ are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or....... 8(4). The provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner- (a) a declaration form duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased or their use as raw materials in the manufacture of goods or the sale of manufactured goods should be inside Delhi. In certain cases the assessees purchased goods of the class specified in the certificate of registration as being intended for resale by them and furnished to the dealers selling the goods declarations in the prescribed form, as it stood prior to March 29, 1973, stating that the goods were intended for resale and thereafter resold the goods, though not within the territory of Delhi while in certain other cases the assessees purchased goods of the class specified in the certificate of registration as being intended for use by them as raw materials in the manufacture of goods for sale and furnished to the dealers selling the goods declarations in the prescribed form as it stood prior to March 29, 1973, stating that the goods were purchased by them for use as raw material in the manufacture of goods for sale and thereafter used the goods purchased as raw materials in the manufacture of goods, in some cases outside Delhi and in some others inside but in the latter, sold the goods so manufactured outside Delhi. The Delhi High Court, in another case, i.e., Fitwell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the statute. This rule of literal construction is firmly established and it has received judicial recognition in numerous cases. In construing a taxing statute 'one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law'. If the Legislature has failed to clarify its meaning by use of appropriate language, the benefit must go to the tax-payer. Even if there is any doubt as to interpretation, it must be resolved in favour of the subject. When branches of the assessees resold the goods outside Delhi, it was really the assessees who resold the goods, for the branches were not distinct and independent from the assessees but were merely establishments of the assessees. It could not therefore be said that when the goods were resold by the branches, the resales were not by the assessees so as to attract the applicability of the second proviso. There is no inconsistency between section 4 and the second proviso to section 5(2)(a)(ii)." The counsel then relied upon Assessing Authority-cum-Excise and Taxation Officer, Gurgaon v. East India Cotton Mfg. Co. Ltd. [1981] 48 STC 239 (SC). The business of the assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture or processing of goods for a third party under a job-contract, so long as the manufactured or processed goods were intended for sale by such third party, the matter came up in a writ filed in the High Court but the petition was rejected on the ground that on a true interpretation of section 8(3)(b), the goods purchased by the assessee against its certificate of registration could be used by it only in manufacture of textiles intended for sale by itself and if the goods purchased were used in the manufacture of textiles for a third party on the basis of a job-contract, it would amount to user of the goods purchased for a purpose different from the specified in section 8(3)(b) and the assessee would be liable to be proceeded against under sections 10 and 10-A. The Division Bench, however, on the question of law, as mentioned above, decided the matter in favour of the assessee. It is in these circumstances that the Assessing Authority carried an appeal before the Supreme Court. On the controversy that has been mentioned above, the Supreme Court framed the following question for determination: "As to what is the scope and meaning of the expression 'for use.......in the manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sputed that at those places also the said materials were used for actual packing of goods manufactured by those units of the company. The additional question that came for determination was as to whether the transfer of those goods which were purchased by the company at Munger amounted to any violation of its declaration? It was held that the Munger branch of the company, although having a separate registration certificate, cannot be held to be a separate personality independent of its principal company or other offices and branches at different places in other States. The Orissa High Court has also expressed the same view in Indian Aluminium Company Limited v. Sales Tax Officer, Ward-A, Sambalpur [1993] 90 STC 410 wherein it was held that "coming to the first contention of Dr. Pal, it depends upon a construction of section 8(3)(b) of the Central Sales Tax Act and the certificate of registration issued in favour of the petitioner. According to Dr. Pal, the expression 'for use.....in the manufacture....of goods for sale' occurring in section 8(3)(b) of the Act does not put any restriction on the dealer that the dealer himself within the State should produce the finished goods and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that goods in question, namely, "iron and steel" are "declared goods" under section 14(iv) of the Central