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2018 Supreme(Mad) 3305
IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. RAVICHANDRABAABU, J.
Renault Nissan Automotive India Pvt. Ltd. - Appellant
Versus
Deputy Commissioner-Ii (FAC) - Respondent
W.P. No. 24876, 24877 of 2017, Writ Miscellaneous Petition No. 26265, 26266, 36851, 36852 of 2017
Decided On : 23-10-2018
R.L. Ramani, Adv., Narmadha Sampath, Adv., G. Dhana Madhri, Adv.
The main legal point established in the judgment is that the disputed question of fact should be considered and decided by the appellate authority, and the writ jurisdiction is to be exercised only to find out whether the decision-making process was in order and not the very decision itself.
Headnote:
CST Act - Assessment of Motor Vehicles Sales - Section 6(2)(b) - Section 3(a) - Section 3(b) - Section 27 of Tamilnadu Value Added Tax Act - Jurisdictional Issue - Principles of Natural Justice
Fact of the Case:
The petitioner, a manufacturing company of motor vehicles, challenged the assessment order of the respondent under the Central Sales Tax Act for the assessment years 2014-15 and 2015-16. The dispute arose from the sale of motor vehicles to sister marketing companies and subsequent sales to dealers in other states. The petitioner claimed exemption under Section 6(2)(b) of the CST Act, while the respondent contended that the sales fell under Section 3(a) and not Section 3(b).
Finding of the Court:
The court found that the respondent had jurisdiction to reopen the assessment under Section 27 of the Tamilnadu Value Added Tax Act, as the nature of the disputed sales was a crucial factor to be considered. The court also held that the respondent did not violate principles of natural justice in issuing the notice of proposal and that the disputed question of fact should be considered and decided by the appellate authority.
Issues: The issues involved in the case were the jurisdictional authority of the respondent to reopen the assessment, the alleged violation of principles of natural justice, and the nature of the disputed sales falling under Section 3(a) or Section 3(b) of the CST Act.
Ratio Decidendi: The court held that the disputed question of fact should be considered and decided by the appellate authority, and the petitioner should file a statutory appeal within 30 days. The court also emphasized that the writ jurisdiction is to be exercised only to find out whether the decision-making process was in order and not the very decision itself.
Final Decision: The court disposed of the writ petitions by granting the petitioner liberty to file a statutory appeal before the Appellate Authority within 30 days, and directed the respondent not to take any coercive steps against the petitioner until such appeal is filed.
K. RAVICHANDRABAABU, J.
1. Both these writ petitions are filed by the very same petitioner challenging the order of the respondent dated 28.07.2017 in revising the assessment made under Central Sales Tax Act, in respect of the assessment years 2014-15 and 2015-16. The issue involved in both the writ petitions is one and the same and therefore, the facts narrated hereunder are common to both these Writ Petitions.
2. The case of the petitioner is as follows:
(a) The petitioner is a manufacturing Company of motor vehicles and also a registered dealer on the file of the respondent under the provision of Tamil Nadu Value Added Tax Act, 2006 and the Central Sales Tax Act, 1956. The petitioner sold the motor vehicles to two of its sister Companies which are marketing Companies and separate entities. The said marketing Companies namely, M/s. Renault India Private Limited and M/s. Nissan Motor Private Limited, are separate business entities and are engaged in the activities of marketing, distribution and selling the motor vehicles manufactured by the petitioner. Those two Companies, besides having stockyard in the State of Tamil Nadu, also have stockyard in Andhra Pradesh. They purchase motor vehicles from the petitioner on payment of appropriate tax on principle to principle basis and sell the same to the dealers, with whom those Companies have business arrangements, on payment of appropriate tax. Those dealers, thereafter, sell the motor vehicles to users on payment of appropriate tax.
(b) In the regular course of business, the marketing Companies place purchase orders on the petitioner with delivery instructions. Those purchase orders are placed by the marketing Companies on the basis of the orders received by them from their dealers. The purchase orders are placed in respect of local sales as well as inter-State sales with delivery instructions to despatch the motor vehicles to particular destination. In the entire chain of events, the petitioner has privity of contract with the marketing Companies alone who are purchasers from the petitioner. There is no privity of contract between those dealers and the petitioner or the customers and the petitioner. In respect of the motor vehicles that are delivered outside the State of Tamil Nadu, the petitioner raises sales invoice on the marketing Companies with instructions to deliver the vehicles at the particular place, as directed by the Marketing Companies and collects and pays tax under the CST Act, 1956, on the sale price mentioned in the sales invoice of the petitioner Company. The sales invoice along with Lorry Receipt and Delivery Chalan are sent to the marketing companies and title to the goods is transferred to the marketing companies on the basis of the same. In respect of the interstate sales, for which purchase orders are placed by the marketing companies, these marketing companies effect second interstate sale by transfer of documents of title of the goods in favour of the dealers, claiming exemption under section 6(2)(b) of the CST Act, 1956. The respective Branch office of the marketing companies issues "C" declaration form to the petitioner and the petitioner, in return issues "E1" declaration form to them. The petitioner has submitted the "C" declaration forms in support of the interstate sales to the Office of those two Companies situated outside Tamil Nadu and paid tax at 2% on the interstate sales effected by the petitioner. The assessment under CST Act, 1956, for the assessment years 2014-15 and 2015-16 in respect of Andhra Pradesh office of M/s. Nissan Motor India Private Limited, has been completed by the Assessing Officer, Chittoor, and exemption under section 6(2)(b) of the CST Act, 1956, was granted on the second interstate sales effected by them in respect of the motor vehicles sold by the petitioner.
(c) While so, the respondent herein issued notice dated 26.10.2016 proposing to levy higher rate of tax and disallow exemption for non-filing of declaration form
