Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

Professional Updates- November 2017


Professional Updates- November 2017

Tamil Nadu VAT Update

Recent Judgments in VAT CST

by Sampathkumar V V

Input Tax Credit reversal: Whether the ITC can be denied to the petitioner on bullion and raw material, purchased within the State of Tamil Nadu, which is sent outside the State for being converted into finished jewellery and thereafter, brought back into the State for sale. The requirement to reverse input tax credit for the goods sent outside the State otherwise than by way of sale, which goods after processing outside the State of TN is brought into the State for sale from TN is considered to be , violating Article 304(a) of the Constitution. The impugned provision seeks to pivot the denial of tax credit on the basis circumstance and not on the basis of quality or nature of goods. The fact that credit is denied on the basis of where the manufacturing unit of the assessee is located results in hostile discrimination against those who have their manufacturing unit located outside the State. Section 19(2)(ii) of the Act is invalid to the extent that it denies availment of ITC in respect of those units which despatch tax suffered raw materials for conversion into final product outside the State which upon conversion are received back and sold within the State of Tamil Nadu. Thus, the mere fact that the manufacturing unit is located outside the State of Tamil Nadu, cannot be the basis, for denial of ITC u/s 19(1) of 2006 Act. Section 19(2)(ii) of the 2006 Act is, thus, declared bad in law. The writ petition is allowed. Section 19(4) of the 2006 Act provides intrinsic evidence that ITC cannot be disallowed merely because transfer of goods takes place outside the State. PATINA GOLD ORNAMENTS PVT LTD Vs THE AC (CT), ERODE (MAD) WP No.6377 / 2010 Dt: 22.09.2017

Input Tax Credit Reversal: A dealer is entitled to claim input-tax credit (ITC) in respect of tax suffered inputs, which are specified in the First Schedule to the Act and are used for the purpose set out in section 19(2)(i) to (vi) of the Act. The proviso to section 19(2) limits the availment of ITC by providing that ITC shall be allowed in excess of 3% if the Inter State sale covered by declaration forms. Section 19(2)(v) of the Act provides that if, a dealer were to purchase taxable goods specified in the First Schedule to the Act, which were sold in the course of inter-State trade against C declarations, a dealer would be allowed ITC only in excess of 3% of the tax paid on such purchases. There is nothing in the proviso to conclude that it is attracted to any of the other clauses of section 19(2) of the 2006 Act. A plain reading of section 19(1) and (2) of the 2006 Act would show that, as long as specified goods, which suffer tax are used for any of the purposes set out in section 19 (2)(i) to (vi), the dealer should be able to claim the ITC, with a caveat in so far as clause (v) is concerned encapsulated in the proviso to section 19(2) of the 2006 Act. Therefore, the limitation provided in the proviso would apply only vis-a-vis the purpose specified in clause (v) and not qua other purposes set out in Section 19(2) i) to (iv) and 19(2)(vi) of the 2006 Act. In view of the amendment, the Department reversed the ITC and raised demands for tax with interest at the rate of two per cent. Allowing the petition the Court held that the orders in question, reversing ITC, were held as not sustainable.[2017] 100 VST 158 (Mad) EVEREST INDUSTRIES LIMITED V.STATE OF TAMIL NADU AND ANOTHER

Professional Updates- September 2017

Telegana VAT Update

Recent Judgments in TNVAT, TNCST

by Sampathkumar V V

Compounding Notice: Writ petition was moved against a notice of compounding asking the dealer to pay tax and compounding fee amounting to twice the amount of tax. The dealer contended that it rendered service to the original owner of the detained consignment of mobile phones, that for the purposes of reworking the mobile phones, the consignment of 435 boxes (containing 4350 mobiles) was transferred from its own facility in Chennai, that the reworked consignment being despatched to Delhi was accompanied by documents, which, inadvertently, instead of referring to its own address, adverted to the address of another entity in New Delhi, that the conclusion that it was a case of inter State sale was erroneous. Considering this, the Court held that the dealer's claim that the mobile phones had been received at its Chennai unit from its unit in Manaser for the purpose of repair had not been dealt with by the CTO, while issuing the notice. Furthermore, notice was passed at a point in time when the CTO had not completed the exercise of tallying the IMEI numbers and directed the CTO to rule on the representation preferred before him by the dealer, hear the authorised representative, and thereafter, pass a speaking order and supply it to the dealer. [2017] 101 VST 279 (Mad) EXCELLENCE MOBILE TECH INDIA P LIMITED v. CHECKPOST OFFICER / CTO, PUZHAL (OUT) CHECKPOST, CHENNAI.

