Madras High Court
The State Of Tamil Nadu vs Tvl. Avtar Singh And Co. (P) Ltd on 28 March, 2018
Bench: S.Manikumar, M.Govindaraj
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.03.2018 C O R A M THE HON'BLE MR.JUSTICE S.MANIKUMAR AND THE HON'BLE MR.JUSTICE M.GOVINDARAJ T.C.R.Nos.77 and 78 of 2018 The State of Tamil Nadu represented by the Deputy Commissioner of Commercial Taxes, Madras Central Division, Madras-600 006. ... Petitioner in both TCRs. v. Tvl. Avtar Singh and Co. (P) Ltd., 16, 2nd Street, North Boag Road, T.Nagar, Madras-17. ... Respondent in both TCRs. Prayer: Tax Case Revisions are filed under Section 38(1) of the TNGST Act, 1959, to revise the order, dated 19.03.1991, passed in T.A.Nos.201 to 203 of 1990, on the file of the Tamilnadu Sales Tax Appellate Tribunal (Additional Bench), Madras. For petitioner ... Mr.V.Hari Babu Addl. Government Pleader (Taxes) O R D E R
(Order of the Court was made by S.MANIKUMAR, J) Instant Tax Case Revisions are filed to revise the common order, dated 19.03.1991, passed in T.A.Nos.201 to 203 of 1990, on the file of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madras.
2. Facts as deduced from the material on record are that Tvl.Avatar Singh and Company (P) Ltd., dealer in tin sheets, were finally assessed on total and taxable turnover of Rs.7,34,772/- and Rs.3,19,000/- for the assessment years 1981-82 and 1982-83 respectively, under Tamil Nadu General Sales Tax Act, 1959 and also levied penalty of Rs.44,085/- and Rs.19,140/-, under Section 12(3) of the said Act. Aggrieved over the said assessment, the dealer has filed A.P.Nos.657 and 658 of 1988, before the Appellate Assistant Commissioner (CT)-IV, Madras, and vide order, dated 19.08.1989, the appellate authority dismissed the same, as follows:
A.P.No.657 of 1988:
Both sides were heard. At the time of hearing, the learned counsel contended that the entire goods were imported by Tvl.Avtar Singh Ltd., Bombay and sold by them to Tvl.Ambal Tin Factory, Virudhunagar, while they were on High-seas. The learned counsel did not substantiate his contention by any other supporting documents. He was not able to produce bill of lading or memo of clearing. Similarly, the learned counsel contended that in all the transactions, only Avatar Singh Company (Pvt.) Limited, Bombay were involved and not Avatar Singh Company Pvt. Limited Madras. In this context, the import point to be noted is that for keeping the goods imported from foreign countries, only A The Assessing Authority has levied a penalty of Rs.19,140.00 under Section 12(3) of the TNGST Act 1959. Disputing the levy of penalty, the learned counsel did not putforth any valid point. The appellants had the intention of camouflaging the local transactions as sales on Highseas. This intention has been clearly established by the Assessing Authority in the assessment order. Hence, levy of penalty under Section 12(3) is justified, and therefore upheld.
In the result, the appeal is dismissed. A.P.No.657 of 1988:
Both sides were heard. At the time of hearing, the learned counsel contended that the entire goods were imported by Tvl.Avtar Singh Ltd., Bombay and were sold by them to Tvl.Andavar Steel Factory, Madurai, while they were on High-seas. The goods were cleared by their agents. He further stated that the goods were not dealt with by the appellants. At the time of hearing, the learned counsel did not produce any proof as to who cleared the goods from Madras port. The Assessing Authority has recorded in the assessment order that the goods were cleared only by the appellants. Further the Assessing Authority has also stated that the rent to SRVS Godown for keeping the goods imported from the foreign countries was paid only by the appellants. This fact was not disputed by the appellants either in the grounds of appeal or at the time of hearing. Evidently the appellants did not sell the goods when the goods were at high seas. The circumstances and facts vindicate that the appellants sold the goods within the State of Tamil Nadu only after importing them and clearing them at the Madras port, by themselves. Clearly the transaction was the transaction in the nature of the local transaction within the State of Tamil Nadu, attracting the tax liability under the TNGST Act, 1959. The assessment made by the Assessing Authority on this turnover is upheld.
