Madras High Court
M/S.Elgi Equipments Ltd vs The Assistant Commissioner (Ct) on 26 November, 2019
Author: Anita Sumanth
Bench: Anita Sumanth
Writ Petition No.21269 of 2007
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 26.11.2019
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
Writ Petition No.21269 of 2007
M/s.Elgi Equipments Ltd.
Elgi Industrial Complex,
Coimbatore. .... Petitioner
Vs
The Assistant Commissioner (CT),
Fast Track Assessment Circle-I,
Coimbatore. ...Respondent
Prayer: PETITION filed under Article 226 of The Constitution of India praying for
the issuance of Writ of Certiorari to call for records of the respondent in his
proceedings dated 12.03.2007 issued for assessment year CST:299456/99-2000.
For Petitioner : Mr.R.L.Ramani
Senior Counsel
Assisted by Ms.C.P.Priya
For Respondent : Mr.V.Hari Babu
Additional Government Pleader
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Writ Petition No.21269 of 2007
ORDER
The Petitioner challenges the pre-assessment Notice dated 12.03.2007 for the period 1999-2000 issued in terms of the Central Sales Tax Act, 1956 ('Act')
2. The petitioner was originally assessed to Central Sales Tax. Vide order of assessment dated 31.03.2003 the Assessing authority at that relevant juncture has recorded that the accounts were called for and checked and claims of exemption in respect of pre-export sales and branch transfers were examined in detail. Some disallowances were also effected. While this is so, the impugned pre-assessment notice has been issued.
3. Both learned counsel concur on the position that the issue being raised by the officer is contrary to the Judgment of the Supreme Court in the case of Ashok Leyland Ltd. Vs. State of Tamil Nadu [(2004) 134 STC 473]. The relevant paragraphs are extracted below:
'100. In terms of Clause (3) of Article 269, inter-state sale is contrasted from local sale.
101. An order passed by the statutory authority who has jurisdiction therefore, the same would amount to a part of substantive and not procedural law. In addition to this there is no provision for appeal.
Thus, it is only in the limited cases of fraud, mis-representation etc. that reassessment can be directed and not if there had been a mere error of judgment.
102. If it is not an inter-State sale provided through a legal fiction, then it amounts to transfer of stock and this is a finding which has been arrived at by a statutory authority where for there does not exist any provision for appeal. Therefore, it cannot be reopened on the premise that there was a mere error of judgment or change in opinion.
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103. Once it is held that such determination of an issue having regard to legal fiction created in terms of Sub-section (2) of Section 6A is conclusive, it must a fortiorari follow that the same is binding.
104. The particulars required to be furnished in Form F clearly manifest that the proof required is as to whether the goods were factually transferred to the assessee himself or his branch office or his agent and not to any third party. Any other enquiry is beyond the realm of the assessing authority.
105. It is true that this Court in Ashok Leyland (supra) upon consideration of the matter holding that no statutory conclusiveness had been attached by reason of a legal fiction in terms of Sub-section (2) of Section 6A. This Court opined:
"After all Section 6A is also one of the provisions of this Act. There is no reason to elevate it to a higher status than the rest of the provisions" .
106. With utmost respect, therein the Court did not take into consideration that the provisions of Section 6A having been provided by way of exclusionary clause subject to the satisfaction of the conditions precedent contained therein, and, thus, the same stand at an elevated stage over charging Section 6 of the Act. The assessing authority while passing an order is required to take into consideration the jurisdictional fact. Once it is found, having been conferred with a plenary power to determine its own jurisdiction, that he did not have any jurisdiction under the Act, the opinion of the assessing authority attains finality. What would be a jurisdictional fact has been noticed by this Court in Shrisht Dhawan (supra) in the following terms:
"19... A Jurisdictional fact is one on existence or non- existence of which depends assumption or refusal to assume jurisdiction by a court, tribunal or an authority. In Back's Legal Dictionary it is explained as a fact, which must exist before a court can properly assume jurisdiction of a particular case. Mistake of fact in relation to jurisdiction is an error of jurisdictional fact. No statutory authority or tribunal can assume jurisdiction in respect of subject matter which the statute does not confer on it and if by deciding erroneously the fact on which jurisdiction depends the court or tribunal exercises the jurisdiction then the order is vitiated. Error of jurisdictional fact renders the order ultra vires and bad... "
107. In South India Corporation (P) Ltd. v. Secretary. Board of Revenue: [1964] 4 SCR 280, this Court has held that special provisions shall prevail over the general provisions.
108. It is further trite that an administrative authority or a quasi- judicial authority while adjudicating upon a lis is obligated to pose and answer a right question so as to enable it to arrive at a conclusion as to whether he has jurisdiction in the matter or not. By reason of a legal fiction which becomes attracted in terms of determination made thereunder, the provisions of the Central Act shall stand excluded..
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109. In A.V. Fernandez v. the State of Kerala: [1957] 1 SCR 837, this Court observed:
"There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non-liability to tax or non-imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether. The Legislature cannot enact a law imposing or authorising the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all. The very fact of their non- liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. "
110. In Sahney Steel (supra) whereupon reliance has placed by the assessing authority, a contention was raised that the registered office and the branch office were separately registered as dealers under the sales tax law and transaction effected by the branch office should not be identified with transactions effected by the registered office, Pathak, J., as the learned Chief Justice-then was, observed :
"..We are unable to agree. Even if, as in the present case, the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales dispatching, billing and receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the Company and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer..."
111. The Court in the facts of that case held that the movement from the head office to the branch office was for the purpose of delivery to the branch office, thereafter to the buyer through the branch office. The branch office merely acted as a conduit through which the goods passed on their way to the buyer. It is, however, relevant to note that the Court noticed :
"...It would have been a different matter if the particular goods had been dispatched by the registered office at Hyderabad to the branch office outside the State for sale in 4/7 http://www.judis.nic.in Writ Petition No.21269 of 2007 the open market and without reference to any order placed by the buyer. In such a case if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad. It is a sale where the goods moved merely from the branch office to the buyer..."
112. The purpose of verification of the declaration made in Form F, therefore, is as to whether the branch office acted merely as a conduit or the transaction took place independent to the agreement to sell entered into by and between the buyer and the registered office or the office of the company situated outside the State. The said decision therefore, does not run counter to our reading of the said provision. Furthermore, the question which has been, raised before us had not been raised therein.
113. We, therefore, are of the opinion that the observations made by this Court in Ashok leyland (supra) to the effect that an order passed under Sub-Section (2) of Section 6A can be subject matter of reopening of a proceeding under Section 16 of the State Act was not correct.' In the light of the categorical pronouncement of the Supreme Court as above, this Writ Petition succeeds and the impugned notice dated 12.03.2007 is set aside. No costs.
26.11.2019 Index : Yes/No Speaking Order/Non speaking Order arr 5/7 http://www.judis.nic.in Writ Petition No.21269 of 2007 Dr.ANITA SUMANTH, J.
arr To The Assistant Commissioner (CT), Fast Track Assessment Circle-I, Coimbatore.
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