24. Forfeiture of tax – Reimbursement of tax paid to vendor while purchasing the goods, not collection of tax – Forfeiture set aside

The appellant was engaged in the business of manufacture and sale of automotive seats, which were mainly supplied to 1) TELCO and 2) Mahindra & Mahindra Ltd. While assessing the dealer for the year 1996-97 assessing authority disallowed the resale claim of dealer and forfeited sum of Rs. 8,20,382/- because according to assessing authority there is unauthorized collection of tax, after issuing notice in Form 29.

Facts leading to this case were, in the year under assessment, assessee made resale claim in respect of auto seats of Rs. 90,24,211/- because corresponding purchases were effected from registered dealer. The said resale of Rs. 90,24,211/- include an amount of Rs. 8,20,382/- which is charged separately, and which was according to appellant was the reimbursement of tax paid to vendor.

In the order passed in First Appeal before the Dy. Commissioner of Sales Tax, he has observed that the appellant has shown the impugned amount separately in the column of "Tax Collection" in the sale invoice, whereby the buyer appears to have been given an understanding that the sales are liable to tax in the hands of appellant. The appellant pointed out to in this regard that sale invoice bear a rubber stamp to the effect of "reimbursement of taxes paid to vendor" and therefore the buyer knows that the amount shown in the "tax collection" column represents the amount of reimbursement of tax paid to the vendor and not the amount of tax required to be paid by the appellant to the Government.

In Second Appeal appellant prayed to i) allow resale of Rs. 90,24,211/- on the ground that the corresponding purchases were effected from dealer who hold valid registration certificate at the time of these transactions, and ii) forfeiture of tax may be set aside. Appellant relied on the Bombay High Court judgment in the case of M/s Mather and Platt Ltd. (53 STC 104).

Hon'ble Tribunal set aside the order passed in appeal forfeiting tax amount and remanded back to the assessing authority to allow the resale after bill wise verification to ascertain the precise amount collected from TELCO and tax paid to buyer.

While allowing the appeal, observations and reasons given by the Dy. Commissioner to disallow the claim are totally rejected by the Tribunal saying that "the observation is not at all supported by the evidence, and is based merely on presumptions and surmises. Hon'ble Tribunal also said that, merely because the buyer becomes entitled to claim set off with reference to the said amount. It will not necessarily mean that the amount charged by the appellant in his invoices is by way of tax and not by way of reimbursement of tax paid to the vendor.

[M/s Tata Johnson Controls Automotive Ltd. S.A. No. 1909 of 2004 decided on 6-6-2006. Member Shri G.G. Kochrekar of First Bench delivered the judgment. Advocate Shri P. V. Surte appeared for appellant]

25. Whether machinery can be purchased to print "newspaper" against Certificate A to be issued u/e A 88

Held : Yes.

The appellant, who was a printer and publisher of newspaper and magazine registered under BST Act, intended to purchase printing machinery for printing the newspapers. To avail the concession in tax rate, the appellant desired to issue a declaration in Form A, as per the Notification under entry A 88 u/s 41. One of the conditions of the said notification is that, the claimant purchaser has to obtain necessary certificate from the Commissioner of Sales Tax. The application made by the appellant was rejected by the Dy. Commissioner only because machinery is going to be used to print newspaper.

In appeal before the Hon. Tribunal revenue was of opinion that newspapers being not goods as per section 2(13), machinery proposed to be purchased by the appellant not meant for use in manufacture of goods and hence not eligible to issue certificate in Form A, u/e A 88. On the other hand appellant submitted that it is due to the constitutional bar that the States are prohibited from levying any tax in respect of newspapers, and that is why they are excluded from the definition of goods for a restricted purpose of keeping the newspapers outside the purview of the tax net. That however does not mean that newspapers are not goods. Attention was drawn to the expression "unless the context otherwise requires" with which section 2 of BST Act commences. Therefore, if the context is otherwise, it is not permissible to adhere to defined meaning of a term. Appellant relied on the judgment of Supreme Court in the case of M/s Printers (Mysore) Ltd. and Another (93 STC 95) and also on Indian Express Newspaper (Bom) Ltd. SA Nos. 1731 to 1734 of 1992 dt. 22-7-1994. In the case before Supreme Court the question was as to whether publisher of newspaper is entitled to effect purchases on ‘C’ form (at the concessional rate of 4%) for the purpose of use in the manufacture of newspapers. In the definition of the term "goods" in section 2(d) of the CST Act, 195 "newspaper" are specifically excluded from the scope of the expression. With this exclusion, the question for interpretation was whether the term "goods" appearing in the relevant provisions of section 8 of the CST Act should be given defined meaning of the term "goods" in section 2(d), so as to deprive the publisher of newspapers from availing the benefit of the concessional tax rate. On careful consideration of the relevant statutory provisions and earlier judicial pronouncements, the Supreme Court held that the expression goods occurring in the words "for use by him in manufacture or processing of goods for sale" in section 8(3)(b) of the CST Act does not exclude newspapers. Observations of Supreme Court in this regard are very important and they are "It should also be remembered that section 2 which defines certain expression occurring in the Act opens with the words "in this Act, unless the context otherwise requires". This shows that wherever the word "goods" occur in the enactment, it is not mandatory that one should mechanically attribute to the said expression the meaning assigned to it in clause (d). Ordinarily, that is so. But where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. If we keep the above consideration in mind, it could be evident that the expression "goods" occurring in the second half of section 8(3)(b) cannot be taken to exclude newspapers from its purview. The context does not permit it."

