9911796707
TMI Blog2004 (3) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... ndonation of delay. However, in view of the fact that common questions are involved in all these revisions and in view of the fact that T.R.C. No. 416 of 2002 had already been admitted and particularly considering the affidavits filed by the counsel for the petitioner stating that the revisions were prepared along with T.R.C. No. 416 of 2002 but not filed then since there was only one copy of the Tribunal order served by the Tribunal, the delay petitions were allowed in spite of the objection by the State. 2.. T.R.C. No. 416 of 2002 and S.T. Revision No. 27 of 2003 are filed against the assessment orders under the KGST Act for the years 1986-87 and 1987-88 whereas S.T. Revisions Nos. 26 and 28 of 2003 are filed against the assessments under the CST Act for the said years. Since a common question regarding the liability of the assessee to be assessed for the aforesaid years is involved and since the parties are the same, all the revisions are disposed of by this common judgment. 3.. Brief facts are as follows: Petitioner-company had set up a distillery to compound or blend locally made foreign liquor and imported foreign liquor at Cheemeni in Hosdurg Taluk and obtained a licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated August 24, 1985 requesting for continuation of the same till September 30, 1985 was also sent. This was repeated by another letter dated November 29, 1985 requesting for continuation of the registration till December 31, 1985. The petitioner, it is stated, bona fide believed that fresh sales tax registration might have been given to the lessee. Petitioner, it is stated, sent a registered letter to the department confirming that no further requests were made by the lessee for continuation of the registration and also sought for information regarding any arrears of sales tax till December 31, 1985, but no reply was received. 7.. According to the petitioner since the unit was given on lease which was approved by the Commissioner of Excise also the responsibility of production and sale of foreign liquor was on the lessee and the lessee alone can be made liable for the sales tax dues. It is stated that the lessee also on account of the financial difficulties and nonallotment of alcohol quota abandoned the unit in October, 1988. The lease agreement was also terminated on March 20, 1989. 8.. Earlier when recovery proceedings were initiated against the petitioner in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his judgment, the assessing authority had issued notices both to the petitioner and to M/s. Eagle Distillery (P) Ltd., the lessee-company. The lessee did not respond, however, the petitioner had produced the books of accounts and other documents. The assessing authority thereafter issued pre-assessment notices for the assessment years 1986-87 and 1987-88 both under the KGST Act and under the CST Act [annexures N(a) to (d)]. Since no reply was received either from the petitioner or from the lessee-company, the assessing authority completed the assessment for both the years as proposed (annexures Q to T). 10.. Petitioner then filed Writ Petition O.P. No. 4315 of 1994 before this Court. This Court took the view that the petitioner has to avail the alternate remedy provided under the statute. However, petitioner, by way of amendment, produced the copy of the appeals filed before the appellate authority and sought for stay of the recovery proceedings pursuant to the assessment orders till the disposal of the appeals. This Court by judgment dated April 7, 1994 (annexure U) taking note of the fact that very serious question of facts and law has to be adjudicated by the appellate aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petitioner to the assessing authority in May, 1985 immediately after getting the approval of the lease from the Excise Commissioner. Counsel submitted that the liability to pay sales tax in respect of the distillery business conducted thereafter is on the lessee and that the lessee was doing the business, filing returns and was remitting the tax in its status as a dealer under the KGST Act. Counsel submitted that though the lessee had applied for independent registration as a dealer both under the KGST Act and under the CST Act after the lease arrangement, in view of certain difficulties pointed out by the lessee and the request made by the lessee for permission to use the registration certificate and the assurance given that tax will be promptly paid, petitioner had requested to continue the registration by various letters up to December 31, 1985 and that thereafter the petitioner did not seek for any extension. Counsel submitted that this Court in the earlier proceedings has clearly found that the lessee was doing the business and that the books of accounts and other documents maintained by the petitioner would clearly show that the petitioner was not doing the distillery busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease deed was executed in favour of the lessee, the conduct of the petitioner would clearly establish that notwithstanding the lease, the business was being conducted by the petitioner itself through its employees and therefore in the circumstances of the case the assessing authority and the Tribunal were perfectly justified in holding that the lessee was acting only on behalf of the petitioner and therefore the assessment orders making the petitioner and the lessee liable to pay the tax for the assessment years 1986-87 and 1987-88, both under the KGST Act and under the CST Act are justified. Special Government Pleader has also placed before the court the assessment records for the aforesaid two years as well as the registration files of the lessee. 14.. We have considered the rival submissions. The undisputed facts are that the petitioner is the owner of the distillery by name M/s. Normandy Breweries and Distilleries Ltd. at Cheemeni in Hosdurg Taluk, that they had obtained licence from the excise authorities and was conducting the business in the aforesaid name till December 31, 1984, that the petitioner had entered into a lease arrangement with another company by name M/s. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due after December 1, 1984, the petitioner itself had written to the assessing authority on July 30, 1985 requesting for continuation of the registration till August, 1985 and thereafter by communication dated August 24, 1985 to continue the same till September 30, 1985 and further up to December 31, 1985. The lessee had made an application for registration before the assessing authority on April 22, 1986. Further, in spite of the various notices, lessee did not cooperate with the assessing authority in the matter of registration and lastly the lessee by communication dated December 19, 1986 requested the assessing authority to keep in abeyance the registration proceedings for the present and stated that the lessee will be approaching the assessing authority for sales tax registration in 1987-88. The assessing authority accordingly passed an order on December 29, 1986 rejecting the application for registration. It was specifically stated therein that the lessee can apply for registration certificate afresh when they starts business in the new name. 16.. As already noted, though the petitioner wanted an adjudication of the contention that after the lease arrangement petitioner is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions of the petitioner, the first appellate authority observed as follows: I find substantial force in the arguments advanced and evidences produced as detailed in the preceding paragraph which would point to the fact that appellant, i.e., Periyar and Pareekanni Rubber Ltd., have not conducted any business in I.M.F.L. during the years 1986-87 and 1987-88. The books of accounts produced for the year 1986-87 before the assessing authority did not reveal anything to show that the appellant had business in the production and sale of I.M.F.L. On the other hand evidences such as letter from Kerala State Beverage Corporation, etc., pointing out the fact that M/s. Eagle Distillery (P) Ltd. cannot escape from the charge that they were doing business in the premises of the appellant. Invoices were raised by M/s. Eagle Distilleries only, in the trade name of Normandy Breweries and Distilleries. All the evidences produced and nature and circumstances of the cases to the rescue of the appellant. Without prejudice to my observation and findings above, I find that the entire facts, evidences and circumstances of the case are to be investigated once again keeping in line with the directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority and restore the order of assessments. Thus, all these appeals succeed and cross-objections are liable to be dismissed. 20.. From the aforesaid discussion of the materials on record, the following facts and circumstances are in support of the contentions of the petitioner: The petitioner had executed a registered lease agreement dated December 1, 1984 transferring the right to manufacture and vend foreign liquor in the petitioner's unit to M/s. Eagle Distillery (P) Ltd., intimated the assessing authority that the business hitherto conducted by the petitioner in the name of M/s. Normandy Breweries and Distilleries Ltd., is being conducted by the lessee from December 1, 1984; the petitioner had also produced the registered lease deed before the assessing authority; the Board of Revenue (Excise) had permitted the lease arrangement as per order dated April 27, 1985; the lessee had applied for separate registration from April 1, 1985; the lessee had been filing returns for the subsequent periods; sales invoices showed the name of M/s. Eagle Distillery (P) Ltd., the petitioner had not accounted the transactions of M/s. Normandy Breweries and Distilleries Ltd., in its boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances mentioned hereinabove would indicate that notwithstanding the induction of the lessee by legally accepted methods, namely, execution of registered lease deed, permission from the Board of Revenue (Excise), it would appear that the business of M/s. Normandy Breweries and Distilleries Ltd., was being conducted by the petitioner, of course with the connivance of the lessee. We say so, because the petitioner had permitted the registration certificate and various other documents, such as delivery notes, C forms, etc., issued by the assessing authority to the petitioner, for the business conducted in the name of the lessee, the petitioner's employees, particularly, the chief executive Mr. Krishnan Bhattathiri, continued to be the chief executive of the lessee even after the lease; he, on behalf of the unit submitted application for renewal of the certificate of registration granted to the petitioner by remitting the required fees; the petitioner did not act in consonance with the terms of the lease, in that though the lessee had defaulted payment of rent for more than four months, no action was taken to terminate the lease agreement and even on their own showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing authority has to make either the petitioner or the lessee liable, but cannot make both liable for the same dues. The registered dealer in respect of the transactions of M/s. Normandy Breweries and Distilleries Ltd., was the petitioner though the petitioner had stated that it had discontinued the business from December 1, 1984. Petitioner continued to be registered dealer up to December 31, 1985. Petitioner did not return the various documents such as delivery notes, C forms, etc., the chief executive who was the chief executive of the petitioner, even after the lease applied for renewal of the certificate of registration and the business continued with the said registration certificate during both these assessment years. In these circumstances, the petitioner themselves can be held responsible for the sales tax liability of the unit for the years 1986-87 and 1987-88 both under the KGST Act and under the CST Act. 26.. In this context, it is not out of place to refer to the provisions of section 19C of the KGST Act providing for protective assessment. As per the said section notwithstanding anything to the contrary contained in any judgment, decree, order, direction or d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