The Assessing Authority has levied a penalty of Rs.19,140.00 under Section 12(3) of the TNGST Act 1959. Disputing the levy of penalty, the learned counsel did not putforth any valid point. The appellants had the intention of camouflaging the local transactions as sales on Highseas. This intention has been clearly established by the Assessing Authority in the assessment order. Hence, levy of penalty under Section 12(3) is justified, and therefore upheld.
In the result, the appeal is dismissed.
3. Being aggrieved by the same, the dealer has preferred T.A.Nos.201 and 202 of 1990, before the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madras. Along with these appeals, Appeal in T.A.No.203 of 1990, under the Central Sales Tax Act, 1956, for the assessment year 1982-83, was tried and vide common order, dated 19.03.1991, the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madras, allowed T.A.Nos.201 and 202 of 1990, as hereunder:
7. We have heard the arguments of both the sides and perused the connected records. The alleged place of business of the appellants was inspected by the Enforcement Wing Officers on 01.10.1982. During the inspection they have recovered correspondence files marked A relating to BASF Tapes and correspondence file marked B relating to purchase of film from Hindustan Photo film manufacturing Company Ltd., Madras. Correspondence files C and D relating to import of tin plates from foreign countries. The Inspecting officers have issued summons for the production of accounts. In their letter dated 19.03.1985 the alleged dealer in Madras has stated that since Avtar Singh and Company Pvt. Ltd., does no transactions or sale or otherwise all the accounts are at Madras and the Madras address is only the residence of their representative at Madras and in their letter dated 17.01.1984 the Bombay office has sent a letter to the Assistant Commissioner(CT), Enft.II that no levy is attracted regarding items 1, 3, 4, 6, 7 and 8 and the CST Tax Demanded has already been paid for items 2 and 5. They further contended that item, 1, 3, 4 and 6 are high seas sales with do not attract levy of any sales tax. In all these three cases the sale by transfer of documents having taken place while the goods were still on the high seas well before their arrival at Madras port. Regarding item Nos. 2 and 5 in respect of inter-state sales the appellants have produced the C forms. The Assessing Officer has traced out the transactions as follows:-
Commodity Value Tax liability Rs.
1. Sales to Tvl. Ambal Tin Plates. 1,76,500.00 4 @ TNGST Tin Factory Virudhunagar, Bill No.Nil, dt.9.3.82.
2. Sale to Tvl. Nagarajan 29,000.00 8% CST and Co., Ernakulam, dt. 25.8.82.
3. Sale of 58 MT to 2,06,272.00 4% TNGST Tvl. Can Manufacturing Co., Madras, Lr. dt.
2.12.81.
4. Sale of 44 MT to Tvl. Srinivasan Multiple 1,76,000.00 4% Industries, Madurai, dealer lr. dt. 7.12.81.
5. Sale of 15 MT to 90,000.00 8% CST Tvl. Swamy Trading Co., Quilon Inv.No. dt. 1.9.82.
6. Purchase of 50 MT as per 1,76,000.00 4% TNGST indent 7748/6.9.81 treated as sale subsequently.
7. Purchase of 54.81 M.T. 3,17,000.00 4% as per indent 7616. Delivery taken on 6.5.82 treated as sales subsequently.
8. Purchase of 40 MT as per 2,32,000.00 4% indent 7766 dt. 22.2.82, Delivery taken at Madras 8.5.82 treated as sales subsequently.
Out of these eight transactions item No.1 3, 4 6 and 7 relate to the sales by enforcing the documents, items 2, 5 and 8 relates to interstate sales. Item 1, 3, 4 & 6 relate to the year 1981-82 and item 7 relates to the year 1982-83. Item No.1 relates to sales effected to Tvl. Ambal Tin Factory, Virudhunagar, item No.3, sales effected to Tvl. Can Manufacturing Company, Madras and item No.4 sales effected to Srinivasan Multiple Industries, Madurai, Item No.6 sales effected to Swamy Trading Company, Quilon. Item No.7: Sales effected to Moideen Andavar Tin Factory, Madurai. The interstate sales comprises of sales effected to Tvl. Nagarajan and Company, Ernakulam and Tvl. Swamy Trading Company, Quilon in the year 1982-83.