With this order passed by the Dy. Commissioner is set aside, and directed to issue certificate.

[Bennett Coleman & Co. Ltd. Appeal Nos. 67 of 2005 decided on 13- ....-2006 Judgment delivered by member of Third Bench Shri G. G. Kochrekar. Advocate Mrs. Sujata Rangnekar appeared for the appellant.]

26. Revision of assessment without any proper finding, notice reveals that there was neither a discrepancies nor impropriety ………. Order set aside

The appellant was engaged in the business of buying and selling Indian made foreign liquor covered under entry 22(1) of Schedule C-II. The appellant was assessed for the period 1996-97 by the Sr. Assistant Commissioner of Sales Tax. The order of assessment resulted into refund of Rs. 17,88,161/-.

The Dy. Commr. of Sales Tax revised the order of assessment and taxed the sales of Rs. 3,35,35,517/- @20%, he also taxed the sales of Rs. 16,05,46,912/- under CST Act, and also imposed interest u/s 36(3)(b). Against this order appellant came in appeal before the Tribunal. In appeal appellant challenged the notice issued in Form 40, and highlighted the discrepancies in the notice. Order appealed says that "while scrutinizing the record underlying the assessment order certain discrepancies were noticed and in order to remove these improprieties notice in Form No. 40 is issued". Therefore, appellant brought attention to the notice issued in Form 40, which says that "there is no record whether the condition prescribed in Entry A 16(b) of the notification are fulfilled, before allowing the sale as exempt" Therefore on careful reading of the notice reveals that there was neither a discrepancies nor a impropriety stated in the notice. Appellants relied on the order of assessment which is passed after verification of books of account and allowed the sale as exempt. It is nowhere in the order alleged in the order of assessment that conditions of the notification are not complied.

The plea of the appellant was that for allowing the claim no working is required. Assuming that working was required, it was for assessing officer to do it. If he did not keep the working on record, it does not mean that the claim was not admissible or that two conditions were not fulfilled and yet the claim was allowed by assessing officer. In allowing the claim, the appellant cannot say that what the assessing officer should write in the assessment order, which is not passed in the presence of the appellant, but written afterwards.

The order under CST Act is revised because, the goods are restricted commodity and in order to justify the claim under section 6(2), the assessee could have produced the vital evidence; i.e., V12 the Import Register, Transport Permit, Stock Register etc. Instead of producing this evidence, appellant maintained that goods were never brought into the State of Maharashtra, in the absence of any evidence the order was revised, claim of u/s 6(2) was disallowed, accordingly, taxed the said sale @4% being supported with Form C. In this connection Regional Accountant of appellant filed an affidavit confirming that he attended assessment proceedings and tendered one box file containing declaration in Form C issued by the Distributors of the Company to whom goods were supplied from places outside the State of Maharashtra. In view of this affidavit Hon'ble Tribunal accepted the plea of appellant, because in assessment record Tribunal found lists of E-1, E-II. The said statement also gives E-1 form number as well as C form numbers. In view of this Tribunal found no hesitation to allow the claim and set aside the revision order.

Consequential levies of interest u/s 36(3)(b) is also set aside.

[M/s Herbertsons Ltd. Appeal No. 10 and 11 of 2006 decided on 17-7-2006. Judgment delivered by Shri R. B. Ahuja member of First Bench. Advocate Shri P. V. Surte appeared for the appellant.]

27. Service of assessment order – On authorized representative as per rule 68 – Chartered Accountant can be said to be his agent till hearing of assessment or relevant proceeding is completed

The appellant was assessed by the Sales Tax officer (D-1425) M.65, Pune. The order passed on 7-2-2004 was served on employee of Chartered Accountant who represented appellant in assessment. Appellant came to know about same only when recovery proceedings were initiated. Appellant, then applied for certified copy of assessment, order an appeal was preferred before the first appellate authority

The first appellate authority dismissed the appeal on the ground that appeal is filed late by 473 days. The first appellate authority counted the days from the day which order was served on the employee of Chartered Accountant, and not the day on which order is served up on appellant when he applied for the certified copy.

In Second Appeal before the Tribunal, appellant submitted that, no order of assessment has been served on the appellant, hence the time limit for filing the appeal order cannot be calculated from the date alleged.