  • Declaration forms: Petitioner was assessed to tax under the CST Act, 1956 at 12.5% as against 2% in respect of inter-State sales which were, according to the AO, not covered by declarations in form C because form C declaration covered more than one quarter. The circular dated October 20, 2015 of the Commissioner showed that the Revenue itself had taken a view that technicalities ought not to come in the way of acceptance of declaration forms. For instance, when, goods were despatched on the last day of the last quarter of a financial year and they were recorded by the buyer in his record, based on the date of delivery or receipt and a declaration was issued accordingly the seller could not be denied the benefit of the form C declaration. The second and third provisos of rule 12(1) of the Rules, contemplated only two scenarios. The present case presented a third scenario not envisaged under the Rules. Stating so, the assessing officer was directed to re-examine the matter and then, reach a definitive conclusion as to the rate of tax applicable to the dealer, qua the transactions in issue. [2017] 101 VST 312 (Mad) HEWLETT PACKARD INDIA SALES PVT.LTD v. STATE OF TAMIL NADU
  • Stock Transfer by SEZ unit: Appellant-dealer had a unit located in a special economic zone. The unit was issued a letter of approval for the setting phone and sets and mobile phone parts and accessories". The dealer purchased mobile phones from a manufacturing unit within the same SEZ and either sold them in the domestic tariff area after paying applicable duties and taxes including value added tax or transferred them to its branches located in other States, by way of stock transfer. Assessing Officer passed orders holding the dealer liable to pay purchase tax on the value of the goods transferred by it to its branches in other States. The dealer filed petitions for rectification which were dismissed. The dealer filed two petitions which were dismissed by a single judge. On appeals the Court held that the letter of approval specifically permitted the appellant to supply or sell goods or services in the domestic tariff area also. Export obligation was imposed upon the dealer, not with the idea of making it a 100% EOU but entitling it to apportion its exports and domestic sales in such a manner that it achieved a positive net foreign exchange within the stipulated period. In other words, the inter-State stock transfer made by the dealer to its own branches located outside the State, was clearly authorised by the letter of approval and would come within the purview of the expression "authorised operations". In fact, that State had not withdrawn any of the other benefits, privileges or concessions to the dealer on the ground that it had stopped carrying on authorised operations. Therefore, to say that the inter-State stock transfer effected by the dealer would not be permissible was not correct and reversed the decision of the single judge in NOKIA INDIA SALES P LTD. V AC (CT) [2016] 89 VST 163 (Mad). [2017] 101 VST 361 (Mad) NOKIA INDIA SALES P LTD v. AC (CT), SRIPERUMBUDUR ASSESSMENT CIRCLE, CHENNAI

Professional Updates- August 2017

Telegana VAT Update

Recent Judgments in VAT CST

by Sampathkumar V V

Purchase tax, Exim Scrip: On the question whether the State Bank of India would be liable to levy of purchase tax for accepting EXIM scrips for the purpose of cancellation from holders thereof, it was held that "ownership" in the goods was never transferred or assigned to the State Bank of India and not taxable [2017] 97 VST 1 (SC) CTO AND OTHERS v. SBI.

