Madras High Court
M/S.Siemens Ltd vs Assistant Commissioner (Commercial ... on 1 December, 2010
Author: S.Nagamuthu
Bench: S.Nagamuthu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 01/12/2010 CORAM THE HONOURABLE MR.JUSTICE S.NAGAMUTHU W.P.(MD).No.6167 of 2005 and W.P.(MD).No.6168 of 2005 and W.P.M.P.(MD)Nos.6719 and 6721 of 2005 M/s.Siemens Ltd., No.4 (Old No.144), Mahatma Gandhi Road, Chennai-600 034. ... Petitioner in W.P.(MD)No.6167/2005 KGS Advanced MR&CT Scan, 766, Anna Nagar, Madurai-625 020. ... Petitioner in W.P.(MD)No.6168/2005 vs. 1.Assistant Commissioner (Commercial Taxes), (Enforcement), Madurai-20. 2.Assistant Commercial Tax Officer (Roving Squad - Additional), Madurai. ... Respondents in both W.Ps. COMMON PRAYER Writ Petitions are filed under Article 226 of the Constitution of India praying for the issue of a Writ of Certiorari, to call for the records of the case on the file of the second respondent in Notice No.46/05-06, dated 03.07.2005 read with ROC.3202/2005/B3, dated 07.07.2005 on the file of the first respondent and quash the same. !For Petitioners ... Mr.R.Venkataraman Senior Counsel For Mr.T.Ramesh Kutty ^For Respondents ... Mr.Pala Ramasamy Special Government Pleader ****** :COMMON ORDER
****** Since common issues are involved in these two Writ Petitions, they were heard together and they are disposed of by means of this common order.
2. The petitioner in W.P.(MD)No.6167 of 2005, viz., Siemens Limited is an assessee registered under the provisions of the Tamil Nadu General Sales Tax Act of 1959 [hereinafter referred to as "the State Act"] and the Central Sales Tax Act [hereinafter referred to as "the Central Act"] on the file of the Commercial Tax Officer, Nungambakkam Assistant Circle, Chennai.
3. The petitioner in W.P.(MD)No.6168 of 2005 is a Medical Diagnostic Centre (hereinafter referred to as "the K.G.S.Scan"]. The said K.G.S.Scan is primarily and essentially in the field of carrying out diagnostic tests, such as scan and MRI as suggested by the doctors for further course of medical diagnosis and treatment.
4. Admittedly, under Invoice No.1810008699, dated 30.03.2002, Siemens Limited sold a machine known as "Magnatum Consorto System" [hereinafter referred to as "the equipment"] for a total sum of Rs.1,59,00,000/-. Appropriate tax under the State Act was paid at the time of the said sale. The purchaser, viz., the K.G.S.Scan was using the same in Madurai. Subsequently, the K.G.S.Scan re-sold the said equipment under Invoice No.3500007256, dated 21.06.2005, for a sum of Rs.75,00,000/- to Siemens Limited. The payment for the purchase of the same was made by means of a cheque in Cheque No.278590, dated 30.06.2005 on Deutsche Bank, Chennai. The said payment was duly credited to the account of the K.G.S.Scan.
5. Thereafter, the said equipment was sold by the Siemens Limited to one Kamineni Education Society (Kamineni Institute of Medical Sciences), Sripuram Narketpalli, Nalakonda District, Andhra Pradesh State, under Invoice dated 02.07.2005. Admittedly, it was an interstate sale. The petitioner instructed the K.G.S.Scan, Madurai to deliver the equipment to Associated Road Carrier, who is to transport the equipment to Nalakonda. The Siemens Limited had handed over the invoices pertaining to the sale and other transport documents to the transporter.