Act, entry 92-B was added by an amendment of the Constitution with effect from February 2, 1983, by the Constitution 46th Amendment Act, 1982, by virtue of which the authority is now conferred on the Parliament to impose tax on a mere inter-State consignment of goods even though such consignment did not involve a sale, the Parliament has so far not exercised its power and not imposed any consignment tax. Under article 269(3) the Parliament has to formulate principles for determining when a sale or purchase of, or consignment of, goods takes place in the course of inter-State trade or commerce by law. Such law has been enacted by the Parliament under section 3 of the Central Act which reads thus: "Section 3: When is a sale or purchase of goods said to take place in the course of inter-State trade or commerce.-A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce, if the sale or purchase- (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ystems of payment by instalments is included in the definition of "sale". The facts of the case aforesaid reveal that the company had its registered office in Bombay, its head sales office in Calcutta in the State of West Bengal and its factories in Jamshedpur in the State of Bihar. For the period of assessment July 1, 1957 to March 31, 1958 the company submitted its return of taxable sales to the Commercial Tax Officer, Calcutta, disclosing a gross taxable turnover of Rs. 9,561.71 in respect of sales liable to Central sales tax in the State of West Bengal. The Commercial Tax Officer, however, directed the company to submit a statement of sales from Jamshedpur for the period under assessment, "documents relating to which were transferred in West Bengal or of any other sales that might have taken place in West Bengal under section 3(b) of the Central Act. However, the company, by its letter dated September 30, 1959, informed the tax officer that the requisition for production of statement of sales made from Jamshedpur in the course of inter-State trade or commerce was without jurisdiction. However, by order dated October 21, 1959, the tax officer made a best judgment assessment on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect and thereupon the movement of goods to which the declaration relates shall be deemed for the purposes of this Act to have been occasioned otherwise than as a result of sale." It is argued that the burden of proof is discharged by producing a declaration duly filled and signed by the principal officer of the other place of business where the goods have been consigned in the prescribed form obtained from the prescribed authority along with the evidence of despatch of such goods. In that event the Assessing Authority is merely to make an inquiry as to whether the particulars contained in the declaration furnished by a dealer are true. If he finds that those particulars were true, he was required to make an order to that effect and then there is a statutory conclusion that the movement of goods, to which the declaration relates, has not been occasioned by a sale. There are, thus, two ways in which the goods may be sold by a dealer in one State to another dealer in a different State. Either a contract of sale is first entered into and in pursuance of that contract of sale, goods are despatched from one State to another in which such sale to the dealer of the other State would attra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm "F" had moved from one State to another otherwise than by way of a sale. In that situation, the question of levying any Central sales tax on such goods would not arise. It is further being argued that all the goods that were sent by the assessee to its selling agents in other States were covered by form "F" declaration supplied by those agents and the GRs as also the despatch advices in respect thereof were also available. The authorities concerned, in the event of having been furnished form "F", were permitted to hold a limited inquiry under sub-section (2) of section 6-A to see that the particulars contained in the declaration in form "F" were correct. If the facts were correct, the statutory consequences mentioned in sub-section (2) flow, namely, that there had been no sale of goods in the course of inter-State trade or commerce. For this, reliance has been placed upon C.P.K. Trading Company v. Additional Sales Tax Officer [1990] 76 STC 211 (Ker), State of Andhra Pradesh v. A.P. Dairy Development Corpn. Ltd. [1994] 95 STC 478 (AP), Commissioner of Sales Tax v. Agra Food Products Private Ltd. [1987] 67 STC 266 (All.) [App.]; (1984) 10 STL 49 (All.) and Chunni Lal Parshadi Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter-State sales. Besides that, the main stress of the learned counsel for the respondents has been on availability of an alternative remedy as also that the allegations of mala fide against the Chief Minister Shri Bhajan Lal are totally unfounded. We have heard elaborate arguments advanced by learned counsel for the parties. In so far as two basic contentions of learned counsel representing the petitioners on the law dealing with branch transfers and consignment to agents, are concerned, we are quite in agreement with the