  • Input tax Credit: Where on verification of annexure I of the dealer with annexure II of the selling dealer, the AC concluded that the selling dealers not having filed returns or reflected the sales effected to the dealer, the input¬≠ tax credit availed of by the petitioner-dealer was liable to be reversed in terms of section 19(6) of the TNVAT Act, 2006, and the dealer was liable to penalty under section 27(4) of the Act, the Court, held that the dealer could not have been directed to reverse the input-tax credit availed of by it on the grounds assigned by the AC. [2017] 97 VST 91 (Mad) GURUDEV ENTERPRISES v. AC (CT), VALLALAR NAGAR ASSESSMENT CIRCLE, CHENNAI
  • Remand directions: The Appellate Deputy Commissioner (ADC), in appeals filed by the dealer against orders of assessment passed by the AC rejected all the pleas raised by the dealer, set aside the assessment, and remanded the matter for fresh investigation giving opportunity to the dealer to produce all the documents. In a writ petition filed, the court held that the ADC had recorded certain findings against the dealer, yet, remanded the matter for thorough verification. Both these conclusions could not sail together. When the ADC came to the conclusion that the matter required to be re-examined, he should have refrained from making any adverse observations on the merits of the assessment. The ADC having rejected all the grounds raised by the dealer in the appeals and remanded the matter to the AC, obviously, the AC, who was, a subordinate officer to the ADC, would be guided by those findings rendered by the superior authority. Therefore, the findings recorded by the ADC were vacated, and the matter was to be remanded to the AC for assessment afresh after thorough verification of the records and after affording opportunity of personal hearing to the dealer uninfluenced by any of the observations made by the ADC. [2017]97 VST 153 (Mad) AMMAN BALAJl TWO WHEELERS (PVT.) LTD. v. AC (CT), OMALUR ASSESSMENT CIRCLE, OMALUR.
  • Inspection and statement : In a writ petition contending that the entire inspection and the statement recorded, during the course of inspection, was, illegal, without jurisdiction on the ground that no power was conferred on the officer in the rank of a CTO, that the petitioner is not carrying on business within the jurisdiction of the first respondent, nor was registered as a dealer within the assessment circle the Court held that writ of certiorari could not be issued, quashing the inspection report or the seizure mahazar or the statement recorded from the dealer. The documents were seized from the place of business of the petitioner. Therefore, if the petitioner had any reservations on the statement given by it before the enforcement officials, it was open to the petitioner to raise contention before the assessing officer. It was settled law that the assessing officer, while competing the assessment, could not solely be guided by the statement recorded by the enforcement officials. Therefore, the petitioner need not have any apprehension that its rights and remedies would stand foreclosed, if the inspection report and the statement were allowed to stand. The issue relating to jurisdiction was left open to be canvassed by the petitioner as and when notice was issued by the assessing officer.[2017] 97 VST 156 (Mad) KADHIR TRADERS v CTO, GROUP-VII, ENFORCEMENT (NORTH), GREAMS ROAD, CHENNAI.
  • Declaration forms: For failure to produce the C forms relating to interstate sales for the four years, viz., 2006-07 to 2011-12, assessments were completed by the assessing officer and recovery proceedings were initiated for recovering tax arid penalty as assessed on it. Upon receiving communication proposing to conduct auction to bring its property for sale for recovery of the tax dues, the dealer filed a representation under section 84 of the TNVAT Act, 2006 enclosing certain C forms which it claimed represented 75 per cent of the transactions. Before bringing the property of the dealer to sale, the assessing officer was to consider the dealer's representation under section 84 of the Act along with the C forms enclosed in the representation, and pass appropriate orders of revised assessment on the merits and in accordance with law. Till then, the distraint proceedings shall be kept in abeyance. After the passing of such order, the dealer should remit the balance amount of tax and penalty as assessed for the transactions for which C forms were either not produced or rejected or returned, on valid grounds, In case of failure by the dealer to remit it, the respondents would be permitted to proceed further with the distraint proceedings. [2017]97 VST 182 (Mad) GTR EXPORTS v. ASSISTANT COMMISSIONER (CT), HOSUR (SOUTH), HOSUR.
  • Input tax credit on DEPB licence: DEPB licences are goods. But, the mere fact that these licences constitute goods within the meaning of section 2(21) of the Act is not sufficient to make the dealer entitled to input-tax credit. Under section 19(1), the entitlement to input-tax credit is restricted to the amount of tax paid or payable under the Act by the registered dealer to the seller on his purchases of taxable goods specified in the First Schedule to the Act. Therefore, unless the claim for input-tax credit relates to the tax paid or payable on the purchase of taxable goods specified in the First Schedule, it is not possible to grant credit. He had used these DEPB licences, for the purpose of payment of import duty. Therefore, the benefit that he was claiming now under the Act was a double benefit. The dealer did not satisfy all the three conditions for claiming input tax credit. Hence, the denial of input-tax credit on the purchase of DEPB licences was perfectly in order. [2017] 97 VST 295 (Mad) SHA KANTILAL JAYANTILAL v. STATE OF TAMIL NADU