6. While so, the machinery was loaded on the Carrier. The second respondent, viz., the Assistant Commercial Tax Officer (Roving-Squad-Additional) made a surprise check and detained the goods on the premise that it belonged to the K.G.S.Scan, Madurai and that as a casual dealer, the K.G.S.Scan, Madurai had not paid the tax on the sale to the petitioner. The second respondent recorded the statement from a person belonging to the K.G.S.Scan to the effect that they should have registered themselves as Casual dealer and then, to have sold the goods. Ultimately, a goods detention notice under notice No.46/0506, dated 03.07.2005 was issued by the second respondent, thereby detaining the goods under Section 42 of the State Act on the ground that the Consignor, viz., the K.G.S.Scan, Madurai had sold the scanning machine without raising invoice and that Siemens Limited, Chennai has transported the goods mentioned in the invoice dated 02.07.2005 without any purchase bill from the K.G.S.Scan. The second respondent ordered the detention of the goods pending further enquiries as contemplated under Section 42(8) of the Act. In this regard, the K.G.S.Scan filed an objection on 04.07.2005. But, an order was passed on 07.07.2005 in Roc.No.3202/2005/B3, thereby directing the K.G.S.Scan, Madurai, to pay the tax plus surcharge of Rs.7,87,500/- along with the two times of the tax due as compounding fees under Section 46(1)(a) of the State Act and get the goods released.
7. Challenging the detention notice dated 03.07.2005 and the order dated 07.07.2005, the petitioners in both Writ Petitions have come up with the present Writ Petitions.
8. I have heard Mr.R.Venkataraman, learned Senior Counsel appearing for the petitioners and Mr.Pala Ramasamy, learned Special Government Pleader appearing for the respondents. I have also perused the records carefully.
9. In the counter-affidavit filed by the respondents, it is admitted that the goods in question were originally sold by the Siemens Limited to the K.G.S.Scan on 30.03.2002 under Invoice No.1810008699. It is also admitted in the counter that on 2/3.07.2005, the K.G.S.Scan re-sold the same to Siemens Limited for a sum of Rs.75,00,000/-. It is also admitted that subsequently, the Siemens Limited sold away the same to a Company in Andhra Pradesh under appropriate invoice, which was also produced at the time of inspection. It is also admitted that for the said interstate sale, tax was paid as per the Central Act. But, what is now stated is that since the sale made by the K.G.S.Scan to the Siemens Limited was not authenticated by any invoice and since there was tax evasion, the detention notice dated 03.07.2005 as well as the order dated 07.07.2005 came to be passed.
10. Though several grounds have been raised in the Writ Petitions and though arguments have been advanced at length by the learned counsel appearing on either side, in my considered opinion, the question involved in these two Writ Petitions falls within a very narrow campus. Though it was argued that the K.G.S.Scan is not a dealer and the sale of the goods made by the K.G.S.Scan to the Siemens Limited will not amount to business, I do not go into these questions, because they are not relevant for the purpose of deciding these two Writ Petitions.
11. In my considered opinion, it would be suffice to consider as to whether the detention order has been made in accordance with law and whether the authority, who passed the detention order, has got power and jurisdiction to do the same. Similarly, whether the compounding order passed on 07.07.2005 is also with jurisdiction and in accordance with law. If these two aspects are tested, it would be suffice to decide the issues in these two Writ Petitions.
12. Now, as I have already stated, the admitted facts are that for a sum of Rs.75,00,000/- on 02/03.07.2005, the equipment was sold by the K.G.S.Scan. Regarding this aspect, there is no dispute at all between the parties. Thus, on account of the said sale made on 02/03.07.2005, the ownership of the equipment had transferred in favour of the Siemens Limited. After the Siemens Limited had become the owner, it had sold away the property to a Company in Andhra Pradesh. This was done under Invoice No.3000290147, dated 02.07.2005. Thereafter, the goods were being loaded in the vehicle provided by the transporter. Therefore, the Siemens Limited was the consignor and the equipment was to be transported to Andhra Pradesh. For this interstate sale also, as per the provisions of the Central Act, appropriate tax has been paid by the Siemens Limited. Therefore, there is no amount due towards tax either under the Central Act or under the State Act payable by the Siemens Limited.
13. Admittedly, for the sale made by the K.G.S.Scan to Siemens Limited, no tax under the State Act was paid. According to the K.G.S.Scan, since the K.G.S.Scan is neither a dealer nor the transaction amounts to business, the said K.G.S.Scan is not liable to pay any tax under the State Act. To the contrary, it is the contention of the respondents that the K.G.S.Scan is a dealer as defined under the Act and the sale of the equipment made in favour of the Siemens Limited amounts to business as defined under the Act and, therefore, the said K.G.S.Scan is liable for tax to be paid under the State Act.
