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TMI Blog2019 (5) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... Branch and held that the appellant s contention that Pondicherry Branch independently received orders and executed them is contrary to facts. We have no reason to disbelieve the statement made by the Assessing Officer that detailed examination of the stock transfers from Tamil Nadu to Pondicherry with reference to the stock book of Pondicherry revealed that in almost all the cases, the goods stock transferred from Tamil Nadu have been sold and dispatched in the same lot to the ultimate buyers in Tamil Nadu and other States - We also find no substance in the submission of the appellant that the Assessing Officer had disallowed the transactions pertaining to transfer of goods to Pondicherry on the basis of a single transaction. The appellant clearly attempted to avoid tax under the TNGST Act and under the CST Act due to Tamil Nadu. We are entirely in agreement with the Assessing Officer s view expressed in his well-reasoned orders. Unfortunately the Appellant Assistant Commissioner overlooked vital aspects and core issues of the matter and reversed the Assessing Officer s orders. Appeal dismissed. - CST/ 8/2014, CST/ 9/2014, CST/10/2014, CST/11/2014 - - - Dated:- 25-4-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., Mariamman Koil Street, Muthialpet, Pondicherry Consignee Tvl. Zeneca ICI Agro Chemicals Ltd., 397/3, Madukarai Main Road, Bodipalayam Village, Coimbatore District. Commodity Fenevelerate 20/EC-40 Barrels Value ₹ 10,24,013/- Documents produced D Note 60/09-07-97 Invoice (as per Central Excise Rules) No. 19 dt. 09.07.97 iii) Pondicherry Form XX No. A 310358 iv) Lorry Gvr (which was maintained from 05.07.97) On verification, it was found that the same goods had been transported in the same lorry by the same driver on 08.07.1997 and it had crossed Pattanur Commercial Tax Checkpost at 00.30 hrs. on 09.07.1997. Form No. 20 0114129 dated 08.07.1997 that accompanied the consignment revealed the goods as having been transported from Chennai to Pondicherry. The Kandamangalam Checkpost officials obtained copies of the following documents: a) Goods Consignment Note No. 318 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other states. One such sales depot is at Pondicherry, functioning from 24.02.95. Usually, the company is not receiving any indents from their Pondicherry Branch showing their specific requirements of stock. iii)The particulars regarding the goods transferred to Pondicherry and sales effected in Pondicherry branch, were there upon, gathered from the year 1995-96 onwards. iv)The particulars of goods purchased against Form XVII as available in one Form XVIII Register were also gathered. v) The following documents relating to transport of stock through the Carriers, that is, Interwing Road Lines, Chennai were recovered on issue of D7 receipt. Freight Bill No. 2666 with Consignment Note 3118/29.05.97. Freight Bill No. 2680 with Consignment Note 3129 3131 / 4.6.97. Freight Bill No. 2688 with Consignment Note 3145 3148 / 08.06.97. Freight Bill No. 2689 with Consignment Note 3146 3147/08.06.97. Freight Bill No. 2701 with Consignment Note 3159 3160 / 18.06.97 Freight Bill No. 2707 with Consignme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consignee Tropical Agro, Pondicherry Zeneca ICI Coimbatore vii. Documents Inv 21 DC No. 1023 Form XX/0114115 Inv. 13 DC no. 54 Form XX-64900 viii. Remarks Door Delivery Door Delivery On the basis of the above the Assessing Officer has concluded that 34 barrels of Fenvelerate had been transported from Chennai to Coimbatore via Pondicherry in the same lorry bearing No. TN 45 Y 5047 and two Consignment Notes had been prepared in Chennai at the time of movement of goods on 07.06.1997 itself. The Assessing Officer has quoted the record created by the appellant for the above movement of goods. It is described as under:- First, for the stock transfer to Pondicherry : Stock Transfer invoice 21 and DC No. 1023/ 07.06.97 for ₹ 8,56,824.00 Second, for the sale to consignee : Invoice No. 13 and DC No. 54/08.06.97 for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above, it has been held that 40 drums of Fenvelerate had been transported from Chennai to Coimbatore via Pondicherry in the same lorry bearing No. TN 67- 5305 and the Consignment Notes had been prepared in Chennai at the time of commencement of goods on 26.06.1997 itself. This is evident from the fact that GC No. 3171 (allegedly raised at Pondicherry) is the next serial no. of the GC No. 3170 admittedly raised at Chennai. It appears that though only two illustrative instances are cited in the order, the Assessing Officer examined the remaining documents which revealed the same pattern. The order reveals that the Assessing Officer found that specific quantities and specific types of pesticides had been transported from Chennai to the branch at Pondicherry and sold to buyers in Tamil Nadu and other States on the prior firm orders of the ultimate buyers in various places. The documents further revealed that the stock transferred had been billed by the branch in Pondicherry immediately on arrival in the exact quantity consigned from Chennai and this reveals an attempt to evade tax under TNGST Act and CST Act due to Tamil Nadu. