Decided on June 29,2009

Sri Venkateswara Steel Industries Appellant
State Of Tamil Nadu And Ors. Respondents


P.V.Reddi, J. (Chairman) - (1.) THE appellant is a dealer registered under the Central Sales Tax Act, 1956 (for short, "the CST Act") and Tamil Nadu General Sales Tax Act, 1959 (for short "the TNGST Act") carrying on business in Salem. It manufactures iron and steel items such as MS rods and bars and sells the same within and outside the State of Tamil Nadu. The appellant has a branch in Palakkad in Kerala State. In the year 1994 -95, the appellant filed returns prescribed under the CST (Tamil Nadu) Rules in which the stock transfers to Palakkad branch were disclosed and inter -State sales were reported to be nil. The value of stock transfers for the year 1994 -95 was Rs. 3,82,67,310. The disputed turnover relating to stock -transfers relate to four months only in 1994, i.e., from April to July 1994. It appears that the appellant later on switched over to job works. An assessment order was passed under the CST Act for the year 1994 -95 on July 15, 1995 on check of accounts of the dealer and accepting the nil returns submitted by the dealer. However, that assessment is a bald and cryptic order. The assessing authority did not even refer to the F forms which were by then filed by the appellant and no finding was recorded as regards the correctness of the F forms filed under Section 6A(1) of the CST Act read with the Rules. The appellant was assessed to tax under the Kerala General Sales Tax Act, 1963 for the same year in respect of the sales effected through its Palakkad branch. A turnover of Rs. 3,82,67,310 was assessed to tax.
(2.) WHILE so, on the basis of inspection of the business premises on February 2, 1995 of the appellant and its branch at Palakkad by the enforcement officials, the same assessing officer initiated reassessment proceedings and brought to tax the entire turnover relating to stock transfers to the branch under the CST Act. In other words, the alleged stock transfers were held to be direct inter -State sales to the buyers in Palakkad. It may be noted at this juncture that even by the date of original assessment made as late as July 1999, the inspection report of the enforcement wing must have been already there. Yet, the assessment was made without reference to that report, Evidently, the report was not made available to the assessing officer by the date of original assessment. Be that as it may, the impugned reassessment order was passed on January 13, 2000 without even discussing the elaborate explanation filed by the appellant. It appears that the assessing authority passed the reassessment order mechanically adopting the observations of the inspecting officials. Tax of Rs. 31,60,393 was demanded consequent upon the assessment and further, penalty was levied under Section 12(3) (b) of the TNGST Act read with Section 9(2) and (2A) of the CST Act at 150 per cent of the tax assessed. The appeal filed by the appellant to the Appellate Assistant Commissioner (CT), Salem, was allowed on March 23, 2000. The appellate authority found no justification to reject the F declaration forms and observed that the records showed the movement of goods genuinely to the branches. However, the appellate authority did not deal with the specific aspects pointed out by the assessing officer based on the inspection report of the Enforcement Wing. It merely extracted the dealer's explanation in extenso. Thereafter, the Commercial Tax Department filed appeal before the Sales Tax Appellate Tribunal, Coimbatore Bench. The Tribunal by the impugned order dated March 3, 2008, allowed the State's appeal. It is against the order of the Tribunal that the present appeal is filed under Section 20 of the CST Act. The Tribunal observed at paragraph 12 of the order as follows: So, when the claim of exemption had not been proved by the dealer -respondent with proper documents like declaration forms and other records, the question of allowing exemption does not arise and the assessing officer was correct in disallowing the claim. Even on this ground the Appellate Assistant Commissioner's order is not correct as per the records that are available. So, the order of the Appellate Assistant Commissioner is set aside and the order of the assessing officer is restored.
(3.) EARLIER , the Tribunal observed that the claim of stock transfer should be supported by valid declaration forms prescribed under Section 6A and then observed that "even when the revision was taken up, the dealer had not whispered anything relating to F declaration forms and documents said to have been filed by him". The Tribunal referred to the observation in the reassessment order that "the records/documents in connection with stock transfer were not produced at the time of inspection, nor were they made available on a later date to prove genuineness of stock transfer". This statement in the reassessment order is only an extract from the inspection report of the enforcement wing. What is relevant is whether the appellant failed to produce the records/documents at the time of assessment or reassessment. The failure if any to produce all the records before the enforcement wing officials is no ground to justify reassessment.;

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