same. The finding of the Assessing Authority that inasmuch as the branch transfers were not permitted and the goods sent to various branches of the petitioners located in various parts of the country, could be used only at Hisar office, failing which the same shall have to be presumed as inter-State sales, cannot stand scrutiny of law. Section 8(3)(b) of the Central Act as also rule 12(1) have been reproduced in the earlier part of the judgment. Neither the provisions of section 8 nor those of rule 12 nor the provisions of the registration certificate in form "B", nor the declaration given in form "C" require that the goods in question should be used in the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t "even if they manufactured the goods outside Delhi and sold the goods so manufactured outside Delhi, the use by them of the goods purchased would be for the purpose stated in the declarations and it would not be right to say that they utilised the goods for any other purpose". It was further held that "when branches of the assessees resold the goods outside Delhi, it was really the assessees who resold the goods, for the branches were not distinct and independent from the assessees but were merely establishments of the assessees. It could not therefore be said that when the goods were resold by the branches, the resales were not by the assessees so as to attract the applicability of the second proviso". This has been the consistent view of the Supreme Court and various High Courts in the judgments, mention whereof has been made in the preceding paragraphs of this judgment and, therefore, there is no need to further elaborate on the issue. Once we are accepting the first contention of learned counsel, the alternative plea that in any event there was no sale involved in the branch transfers, needs no further comments. In so far as consignment transfer of goods to the agents in oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods from one State to another so as to constitute the sale into a sale in the course of inter-State trade or commerce so as to be subjected to the Central sales tax under the Central Act. The question in that case as to whether the sales of vehicles by Telco to its dealers in other States were inter-State sales under section 3(a) of the Central Act as having occasioned the movement of goods from the company's works at Jamshedpur in the State of Bihar to other States outside the State of Bihar. At pages 377-378 of STC (page 867 of SCR), the basic clauses of the agreement have been mentioned and the same read as follows: "A new form of dealership agreement (exhibit I) was introduced by the appellant after the promulgation of the Control Order. Clause 1(a) of this agreement provided that 'the company agrees to sell and supply from its works at Jamshedpur in the State of Bihar or from its depots and stock-yards outside the State of Bihar to the dealers the vehicles which shall be allotted to the dealer by the company at its discretion for resale in accordance with the provisions of the agreement. Clause 11(b) is reproduced below: 'The dealer shall mail to the company on the 15th of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax under the provisions of the Act." The judgments reported in Kelvinator of India Ltd. v. State of Haryana [1973] 32 STC 629 (SC), and others, mention whereof has been made in the earlier part of the judgment, do support the contention of learned counsel. From the relevant sections, as have been noticed above, and the judgments that have been relied upon by learned counsel appearing for the petitioners, it is thus clear that when the goods have moved from one State to another, a question arises under section 3(a) of the Central Act, as to whether such movement of goods had been occasioned by a sale in the course of inter-State trade or commerce and if it has been so occasioned, a liability under the Central Act would arise. If not, no such liability can possibly arise. We are also in agreement with the contention of the learned counsel that where the transfer of goods is claimed otherwise than by way of sale, the burden of proof would be discharged by the dealer if he has furnished to the Assessing Authority, within the prescribed time or within such further time as that authority might, for sufficient cause, permit, a declaration duly filled and signed by the principal officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers have been based on considerations which are not germane to the inquiry contemplated under the law. In the impugned order, annexure P194, dated December 18, 1991 (pertaining to C.W.P. No. 1898 of 1992) while dealing with branch transfers, the Assessing Authority observed that "the dealer had submitted that the store goods worth Rs. 1,24,073.78 were purchased from within the State (after payment of tax) and the balance store goods worth Rs. 16,06,282.48 were purchased from outside the State by them as these were required in their branches in other States. The written reply by the dealer is not tenable because the store goods being consumable items are consumed during the process of manufacture of finished goods at Hisar only. The finished goods may be