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t objections, if any, against the above proposal. The appellant raised several objections which were dismissed by the Assessing Officer as untenable and by order dated 29.08.2000 the Assessing Officer confirmed his proposal and re-determined the total and taxable turnover of the appellant for the year 1995-96 under the CST Act as shown below: Taxable already determined in the proceedings first cited taxed at 3.6% : ₹ 902000.00 Add: Taxable turnover escaped assessment to the Tax in the proceedings first cited taxable at 10% : ₹ 13725247.00 Taxable turnover redetermine Rs.14627247.00 Add: Stock transfer to other ₹ 72577663.00 state except to the Union territory of Pondicherry i.e. total stock transfer Deduct Rs.11498897.00 Stock transfer to the Union Territory of Pondicherry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive cases and other material which was noticed in the reassessment order dated 29.08.2000. In the circumstances, the value of goods shown as branch transfer to Pondicherry from Chennai and sales made to dealers / others in other States billed in the Pondicherry Branch in 1996-97 amounting to ₹ 16,02,264/- was proposed to be assessed in the hands of the dealers as inter-State sales from Chennai to places mentioned therein at 10% in the absence of C/D forms. A notice was issued to the appellant accordingly for revision of the assessment. The appellant filed its objections. The Assessing Officer rejected the objections and confirmed his proposal and re-determined the turnover and tax liability under the CST Act as under: Details Turnover Rate Tax due Exemption disallowed on value of goods shown as Branch transfer from Chennai to Pondicherry and sales made to Dealers / others in other States, billed at Pondicherry and assessed in the absence of C/D Forms 16,02,264.00 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sales (Tamil Nadu as per accounts): ₹ 70,36,697.00 Less: 1) Sales return claimed : ₹ 1,29,266.00 2) CST Sales (Direct) : ₹ 26,800.00 Taxable turnover under TNGST Act : ₹ 68,80,631.00 The appellant claimed exemption on sales return for ₹ 1,29,266.00 for which the appellant did not furnish details of credit notes issued by it. It was therefore proposed to disallow the claim of exemption and to assess it at 4%. Details of miscellaneous income need not be stated. This assessment order dated 31.10.2000 also relates to interception of lorry bearing no. TAN 8895 covering 40 barrels each containing 200 litres of Fenvelerate of 20 EC at Kandamangalam Commercial tax checkpost on 09.07.1997 and the details of consignment gathered by the officers of the department and the facts disclosed from the same, which are similar to what we have reproduced hereinabove quoting from the reassessment order dated 29.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 12.10.2012 disposed of STA 98/03. The applicant has preferred CST / 8 / 2014 challenging the said order. The Tribunal by its order dated 12.10.2012 disposed of STA No. 99/03 along with STA No. 100/2003 and STA No. 101/2003. The appellant has filed CST/9/2014 challenging order of the Tribunal dated 12.10.2012 to the extent it disposed of STA 99/2003. The journey of each assessment order upto this Authority could be summarized for ready reference as follows- The Tribunal by order dated 12.10.2012 disposed of STA No. 98/03 in which assessment order dated 31.10.2000 in respect of assessment year 1997-98 covering disputed turnover of ₹ 4,12,18,506/- was challenged. The said order is challenged in CST / 8 / 2014. The Tribunal by another order dated 12.10.2012 disposed of STA No. 99/03 in respect of disputed turnover of ₹ 2,78,90,022/- for the assessment year 1997-98, STA No. 100/03 in respect of disputed turnover of ₹ 1,37,25,247/- for the assessment year 1995-96 and STA No. 101/03 in respect of disputed turnover of ₹ 16,02,264/- for the assessment year 1996-97. The appellant has filed CST / 9 /2014, CS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the Department should produce the documentary evidences to prove that the goods have moved based on the prior orders. The Assessing Officer