8. The main points for consideration are whether these sales are high seas sales whether the bill of lading has been endorsed to the buyers when the goods were on high seas whether the customs duty and other payments were made by the purchasers and finally whether the transactions attract levy of tax either under TNGST or under CST Act along with penalty. Perusal of the records revealed that items Nos. 2 and 5 i.e. sales effected to Tvl.Nagarajan and Company, Ernakulam and Tvl.Swamy Trading Company, Quilon were accounted for and covered by C forms. These transactions have been assessed to tax by the Bombay Sales Tax Authorities under the CST Act. The learned Counsel has produced copy of the orders passed by the Bombay Sales Tax Authorities for our perusal. But the consignment has been cleared as per indent 7766 dt. 22.2.1982. Total quantity was 40 M.T. The appellants representative has cleared the goods at Madras and despatched the goods to the buyers in quilon and Ernakulam. Since the goods have been despatched from Madras, the Assessing Officer is justified in assessing the turnover under CST Act. But it is restricted to Rs.2,31,000.00 ins-tead of Rs.3,19,000.00. It is seen that the turnover of Rs.29,000/- and Rs.90,000/- have been taken twice by the Assessing Officer. This is not correct. The Bombay Sales Tax Authorities have not jurisdiction to assess the transaction at Bombay under the CST Act 1956. Since the goods were despatched from Madras, it has to be assessed only at Madras. Out of Rs.2,31,000.00 a sum of Rs.55,000.00 relates to Lingam Industries, Madras. This has to be deleted from Rs.2,31,000.00 and assessed under TNGST Act 1959 for the year 1982-83. Under these circumstances, the turnover of Rs.1,76,000.00 is assessable under CST Act. Since it is assessed at first, time has to be granted for filing 'C' forms. Reasonable opportunity should be granted for filing of 'C' forms. Accordingly the turnover of Rs.1,76,000/- under CST Act and Rs.55,000.00 under TNGST Act are remanded back to the assessing officer for fresh disposal and assessment for the year 1982-83.
9. In respect of assessment made under the Tamil Nadu General Sales Tax Act for the year 1981-82 and 1982-83 it is seen that the Assessing Officer has relied on the sales effected to Tvl. Ambal Tin Factory, Virudhunagar, Tvl. Can Manufacturing Company, Madras, Tvl. Srinivasan Multiple Industries, Madurai and Tvl. Swamy Trading Company for the year 1981-82 and Tvl. Moideen Andavar Tin Factory, Madurai for Rs.3,19,000/- for the year 1982-83. The contention of the Revenue is that the dealers had imported Electrolytic Tin plates from foreign countries through Madras port and the goods were actually cleared at the Madras port stored at SRVS godown, Madras on the advise of the said dealer, i.e.Tvl. Avtar Singh and Company Pvt. Ltd., Madras and rent was actually paid by them. The learned counsel has argued that the main party is Tvl. Avtar Singh and Company Ltd., Bombay and the Madras party is only a representative staying in Madras. He further contended that the sales were on high seas sales and the buyers have been identified and the documents of title have endorsed to these buyers and they have taken delivery of the goods. Therefore these transactions do not attract tax under TNGST Act. But he has admitted that the local representative has taken delivery of 40 M.T. As per indent 7766 dt. 22.2.1982 and sold these goods to dealers in outside the states and within the State of Tamil Nadu. In support of his contention the learned counsel has produced the bill lading, the order placed by the appellants to the parties concerned acceptance by the party, endorsement of the bill of lading, and authorisation to take delivery by the shipping agent and forwarding agent of the purchasers, etc. The documents produced at the time of hearing revealed that the bill of lading is available for all the dealers. These bill of lading while the goods were on high seas. The bills of lading in turn were endorsed by the purchasers to the clearing agent and forwarding agents. In respect of Ambal Tin Factory, virudhunagar the bill lading has been endorsed by them in favour of C.Vethachala Mudaliar Son and Company forwarding agents. The endorsement by the appellants to the purchasers was made on 9.3.1983. The bill of entry also confirms this. The goods have been cleared at Madras port by the parties concerned and clearing agent has cleared the goods which was ultimately transported by Thalamulasamy Transport Carriers to the place of business of the purchasers.
