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TMI Blog2018 (3) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... ned orders are patently erroneous and bad in law, apart from being arbitrary and without any material evidence and that apart, as there is no Presiding Officer in the Tamil Nadu Taxation Tribunal, they have approached this Court by way of these writ petitions. 4.It may not be necessary for the Court to test the correctness of these submissions nor relegate the petitioner to avail the alternative remedy available under the TNGST Act, as the writ petitions were filed in the year 2004 and have been pending for all these years and therefore, the Court proceeded to hear the matter on merits and such course was agreeable to the learned counsel appearing for the petitioner. 5.The facts leading to the impugned assessment orders are briefly stated here-under: (i)The place of business of the petitioner was inspected by the Enforcement Wing Officer, Chennai 4, on 20.01.2013, 22.01.2003 and 01.02.2013. The result of the inspection was notices dated 25.02.2004 and 05.03.2004, proposing to revise the assessment for the relevant years, apart from levying penalty. The petitioner was given 15 days time to file their objections and the petitioner filed objections, dated 20.04.2014. After conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ochemicals Limited and they procured orders from the buyers/customers in Tamil Nadu and forwarded those intents to M/s.Haldia Petrochemicals Limited, who effected direct supply to the actual buyers and collects payments from the buyers and on receipt of payment, commission is paid by M/s.Haldia Petrochemicals Limited to the petitioner, as they are del credere agent. Further, it was stated that the petitioner never takes delivery of goods, not handling the goods and no liability can be fixed on the petitioner. The objections raised by the petitioner were overruled and the proposal in the notices, dated 25.02.2004 and 05.03.2014, was confirmed and the impugned assessment orders were passed. 6.Mr.N.Sriprakash, learned counsel, representing Mr.Adhithya Reddy, learned counsel appearing for the petitioner, contended that there is no material evidence to fix tax liability on the petitioner, there is no evidence that the petitioner received goods and effected payment on behalf M/s.Nandhini Polymers and the petitioner never handled the goods and never accepted that they handled the goods, as they are only canvassing agent of M/s.Haldia Petrochemicals Limited and they are genuine transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnai and then proceeded to Pollachi to be delivered to the buyer, the stop over of the goods at Chennai can have no effect to take the transaction outside the purview of an interstate transaction. In support of transaction, reliance was placed on the decision of the Division Bench of this Court in Chesebrough Pond's Inc. v. State of Tamil Nadu reported in (1983) 52 STC 164 (Mad). 10.The learned counsel appearing for the petitioner submitted that on the above grounds, the impugned assessment orders deserve to be set aside. 11.Mr.M.Hariharan, learned Additional Government Pleader, appearing for the respondent, has referred to the del credere agency agreement and various clauses contained therein and submitted that fixing of liability on the petitioner is just and proper and the impugned assessment orders call for no interference. Further, it is submitted that non-compliance of Rule 26(6)(a) and (b) is sufficient to hold the petitioner liable for payment of the taxes and penalty, as demanded. Therefore, as per the agreement condition, the petitioner is bound to pay the tax. Further, it is submitted that in the reply given by the petitioner to the show cause notices, they have ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... livery challans and invoice on the customers for sale of the products and in the event of invoice being drawn by the principal directly on the customer are handed over to the del credere agent for the purpose of collection and due payment who undertakes not to part with the said delivery order/invoice and other documents, till the payment due in respect of the said invoices are collected by the del credere agent, who shall indemnify and keep indemnified at all times the principals from any damages, deterioration or loss caused while the said product is in transit. The following clauses of the del credere agency agreement, dated 01.07.2002, would be relevant for the purpose of these cases and the same are extracted hereunder: "1.OBLIGATIONS: B. The Del Credere Agent undertakes to act as its Del Credere Agent subject to the terms and conditions hereinafter contained and policy/procedures/guidelines which may be prescribed by HPL from time to time for marketing of the said Product in the area as aforesaid by using all its best efforts. 2.PROCEDURE: B. HPL shall make available to the Del Credere Agent, a format of indent/order for securing order from the Customer. The Customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom and against all taxes, interest, penalty and all costs, charges and expenses of whatsoever nature . 14.The methodology adopted in the transactions have been brought out in the impugned assessment orders. The specific finding is that the payments stated to have been made by M/s.Nandhini Polymers, Pollachi by demand drafts were untraceable or from financially incapable persons, which were forwarded to Haldia Petrochemicals Limited. The petitioner who is said to have procured orders from M/s.Nandhini Polymers for being supplied by M/s.Haldia Petrochemicals Limited, could not prove by documents, the existence of the said dealer, M/s.Nandhini Polymers. The petitioner has clearly breached the terms and conditions of the del credere agreement in ascertaining the financial status of the buyer. This is clear from the stand taken by the petitioner as regards their role played in the transaction. Thus, in the absence of any records produced by the petitioner, the respondent was fully justified in holding that the goods were handled by the petitioner and the ownership and domain over the goods always vested with the petitioner. 15.The petitioner does not deny the fact that they are del c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws and regulations for the sale of the product to the customers and shall exclusively be liable for the collection and payment of sale proceeds of the products including the taxes, dues and levies (whether sales tax, central excise or octroi, etc.) in respect of the sale of the said product effected by HPL to the customer. Further, the petitioner shall at all times indemnify and keep HPL indemnified from and against all taxes, interest, penalty and all costs, charges and expenses of whatsoever nature. All these factors work against the petitioner and directly hits at them to disregard the defence taken by them to escape from the rigour of law. 18.The decision in the case of Joseph Vilangandan v. The Executive Engineer, (PWD), Ernakulam and Others reported in (1978) 3 Supreme Court Cases 36, is clearly distinguishable on facts, as in the said case, the question was with regard to the validity of an order passed by the Executive Engineer, debarring the appellant therein, from taking any further contract under the Buildings and Roads Division. The Hon'ble Supreme Court pointed out that the show cause notice, issued prior to debarment, was only for a particular work and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the parties as could be culled out from the agreement and on facts it was found that it was a principal to principal relationship. 22.As pointed out earlier, the terms and conditions of the del credere agreement entered into between the petitioner and M/s.Haldia Petrochemicals Limited and the conditions contained therein clearly show that the nature of transaction between M/s.Haldia Petrochemicals Limited and the petitioner is a principal to principal basis and the theory that the petitioner was an agent of M/s.Haldia Petrochemicals Limited is absolutely false. 23.An argument was advanced by the learned counsel appearing for the petitioner that if the Court accepts that the show cause notices are vitiated, then the Court may consider granting liberty to the respondent to issue fresh show cause notices. As already pointed out, when the Court is convinced that the show cause notices are proper and the findings recorded in the impugned assessment orders are proper and the Court having tested the correctness of the impugned orders in these writ petitions and held that the contentions advanced by the petitioner do not merit consideration, it is left with no other option, except t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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