or the Enforcement Wing officials have not produced any documents or records to show that there is a conceivable link between the movement of goods and the delivery of the goods to the ultimate purchaser. The Pondicherry Branch has independently acted on their own and the goods were received from Chennai in the regular course of stock transfer and the same were sold to the local Pondicherry customers and to the customers of Tamil Nadu and also to the customers of other States. In view of the above the disallowance of exemption and the assessment made by the Assessing Officer on the entire turnover under both the Acts for the year 1997-98 cannot be sustained. Therefore the assessment made on the turnover of ₹ 4,12,18,506/- and ₹ 2,78,90,022/- under TNGST and CST Acts respectively are set aside. Similar is the reasoning of the Appellate Assistant Commissioner s order dated 11.10.2002 by which he has disposed of CST 156/2000 and CST 40/2001. Before we go to the rival contentions it is necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1961 Madras 504 and in Bank of Chettinad Ltd . 1940 (8) ITR 522 , it is submitted that there is no legal impediment in a party adopting a particular form of transaction to minimize the expenses. It is submitted that this is exactly what has been done by the appellant and hence the appellant should not have been subjected to such treatment. It is submitted that in the circumstances, the impugned orders deserve to be set aside. Ms. Rama Ahluwalia, Ld. Counsel for the State of Maharashtra has filed written submissions. Counsel reiterated the said submissions. Counsel submitted that the appellant s F-Forms for the Assessment Years 1997-98, 1995- 96 and 1996-97 have been wrongly rejected disallowing the appellant s branch transfer claim. Counsel submitted that prior to 31.03.2010 the scope of the Assessing Authority s jurisdiction and powers was limited only to examining whether the particulars contained in Form F were true or not. After the amendment of Section 6A(2) of the CST Act effective from 08.05.2010 the scope of inquiry was expanded empowering the Assessing Authority not only to verify the correctness of Form-F but also to verify the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be proceeded against exparte. The States of Karnataka, West Bengal and Andhra Pradesh have also not filed any counter-affidavits. From the submissions of the appellant one thing is clear that the appellant has not disputed the manner in which the goods have moved from Tamil Nadu to Pondicherry and from Pondicherry to Tamil Nadu and other States. The appellant has admitted that same lorry was used. The appellant s case is that a party can always select and adopt a particular form of transaction to minimize the expenses and there is no legal impediment obstructing the party from doing so. A party can always plan its transaction in such a manner that it pays less tax. There is no tax evasion in such a case. In our opinion, if the appellant s case was so simple and innocuous as that there was no need for the Assessing Officer to start revisional proceedings and reassess the appellant or pass assessment orders disallowing branch transfer claim. For the reasons we shall now state it is not possible to hold that this is a case of simple tax planning. We have at some length discussed the reassessment order dated 29.08.2000 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were appeared to have been raised in the Branch immediately on arrival of vehicles in the Branch; iv. The goods were sold immediately in the same quantity and same lot generally on same date as received from the Head office; v. The goods were never unloaded at the Branch and were not stocked there; vi. The movement must have commenced from Chennai based on prior orders of the buyers in Tamilnadu and other states, as seen from the pattern of transactions as evidenced by the records maintained by the dealers themselves. In our opinion from the available record the Assessing Officer has rightly concluded that the appellant has circuitously transferred the goods to their already identified purchasers in various places in Tamil Nadu and other States via Pondicherry so as to evade payment of tax. The Assessing Officer has further rightly concluded that in the scheme of supplying the goods to customers in Tamil Nadu and other States, the intervention of the Pondicherry Branch is only as a conduit as evidenced by the transport records and the Stock Register maintained at Pondicherry. It is pertinent to note that the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the appellant has not controverted the glaring circumstance that the transporter has charged one single composite freight for the movement of