10. Likewise the bill of lading has been endorsed in the name of Can Manufacturing Company, Tondiarpet, Madras. The duty has been paid by the purchaser to the collector Customs, Madras. On 8.1.1982 the purchaser Tvl. Can Manufacturing Company have further endorsed the documents in favour of C.Vethachala Mudaliar Son and Company the forwarding Agent. Likewise the bill of lading has been endorsed to the purchaser Tvl.Srinivasan Multiple Industries, Madurai and in turn the purchasers were endorsed the documents in favour of Vethachala Mudaliar Son and Company the clearing agent. This is the case with Swamy Trading Company, Quilon also. All these transactions fall under Section 6(2)(b) of the Central Sales Tax Act and they do not attract levy under Tamil Nadu General Sales Tax Act or Central Sales Tax Act. Therefore the turnover of Rs.7,34,772.00 assessed by the Assessing Officer for the year 1981-92 under Tamil Nadu General Sales Tax Act is not justified. Accordingly, it is deleted. In the end the appeal in T.A.No.201/90 is allowed.
11. The same method has been adopted in respect of Moideen Andavar Tin Factory, Madurai for the year 1982-83. Bill of lading has been endorsed in the name of Moideen Andavar Tin Factory, Madurai who in turn endorsed in the name of Tvl. Vethachala Mudaliar Son and Company, forwarding agents. This transaction also falls under Section 6(2)(b) of the Central Sales Tax Act. Under these circumstances, the assessment made on a turnover of Rs.3,19,000.00 under Tamil Nadu General Sales Tax Act is not justified. Accordingly it is deleted. In the appeal in T.A.No.202/90 is allowed.
12. Since the appellants bonafide believed that the transactions do not falls under either Tamil Nadu General Sales Tax Act or Central Sales Act, they have not reported this turnover. The intention cannot be said to be malafide. Therefore the levy of penalty is not jusitfied. Accordingly the penalty of Rs.44,085.00 for the year 1981-82 and Rs.19,140.00 for the year 1982-83 is deleted.
13. In the end the appeal in T.A.no.202/90 under Tamil Nadu General Sales Tax Act for the year 1981-82 is allowed. Appeal in T.A.No.202/90 under Tamil Nadu General Sales Tax Act for the year 1982-83 is also allowed. Appeal in T.A.No.203/90 under Central Sales Tax Act 1956 for the year 1982-83 is remanded.
4. Being aggrieved the above orders, State has preferred the instant Tax Case Revision.
5. Mr.V.Haribabu, learned Additional Government Pleader (Taxes) submitted that the observation of the Tribunal that the transactions for the years 1981-82 and 1982-83, have to be assessed, under Section 6(2) of the Central Sales Tax Act,1956, is solely on the basis of the averments and that there is no reason, as to whether, the respondent had produced any proof that goods were sold before payment of customs duty and that there was nothing on record to show that they were sold in high seas.
6. He further submitted that it is evident from D7 records, obtained by the Enforcement Wing Officials that there is no evidence that customs duty were paid by the prospective purchasers, on behalf of the respondent. Even the documents produced in support of the claim was only xerox copies and at no point of time, originals were produced in support of their claim.
7. He further submitted that none of the documents produced by the respondent, support the claim that high sea sales had been endorsed in favour of the purchasers and that the entire claim was only false and that the goods had in fact been cleared by the assessee's local agents and sold inside the State, attracting levy under TNGST Act 1959.
Heard the learned Additional Government Pleader (Taxes) and perused all the materials available on record.
8. The Appellate Tribunal has considered the Bill of Lading, 'C' Forms and thoroughly gone through the material on record, for arriving at a finding in favour of the assessee that tax is not attracted. Though Mr.V.Hari Babu, learned Additional Government Pleader (Taxes) made submissions on the above grounds, a well considered order of the Tribunal, on facts and evidence, does not require reversal.
9. In view of the above, both the Tax Case Revisions are dismissed. No costs.
(S.M.K.,J) (M.G.R.,J) 28.03.2018 Index : Yes/No Internet : Yes/No dm/skm S.MANIKUMAR,J and M.GOVINDARAJ,J skm T.C.R.Nos.77 and 78 of 2018 28.03.2018