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Ashok Leyland Ltd. Vs. State of Tamil Nadu and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtSupreme Court of India
Decided On
Case NumberCivil Appeal Nos. 943, 944 and 976-979 of 2001 and W.P.(C) No. 195 of 1999 and Civil Appeal No. 53/2
Judge
Reported in2004(1)SCALE224; (2004)3SCC1; [2004]134STC473(SC)
ActsCentral Sales Tax Act, 1956 - Sections 2, 3, 3AA(1), 3AA(2), 3AA(3), 4, 5, 6, 6(2), 6A, 6A(1), 6A(2), 8(4), 9, 9(2), 13(4), 14, 15, 31 and 151; Tamil Nadu General Sales Tax Act, 1959 - Sections 2, 12, 12(1), 12(3), 16, 16(2) and 16(3); Constitution of India - Article 14, 19(1), 32, 136, 142, 226, 269, 269(3), 270, 286, 286(3), 366, 366(29A) and 371D; Sales of Goods Act, 1930 - Sections 5(1), 5(1A) and 5(3); Central Sales Tax (Amendment) Act, 2001; Finance Act, 2002; Central Sales Tax (Registration And Turnover) Rules, 1957 - Rule 12(5) and 12A; Citizenship Rules, 1956 - Rule 3; Evidence Act - Sections 41, 112 and 133; ;Indian Companies Act, 1956; Andhra Pradesh High Court (Original Side) Rule - Rule 5; Parliamentary Act; Indian Penal Code (IPC) - Sections 161 to 165A
AppellantAshok Leyland Ltd.
RespondentState of Tamil Nadu and anr.
Advocates: K. Parasaran,; A.K. Ganguli,; B. Sen and;
Prior historyFrom the Judgment and Order dated 12.3.99 of the Tamil Nadu Sales Tax Appellate Tribunal, Chennai in T.A. Nos. 353, 456 and 457/97 and 47 of 1998
Books referredWords and Phrases, Permanent Edition, Volume 41A; Black's Law Dictionary, Fifth & Sixth Edition; Law Lexicon by P. Ramanatha Aiyar, Second Edition
Excerpt:
.....but later issuing show cause notice as to why transfer of stock of vehicles not to be taxed as interstate sales taxable in tamil nadu - appellants by writ petition challenged jurisdiction of assessing authority to reopen assessment - dismissed by high court - reassessment was completed and imposed - validity - initial burden of proof is on the dealer to show that the movement has occasioned by reason of transfer of such goods which is otherwise than by reason of sale - for discharge of burden of proof assessee is required to furnish a declaration within specified time - on a declaration so filed an inquiry is to be made by the assessing authority for the purpose of passing an order on arriving at a satisfaction that movement of goods has occasioned otherwise than as a result of sale..........state to adjudicate upon the situs of sales and character of a transaction in the course of an inter-state sale, whether as falling under section 3 or under section 4 of the central sales tax act, 1956, is arbitrary, unworkable and ultra vires articles 14, 19(1)(g) and chapter xiii of the constitution of india, in matters involving elements of transactions taking place in more than one state.background facts:civil appeal no. 976-979 of 20014. the appellants herein are engaged in manufacture of commercial vehicles. they have their factories at bhandara in the state of maharashtra and alwar in the state of rajasthan for manufacture of popular models of passenger chassis. they are, inter alia, registered under tamil nadu general sales tax act, 1959 (hereinafter called for the sake of.....
Judgment:

S.B. Sinha, J.

1. Leave granted in S.L.P. (Civil) No. 5579 of 2001.

2. Interpretation of Section 6A of the Central Sales Tax Act, 1956 is involved in these appeals and the writ petition. The appeals arise out of judgments and orders dated 12.3.1999 passed by the Tamil Nadu Sales Tax Appellate Tribunal in T.A. Nos. 353, 456 and 457 of 1997 and 47 of 1998; dated 13.11.2000 in STA No. 459 of 1999; dated 14.11.1997 in Appeal No. 383 of 1996; and dated 2.12.1997 in Tax Case (Revision) No. 1096 of 1990 passed by the High Court of Madras.

3. The writ petition under Article 32 was filed by the Petitioner inter alia for declaring that Section 9(2) of the Central Sales Tax Act, 1956 designating the authorities of the movement State to adjudicate upon the situs of sales and character of a transaction in the course of an inter-State sale, whether as falling under Section 3 or under Section 4 of the Central Sales Tax Act, 1956, is arbitrary, unworkable and ultra vires Articles 14, 19(1)(g) and Chapter XIII of the Constitution of India, in matters involving elements of transactions taking place in more than one State.