the consignment from Chennai to the place of destination of the ultimate buyers albeit through Pondicherry. Significantly it is observed by the Assessing Officer that the above instance is cited only as an addition to the other corroborative evidences and the payment of freight by the Chennai Branch alone is not the basis for rejecting the stock transfer claim made by the appellant. Thus it is clear that the Assessing Officer has not merely relied on the illustrative cases cited in the order but has considered voluminous corroborative evidence. There is intrinsic evidence of application of mind in the lucid and reasoned order of the Assessing Officer. We have already quoted Explanation 2 to Section 3 of the CST Act. Having regard to the said provision, the Assessing Officer has rightly concluded in the circumstances of the case that wherever it is established that the goods shown as stock transfer from Chennai to Pondicherry were ultimately delivered to a customer within Tamil Nadu s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of goods to which the Form F declarations relate shall be deemed to have been occasioned otherwise then as a result of sale. It is urged that conclusive presumption contained in Section 6-A(2) of the CST Act having come into force, the Assessing Officer could not have reopened the concluded assessments which could be reopened only on limited grounds of fraud, collusion, misrepresentation and willful suppression of facts as laid down by the Supreme Court in Ashok Leyland (II) which is not the case here. It is not possible to accept this submission. The reassessment order dated 29.08.2000 provides answer to this submission. It is clear from the order that the Assessing Officer was alive to the legal position and effect of filing of Form F declarations by the assessees. This is what he has studied. It is true that once Form-F declaration is filed by the dealers, the scope of enquiry before the assessing authority is to find whether the particulars furnished in the Form-F are true and for this purpose the assessing authority may make any enquiry he deems fit. The crucial factor to be noted here is that the purpose of such enquiry is not to find w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as he may deem necessary, that the particulars contained in the declaration furnished by the dealer are true . The scope or frontiers of enquiry, by the assessing authority under Section 6-A(2) of the Central Sales Tax Act is limited to this extent, namely, to verify whether the particulars contained in the declaration (F forms) furnished by the dealer are true . It means, the assessing authority can conduct an enquiry to find out whether the particulars in the declaration furnished are correct, or dependable, or in accord with facts or accurate or genuine. That alone is the scope of the enquiry contemplated by Section 6-A (2) of the Act. On the conclusion of such an enquiry, he should record a definite finding, one way or the other. As to what should be the nature of the enquiry, that can be conducted by the assessing authority under Section 6-A(2) of the Act, is certainly for him to decide. It is his duty to verify and satisfy himself that the particulars contained in the declaration furnished by the dealer are true . As a quasi-judicial authority, the assessing authority should act fairly, and reasonably in the matter. During the course of the enquiry, under Section 6-A (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer s view expressed in his well-reasoned orders. Unfortunately the Appellant Assistant Commissioner overlooked vital aspects and core issues of the matter and reversed the Assessing Officer s orders. The Tribunal has, however, examined the contentions of the parties, verified them with the records and confirmed the Assessing Officer s view. The Tribunal has concluded that there is sufficient evidence on record to establish that a conceivable link is established between the movement of goods and the buyer s contract and the interposition of an intermediary branch at Pondicherry will not alter the character of the transactions. We concur with the Tribunal because its conclusion is in line with the following observations of the Supreme Court in English Electric Co. v. Deputy Commercial Tax Officers and Others12 - 16 . If there is a conceivable link between the movements of the goods and the buyer s contract , and if in the course of inter- State movement the goods move only to reach the buyer in satisfaction of his contract of purchase and such a nexus is otherwise inexplicable, then the sale or purchase of the specific or ascertained goods ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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