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TMI Blog2019 (3) TMI 1479X X X X Extracts X X X X X X X X Extracts X X X X ..... upon that there was no sale. Though the assessee would contend that Form XVII declaration was filed without prejudice to their rights, having taken note of the factual situation involved in the case and the type of transaction, there is no doubt that the transaction is a sale transaction and the assessee is liable for payment of tax applying the definitions under the Act. The Assessing Officer, in the instant case, has adopted the second method under sub-Clause (ii) of Rule 6(b) by taking into consideration the valuation shown in the central excise invoices and alleged that the assessee had suppressed the basic value of CO2 and completed the assessment by demanding tax on the entire value of CO2 as per the central excise invoices. Under what circumstances, Section 12A could be invoked and what are the prerequisites? - Held that:- The first and foremost pre-requisite is that the Assessing Officer should be satisfied that a dealer with a view to evade payment of tax, shown in his accounts sales or purchase of goods at prices, which are abnormally low comparing to the prevailing market rate of such goods. If the Assessing Officer is satisfied that the dealer has done so, then t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Tax Appellate Tribunal (Additional Bench), Chennai, dated 15.12.2014. 2.T.C.R.No.68 of 2015 has been filed challenging the order passed by the Tribunal in Tribunal Appeal No.698 of 2002 dated 15.12.2014, for the assessment year 1996-97. T.C.R.No.69 of 2015 has been filed challenging the order passed by the Tribunal in T.A.No.389 of 2005, dated 15.12.2014, for the assessment year 1997-98. 3.The impugned order passed by the Tribunal is a common order for both the assessment years. However, the First Appellate Authority, viz., the Deputy Commissioner (CT) Appeals, Chennai, passed separate orders for both the assessment years and for the assessment year 1996-97, the order in A.P.No.160 of 2001 is dated 26.12.2001 and for the assessment year 1997-98, the order in A.P.No.82 of 2001 is dated 05.09.2005. 4.These tax case revisions have been filed raising the following common substantial question of law:- Whether in the facts and circumstances of the case and in law, the Hon'ble Sales Tax Appellate Tribunal committed an error of law in confirming the demand of sales tax on the full value indicated in the Central Excise invoices raised by the Petitioners on M/s.Tuticorin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and in terms of the agreement, they charged excise duty and the sales tax duty on TAC and the same was remitted by the assessee to the assessing authorities. 9.According to the assessee, the cost of production was arrived at ₹ 1200/- per metric ton and in the invoices, the assessee collected the excise duty on ₹ 1200/- per metric ton and the sales tax thereon, and collected only the same from TAC. During the course of assessment, the Assessing Officer raised an objection stating that the assessee ought to have paid sales tax on the full value of the invoice, though the petitioner did not collect the price. At that juncture, the assessee without prejudice to their contention, is stated to have filed Form XVII declaration for the full value contained in the central excise invoice and this, according to the assessee, was filed under protest and without prejudice to their submission that there is no sale at all. The Assessing Officer completed the assessment, vide orders dated 13.07.2001 and 02.05.2002 respectively confirming the demand of full value of the invoice. The assessee filed appeals before the first appellate authority, who by orders dated 26.12.2001 and 05.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable with the Assessing Officer, the cost construction method could not have been adopted for the levy of sales tax and in this regard, the Assessing Officer committed a grave error. 13.Further, it is submitted that filing of Form XVII declaration was without prejudice to the assessee's right, and adverse inference could not have been drawn by the Assessing Officer merely because, the assessee had filed Form XVII declaration. Further, it is submitted that the Tribunal in paragraph 9 of its order, has accepted the fact that turnover is the amount received from the buyer and the turnover was only the excise duty and having held so, erred in adopting the cost construction method for levy of sales tax. Further, it is submitted that the Tribunal ignored the important documents placed by the assessee more particularly, the Chartered Accountant's certificates and affidavit and excise invoices, which clearly establish that except the excise duty component, the assessee has not received any further amount. 14.The learned counsel has drawn our attention to the order passed by the first appellate authority in the assessee's own case for the assessment years 1993-94 and 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts the eye and therefore, the Assessing Officer was well justified in invoking his power under Section 12A of the Act. 17.Relying upon the decision of the Hon'ble Division Bench of this Court, in the case of Jayalakshmi Traders vs. Government of Tamil Nadu and Others, (1997) 105 STC 337, the learned counsel has submitted that when the price at which the goods are sold is abnormally low, it is one of the reasons for invoking the power under Section 12A of the Act. 18.Further, it is submitted that in such circumstances, the Assessing Officer would be entitled to make best judgment assessment and in the instant case, the value of the product was available with the assessee supported by invoices/bills and therefore, there is a need for estimation, as there is suppression and all these have led to the best judgment assessment. 19.To explain as to what would constitute best judgment assessment, reliance was placed on the decision of the Hon'ble Supreme Court in the case of The Commissioner of Sales Tax, Madhya Pradesh vs. M/s.H.M.Esufali, H.M.Abdulali, Siyaganj, (1973) 2 SCC 137. Further, the learned counsel has elaborately referred to the assessment orders to impres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aud and the Hon'ble Supreme Court, in the case of Union of India vs. C.M.Patel Co., AIR 1976 SC 712, has pointed out as to what is the quality of evidence that should be available to prove fraud. Further, to show what is a best judgment assessment, the learned counsel has referred to the decision of the Hon'ble Supreme Court in the case of State of Kerala vs. C.Velukutty, (1966) 17 STC 465; and the decision in Hindustan Steel Ltd. vs. State of Orissa, [1970] 25 STC 211 (SC); and the decision of this Court in Nokia India Private Ltd., vs. Deputy Commissioner, (2015) 79 VST 137 (Mad.), to which, one of us (TSSJ) was a party. Therefore, it is submitted that the impugned assessments can never be taken as a best judgment assessment, as there is no satisfaction recorded by the Assessing Officer as required under Section 12A and the entire proceedings are purely on surmises and conjectures. On the above grounds, the learned counsel prays for interference of the order passed by the Tribunal. 