Rule 68 of the BST Rule provide method of service of orders and notice rule 68(a) provide service of order by hand delivery to the addressee or to a person declared by him in Form 13 or to his agent duty authorized in this behalf. Now the learned Chartered Accountant, who was representing the dealer, can be said his agent till hearing of his assessment of relevant proceeding is completed. After completing of hearing of the said proceeding, it cannot be presumed that the said representative of the dealer still has authority to act as an agent of the assessee. It is therefore, needless to say that the assessment order or notice of demand will have to be served on the assessee or any of his attorney appointed for the purpose or a person regularly employed by him in connection with his business. The learned Chartered Accountant who was representing him during the course of assessment cannot be said to be a person regularly appointed by him in the course of business. Obviously, the service of notice of demand on the Chartered Accountant is not a valid service.

[M/s Solar Distributors S. A. No. 1326 of 2005 decided on 5-5-2006. Shri G.D. Parekh. President M S T T delivered the judgment and Shri P.V. Surte Advocate appeared for the appellant]

28. Assessment u/s 33(4A) –last return is annual return for sec. 33(4A)

The appellant was assessed for the year 1999-2000 by the STO u/s 33(4) and resulted into demand of Rs. 7,42,051/-. In a First Appeal, argument of appellant about, impugned assessment being barred by limitation u/s 33(4A) because assessment order have been passed on 3-3-2005; i.e., after 31-3-2003 was rejected and appeal stands dismissed.

In S.A. before the Tribunal, appellant argued that, return for the month of March was filed on 7-6-2000, and annual return before 30-9-2000. Therefore, the statutory time limit of three years for completion of assessment was applicable to a case wherein all the returns are filed by the assessee on or before the date prescribed for filing the last return of the year.

If any of the returns for the period is not filed or is filed after the due date for filing the last return of that year, then the statutory time limit was not applicable and therefore the assessment order passed in such a case after the expiry of the period of three years did not render itself as time barred. Subsequently, when an annual return for the whole period was prescribed, a question arose as regard which return will constitute "last return" of the year for the purpose of the said provisions. Whether it should be the monthly return for the last month of the particular assessment period, or whether it should be the annual return for the particular assessment period, which chronologically falls after the monthly return for the last month. It is a statutory obligation cast on all the dealers, and therefore the annual return is the last return required to be filed by an assessee with reference to any particular assessment period. Therefore, the term "last return" appearing in the said provision of section 33(4A) of the Bombay Act will be the "annual return" and not the monthly return for the last month of the assessment period. That being the position, according to the Tribunal, if any assessee filed all the returns including the annual return for an assessment period before the due date for filing the annual return, then the assessment for the particular assessment period has statutorily to be completed before the expiry of three years from the end of the assessment period. If it is not completed, then the assessment would be time barred and as natural fallout, the returns filed by the assessee for the particular period will have to be accepted by the department as correct and complete.

On the other hand, revenue tried to interpret, amendment brought in this section by Act No. XIII of 2004, which is effective from 1-7-2004, As has been clearly mentioned in the amendment Act No. 13 of 2004, the said amendment has come into force with effect from 1-7-2004. This amendment has obviously no retrospective application. In view thereof, it was absolutely wrong on the part of the first appellate authority to rely on this amendment which had absolutely no application to the facts of the present case. The said action based on later amendment, which had no application to the present case, is clearly unsustainable in the eyes of law and therefore it has to be set aside.

[Pan Music and Magazine Ltd. S. A. No. 258 of 2006 decided on 27-4-2006 judgment delivered by Shri G.G. Kochrekar member of Third Bench. Shri Mahesh Agashe, Advocate appeared for the appellant]

29. Condonation of delay

In Miscellaneous Appli-cation filed before the Tribunal to condone the delay, the facts of the case were little different. The appellant wanted to challenge the order dismissing appeal passed by the Dy. Commissioner. The appellant challenged this order before the Additional Commissioner of Sales Tax. Mumbai Zone with the prayer to restore the appeal.

Since appeal filed before the Additional Commissioner of Sales Tax remained pending for decision for long time appellant preferred appeal before the Tribunal.

While granting the prayer to condone the delay, Hon'ble Tribunal directed the appellant to reconsider his option and then decide whether the applicant is intending to proceed with the First Appeal before Additional Commissioner or to pursue the present proceeding. The applicant had approached the Additional Commissioner of Sales Tax for restoration, but when the applicant found that there was no progress in the matter then applicant had approached the Tribunal. In these circumstances, it is just a change of option and this change of option is tolerable to condone the delay in filing this Second Appeal.

[M/s. Track Parts Services miscellaneous Application No. 47 of 2006 of 12-7-2006. Shri S. M. Deshmukh, member of Third Bench delivered the judgment Shri C. B. Thakar appeared for the appellant]