14. In my considered opinion, this disputed question need not be gone into in these Writ Petitions. Assuming that there is tax evasion in this regard by the K.G.S.Scan under the provisions of the Act, it is always open for the Commercial Tax Authorities to initiate proceedings, to issue show cause notice and then, to make appropriate assessment. But, without resorting to the said provisions, it is not at all open for them to make a demand straight away from the K.G.S.Scan to the tune of Rs.7,87,500/-, as though the K.G.S.Scan is liable to pay tax. This order dated 07.07.2005 is not only against the Siemens Limited, but it is against the K.G.S.Scan also. For getting the goods released, as per the Detention Order, for which, Siemens Limited was the owner, if at all the detention order is valid, compounding fees can be imposed only against the Siemens Limited. But, instead of that, the order dated 07.07.2005 has been issued against the K.G.S.Scan. On this score, in my considered opinion, the order as against the K.G.S.Scan is liable to be quashed, because the K.G.S.Scan is not liable to pay any compounding fee at all. At this juncture, I have to make it clear that if at all it is the case of the respondents that there was tax evasion by the K.G.S.Scan, when the equipment was sold by the K.G.S.Scan to the Siemens Limited, as I have already stated, it is for the Commercial Tax Authorities to make appropriate assessment by initiating appropriate proceedings under the Act, after affording sufficient opportunity to the K.G.S.Scan.
15. Now, coming to the detention order, as I have already stated, since there was no amount due towards the tax either under the Central Act or under the State Act from the Siemens Limited, the detention order passed against the said Company is not sustainable. Therefore, consequently, the order dated 07.07.2005 imposing the compounding fees is also liable to be set aside. But the learned Special Government Pleader would submit that at the time when the vehicle was checked, appropriate records were not available with the transporter and that is the reason why, the detention notice dated 03.07.2005 came to be issued and the consequential order dated 07.07.2005 came to be passed.
16. In my considered opinion, the said contention cannot be countenanced at all. A perusal of the statement recorded from a representative of the K.G.S.Scan would go to show that at the time of checking, the invoice regarding the sale made by the Siemens Limited to a Company in Andhra Pradesh was very much produced. Therefore, when it was doubtless that the Siemens Limited was the original owner of the goods, who had sold away the goods to a Company in Andhra Pradesh and thus, it was the consignor, there was no legal ground available for the respondents to pass the detention order. Thus, as rightly pointed out by the learned Senior Counsel appearing for the petitioners, the detention order is not only without jurisdiction and the same is void under law. Consequently, the order imposing compounding fees is also without jurisdiction and the same is liable to be quashed.
17. In the result, both the Writ Petitions stand allowed and the impugned orders are quashed, however, with a liberty to the Commercial Tax Authorities under the Tamil Nadu General Sales Tax Act of 1959, to initiate appropriate proceedings against KGS Advanced MR & CT Scan in accordance with law, if the authorities have got materials to show that there was evasion of commercial tax at the hands of the said Centre. The same shall be done strictly in accordance with the Tamil Nadu General Sales Tax Act of 1959, after affording sufficient opportunity to the KGS Advanced MR & CT Scan.
18. In view of this order, the bank guarantee and the personal bond executed by the KGS Advanced MR & CT Scan shall stand discharged and, therefore, the second respondent is directed to return the bond and the bank guarantee to the KGS Advanced MR & CT Scan, which were handed over to the second respondent, in pursuance of the interim order passed by this Court dated 12.07.2005 in W.P.M.P.Nos.6719 and 6721 of 2005. Amount, if any, paid, as per the interim order passed by this Court dated 12.07.2005, shall also be refunded to the KGS Advanced MR & CT Scan. Consequently, the connected miscellaneous petitions are closed. No costs.
SML To
1.The Assistant Commissioner (Commercial Taxes), (Enforcement), Madurai-20.
2.The Assistant Commercial Tax Officer (Roving Squad - Additional), Madurai.