BACKGROUND FACTS:

Civil Appeal No. 976-979 of 2001

4. The appellants herein are engaged in manufacture of commercial vehicles. They have their factories at Bhandara in the State of Maharashtra and Alwar in the State of Rajasthan for manufacture of popular models of passenger chassis. They are, inter alia, registered under Tamil Nadu General Sales Tax Act, 1959 (hereinafter called for the sake of brevity as 'the State Act') as also the Central Sales Tax Act, 1956 (hereinafter referred to as 'the Central Act'. They are registered as dealers in the Office of Assistant Commissioner (Central Assessment Circle-III), the third respondent herein, under both the Acts.

5. Indisputably, the appellants have several regional offices throughout the country wherewith Regional Sales Offices are attached for the purpose of receiving, warehousing and selling the vehicles produced by the appellants. The appellants contend that they transfer both goods vehicle and passenger chassis to their different Regional Sales Offices for marketing the products which in turn are registered under the Sales Tax laws governing the State in Question. The stock of vehicles are transferred to the Regional Sales Offices under the cover of stock transfer invoices, excise gate pass, and entrusted to the transport contractors for movement and delivery thereof where upon transfer of such vehicles local sales tax are collected and paid by the different Regional Sales Offices. The appellants herein upon transfer of such purported stocks of vehicles filled up forms in terms of Section 6A of the Central Act, the original whereof having been filed before the assessing authority of the State of Tamil Nadu, an enquiry was made and/or caused to be made pursuant whereto and in furtherance whereof the claim of the appellants to the effect that by reason of such transactions transfer of stock of goods had taken effect as contra-distinguished from inter-State sale was accepted. On or about 29.11.1990, the assessing authority upon completion of the order of original assessment under the Central Act allowed transfer of stocks of the motor vehicle chassis and other automobile parts to the branches stating:

'The dealers have got 26 branch sales depots in other States. They have dispatched their, products - chassis, spare parts etc., to their own sales depots in other States for sales and the goods involved in the stock transfer have moved from Tamil Nadu to other State as 'stock transfer', i.e., the movement was occasioned by reason of branch transfer and not by reason of sale. The dispatches are supported by stock transfer invoices, transport details and Form F. These records have been verified with the exemption claimed.'

6. An order of assessment for the year 1987-88 dated 28.8.1991 was passed finding:

'The dealers have filed detailed statement of stock transfer of vehicles to their outside State Regional Sales Offices and Spares to their warehouses. The statement was verified in detail with reference to Form 'F' declaration filed by them and dispatching documents. The dealers have also filed completed assessment orders of their Regional Sales Offices in other States. Their claim was examined in length and found to be in order. The Form 'F' filed by them are accepted and the exemption granted.'

[Underlining is mine for emphasis)

7. The assessing authority despite the said findings issued notices directing the appellants to show cause as to why the order dated 29.11.1990 should not be revised and the stock of vehicles allegedly transferred to the Regional Sales Offices so far as the same related to the State Transport Undertakings are concerned should not be taxed as inter-State sales taxable in Tamil Nadu.

8. The appellants filed their show cause inter alia Questioning the jurisdiction of the assessing authority to reopen the assessment inter alia on the ground that the issues stood determined in terms of the provisions of Sub-section (2) of Section 6A of the Central Act relying or on the basis of the declarations made by the appellants in terms of Form F. However, the reassessment proceeding was completed relying upon the provisions contained in Section 16 of the State Act read with Section 9(2) of the Central Act as also in terms of the decision of this Court in Sahney Steel & Press Works Ltd. v. CTO, : AIR1985SC1754 . Consequent to the said order the sales of the Regional Sales Offices in relation to the deliveries made to the State Transport Undertakings of other States were reassessed. Penalty for non-disclosure of the turnover as taxable sales in terms of Section 16(2) of the State Act read with Section 9(2) of the Central Act was also imposed. Similar show cause notices were issued in relation to other assessment years also.

9. A writ petition was filed by the appellants before the Madras High Court questioning the said orders inter alia contending that having regard to the provisions contained in Section 6A of the Central Act and further having regard to the fact that the appellants had paid tax to the other States the orders impugned therein were illegal. The States wherein the local sales tax had been paid in terms of the respective State Acts, namely, State of Kerala, Karnataka, Andhra Pradesh, Maharashtra and Gujarat, were impleaded as parties therein and they in turn also questioned the jurisdiction of the authorities of the State of Tamil Nadu to enquire about the transactions carried out by the appellants. A question was also raised that the Madras High Court had no jurisdiction to grant any relief touching the orders of assessment completed under the respective State law. Upholding the jurisdiction of Tamil Nadu authorities to reopen an assessment completed despite acceptance of declaration in Form F, the Madras High Court by a judgment and order dated 13.6.1996 dismissed the said writ application inter alia holding that they had no jurisdiction to grant any relief. Thereafter the reassessment was completed and penalty was imposed.


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