transferred to other branches and not the consumable items purchased for its own use on the strength of registration certificate within the State as well as outside the State. Such type of transactions tantamount to the misuse of registration certificates by the dealer". In view of the matter as discussed by us in the preceding paras of the judgment, the reasons given by the Assessing Authority for considering the branch transfers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sport companies not in existence at Hisar". We are afraid, none of the reasons given by the Assessing Authority were such that could detract from the plea of the petitioners that such transfers were only consignments to agents in various States located in the country as also to its agents in Madras and Bombay. The Assessing Authority, in view of the law pertaining to the subject and which has been threadbare discussed above, was required to take into consideration the declaration forms submitted either by the petitionercompany or by its agents. If the particulars furnished in the forms were found to be correct, there was no necessity at all for the Assessing Authority to further go into the matter. However, we may hasten to add that the Assessing Authority would have been well within its rights under provisions of section 6-A of the Central Act to hold an inquiry. It would have well been within its rights again to ask the assessee to furnish all declaration forms and to examine the entries made therein and if the same were found to be incorrect or inconsistent or there was some overlapping, the assessee should have been given further chance to prove that the goods sent through decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps Ltd., Hisar, which is managed by highly skilled and qualified personnels will incur heavy unnecessary expenses of transportation by directly bringing the goods from outside the State of Haryana, then incurring expenses on octroi, unloading, storing, maintaining and then again on loading, transportation and octroi, etc., during the despatch to their branches outside the State of Haryana ". It was further observed that "if the goods were actually meant for their branches, then these goods could be directly purchased by the branches themselves, thus, saving the unnecessary expenses incurred by Hisar office". It was also observed that "there were anomalies and manipulations in information given and accounts produced which could not face the test of verification and probing so assessment is framed on the basis of facts noted and verified as discussed above in details not relying on the accounts produced by the dealer". We are afraid, these were again not the grounds on which the Assessing Authority ought to have proceeded. The real issue before the Assessing Authority was as to whether the items sent to branches were such which could be consumed by the said branches in the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly to the ultimate buyers from M/s. Jindal Strips Ltd., Hisar". It was further observed that "similar were the cases with sales shown by other consignment agents. Actually, the goods were delivered as it is to the buyers by the same vehicle and in the same quantity which took delivery of goods from Jindal Strips Ltd., Hisar, but to disguise the interState sale as consignment sale, manipulations were done by just raising two bills, examples whereof were given in the assessment order. In case of M/s. Swastic Sales Corporation, Ahmedabad and other consignment agents as well, some such examples were given and in the ultimate analysis, it was observed that "the given examples of the numerical similarities also prove that there was a prior contract of sales and the goods moved in pursuance of the pre-existing contract of sale". There are some other reasons as well given in the impugned order which we do not wish to detail as, in our view, the crucial question for determination in so far as consignment to agents is concerned, was as to whether the goods had moved in other States to the agents in pursuance of a prior contract. It is true that a conclusion has been drawn from various ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighest taxing authority in the district other than the district of Hisar. This is being ordered only with a view to dispel the doubts that Mr. Jindal has entertained with regard to the Assessing Authorities and, in particular, Shri R.S. Sharma, to whom, it is being argued, a residential plot at Karnal has been given for passing the impugned orders, on the maxim that not only that justice should be done but it also must appear to have been done and without, the court as such, entertaining doubt against the integrity of the officers concerned. In so far as mala fides against the Chief Minister are concerned, the out cry of Mr. O.P. Jindal, Chairman of the petitioner-company, is that ever since Shri Bhajan Lal has assumed the office of Chief Minister of Haryana, he on account of having defeated a protege of the Chief Minister, has left no stone unturned to ruin him financially and otherwise too by involving him, his family members and other associates in various criminal cases. It is stated that