23.Heard the learned counsels for the parties and carefully perused the materials placed on record. 24.The place of business of TAC was inspected by the Central Enforcement W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... protest and without prejudice to their rights. Nevertheless, the Form XVII declaration was reckoned and the Assessing Officer treated the transaction as sale. The question is whether the Assessing Officer was right in doing so. 27.Section 2(n) of the Act defines sale to mean every transfer of the property in goods (other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of business for cash, deferred payment or other valuable consideration. 28.Section 2(r) of the Act defines turnover to mean the aggregate amount for which goods are bought or sold, or delivered or supplied or otherwise disposed of in any of the ways referred to in Clause (n) of Section 2, by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable consideration. The definition of sale and turnover are widely couched and sale includes every transfer of the property in goods, be it in the course of business for cash, deferred payment or valuable consideration. Turnover also has been widely defined to mean the aggregate amount for which goods are bought or sold, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied by the assessee to TAC and it has been for valuable consideration. Therefore, we do not agree with the assessee's contention that there was no sale. Though the assessee would contend that Form XVII declaration was filed without prejudice to their rights, having taken note of the factual situation involved in the case and the type of transaction, we have no doubt in our mind that the transaction is a sale transaction and the assessee is liable for payment of tax applying the definitions under the Act. 32.Having held so, we have to decide the question of law raised in these revisions as to whether the Tribunal was right in confirming the demand of sales tax on the full value indicated in the central excise invoices raised by the assessee on TAC. 33.Chapter II of the Central Excise (Valuation) Rules, 1975 deals with determination of value . Under the Rules, value would mean the value under Section 4 of the CEA, 1944. Rule 6 deals with cases where the value of the excisable goods under assessment cannot be determined under Rule 4 or Rule 5. There are three sub-Clauses under Rule 6 of which, sub-Clause (b) would be relevant for the case on hand, which reads as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is identical to that of the sale' as defined under Section 2(n) of the TNGST Act. The Hon'ble Supreme Court while dealing with the question, pointed out that value of an excisable article has to be computed with reference to the prices charged by the manufacturer and excise law is a tax on value. Further, it was pointed out that Rule 6 of the Excise Valuation Rules, 2000 creates the deeming fiction only for the purposes of Section 4(1)(b) of the CEA, 1944 and for laying down the measure for levy of excise duty, and there is no such provision in Section 3 of the U.P. Trade Tax Act, 1948. Thus, it was held that in the case of excise law, the taxable event is manufacture, which is not related to commercial transaction. On the other hand, commercial transaction is the basis of the pricestructure in sales tax laws. The levy of excise duty is on manufacture, while levy of sales tax arises at the stage beyond manufacture, viz, the sale of the article. Bearing in mind the distinction between the levy of central excise duty and the levy of sales tax we have proceeded to examine the cases on hand. 36.It is the submission of the learned Special Government Pleader that tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer did not have any material to show that the financials of the assessee were incorrect or false, the question of making a best judgment assessment that too invoking the power under Section 12A of the Act cannot be resorted to. The power under Section 12A is a power exercisable only upon satisfaction of the Assessing Officer that the assessee with a view to evade payment of tax, has shown to have sold/purchased goods at abnormally low prices compared to the prevailing market rate. The facts of the assessee's case are entirely different. 39.The assessee admits that the value of CO2 sold for the purposes of payment of central excise is a particular amount. Further, the assessee specifically states that what was collected from TAC was only the excise duty component. Therefore, unless there was clinching material available with the Assessing Officer to show that the statement made by the assessee was false or incorrect, the question of invoking the power under Section 12A does not arise. In fact, the first appellate authority in the assessee's own case in A.P.Nos.61 and 59 of 2001, dated 02.04.2002, for the assessment years 1993-94 and 1994-95, allowed the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, since the charge is quasi criminal. In this regard, it is beneficial to refer to the decision of the Hon'ble Supreme court in the case of C.M.Patel Co. (supra). Furthermore, we find that the Assessing Officer or the first appellate authority have not recorded any finding that there is understatement of the amount received in the accounts. The accounts of the assessee have not been found to be incorrect or discredited. Thus, merely by surmises and conjectures, the Assessing Officer cannot treat the value of CO2 for the purposes of calculation of central excise to be adopted as the sale price for the purposes of levy of sales tax under the TNGST Act. 42.The submission of the learned counsel for the assessee with regard to the relationship of the parties is convincing in the sense that surplus CO2 produced by the assessee is fed to TAC, it sister concern, for manufacture of a product. For such purposes, dedicated pipeline has been laid. Therefore, merely because the assessee and TAC are sister concerns, no adverse inference can be drawn with regard to the transaction relating to the transfer of the excess CO2 by the assessee to TAC. As held by the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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