for over two decades the petitioner-company has been in business and at no given point of time its credentials were suspect of evading tax nor any such orders were passed and it is for the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttached. On August 7, 1991, three FIRs came to be registered under various provisions of the Indian Penal Code of TADA against Shri O.P. Jindal, his sons and employees. On August 9, 1991, 29 employees of the company were arrested from the factory premises. On August 10, 1991 orders under section 144, Cr.P.C. were passed by the District Magistrate, Hisar, prohibiting the assembly and movement of trucks. On August 13, 1991, anticipatory bail application moved by Shri O.P. Jindal and his sons was accepted by the High Court. On August 13, 1991 a criminal writ petition was filed for quashing of FIR aforesaid. On August 20, 1991, 29 employees of the petitioner-company, who were arrested on August 9, 1991, were granted bail by the court. On September 2, 1991 the Haryana State Pollution Control Board issued notice to the petitioner-company for its closure under Air Pollution Act. A civil suit was filed. On September 16, 1991 the Pollution Board issued notice to the petitioner-company under Water Pollution Act for the closure of industrial unit. Again a civil suit was filed. On October 3, 1991, the business and residential premises of Shri O.P. Jindal were raided by the sales tax authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been arrayed as partyrespondents. As mentioned above, it is only Shri R.S. Sharma, DETC, Hisar and Shri Bhajan Lal, who have been arrayed as party-respondents. From the very nature of things, it is a case of drawing inference of mala fides by particularly stating that series of action(s) immediately after the Chief Minister assumed the office, could not be a mere coincidence. There is, in other words, no direct evidence of mala fides and from the circumstances, referred to above, it has been argued that mala fides have been proved beyond shadow of doubt. We are afraid that no findings of mala fides can be returned on mere probabilities and the court has to see if the chain of circumstances is so complete and strong that no other conclusion but for mala fides is required to be recorded. A finding that a particular action or order was taken or passed on extraneous considerations can, thus, be returned only if all other hypothesis are excluded as proving of mala fides is like a criminal charge and the same has to be proved beyond shadow of doubt. The apex Court in A. Periakaruppan v. State of Tamil Nadu AIR 1971 SC 2303 held that "mere probabilities cannot form the basis of a ple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner therein, who was Chief Secretary of the State and the allegations of mala fides were made against the Chief Minister. After taking into consideration the facts of the case, it was further held that "these and a few other circumstances do create suspicion but suspicion cannot take the place of proof and, as pointed out above, proof needed here is high degree of proof. We cannot say that evidence generating judicial certitude in upholding the plea of mala fides has been placed before us in the present case. We must, therefore, reject this contention of the petitioner as well". In M. Sankaranarayanan v. State of Karnataka (1993) 1 SCC 54, the Supreme Court further held that "it may not always be possible to demonstrate malice in fact with full and elaborate particulars and it may be permissible in an appropriate case to draw reasonable inference of mala fide from the facts pleaded and established. But such inference must be based on factual matrix and such factual matrix cannot remain in the realm of insinuation, surmise or conjecture. There was no sufficient material from which a reasonable inference of malice in fact for passing the impugned order of transfer can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir prejudice on the orders issued by him or at his behest. None of the officers/officials dealing with various matters have been arrayed as party-respondents. The various proceedings, mentioned whereof has been made above, are still pending. The petitionercompany may have obtained interim orders, as is being sought to be projected, but concededly till date no final decision has been given in any of the matters from which it might be gathered that the proceedings, subject-matter of court cases, were unwarranted or unjustified. No occasion, thus, arises for such authorities/officers to affirm or deny the allegations made by the petitioners. Any adverse comments in the very nature of things would certainly amount to condemning a number of officers without hearing them. That apart, it does not appear plausible to this Court that all the officers were pliable and amenable to the directions issued by the Chief Minister. The integrity of such large number of officers cannot be doubted and it would not be proper to condemn them and that too without hearing them. Mr. O.P. Jindal may be sure that what has been done to him and to the petitioner-company is at the instance of the Chief Minist ..... 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