Professional Updates- July 2017
Recent Decisions in TNVAT

Refund: The petitioner-dealer was issued a notice of a refund order in form P for the assessment year 2013-14, of the excess of tax collected from the dealer estimated at Rs. 39,33,672. Since no action was taken pursuant thereto, the dealer filed a writ petition which the court disposed of directing the CTO to consider the representation. However, that order had not been complied with by the CTO who issued a notice based on certain queries raised by the DC. The Court in a writ petition filed, held that it was not clear under which provision of law, the DC had issued the proceedings calling upon the CTO to issue the notice. In the absence of any statutory powers, the proceedings of the DC had to be held to be without jurisdiction. Nevertheless, the dealer sent a detailed objection and in spite of having received such a reply, instead of granting refund, the CTO had addressed a letter to the Additional Commissioner, PR as to what had to be done in the matter. There was no statutory sanction to such procedure being adopted by the respondent. Even assuming that there was some manual of procedures formulated by the Commercial Taxes Department, which obviously had no statutory force, assuming that the Commissioner came to a conclusion that the explanation offered by the dealer to the queries raised by the DC was incorrect and unacceptable and he passed the order that would amount to reviewing the order of assessment which undoubtedly the Act did not contemplate. The procedure adopted by the CTO as well as the DC (CT) was wholly illegal. The notice was set aside and the CTO was directed to effect refund of the tax.

Input tax credit: The petitioner-dealer had export sales, during the year categorised as zero rated sale" under section 18 read with section 2(44) of the Tamil Nadu Value Added Tax Act, 2006. It claimed input-tax credit on its purchases and set off proportionate input-tax credit relating to export in the following order: (i) set-off against value added tax liability on local sales, (ii) set-off against Central sales tax liability on inter-State sales, and (iii) the balance input-tax credit carry forward to the next year. The Assistant Commissioner made the set-off in the following manner relating to local and Central sales tax sale: (i) local sale (set-off against value added tax liability), (ii) Central sales tax sales (set-off against Central sales tax liability), and (iii) balance input-tax it in relation to export sale was denied on the ground that the petitioner did not file form W. The Court in writ petition filed in this regard, held that section 18 of the Act does not prescribe the method of preference set-off of input-tax credit and unless and until the Assistant Commissioner was able to clearly demonstrate that the procedure adopted by the dealer was contrary to the statute, the dealer should be permitted to adopt the preference to set-off. The findings rendered by the assessing officer with regard to preference of set -off were set aside and the matter remanded to the assessing officer to redo the assessments after issuing notice to the dealer and after affording opportunity of personal hearing and in the light of the directions issued in preceding paragraphs. [2016l 94 VST 409 (Mad) XOMOX SANMAR LTD. v. ASSISTANT COMMISSIONER (C. T), MYLAPOREASSESSMENT CIRCLE, CHENNAI

Professional Updates- June 2017
Recent Decisions in TNVAT

Form XVII: The dealer and HLL are registered dealers in the State of TN. Instruction was given by HLL to the dealer to deliver the product to a factory at Ranipet, job-worker. The job-worker had a manufacturing facility at Ranipet and had the requisite licences and registration. The linear alkyi benzene sold by the dealer was used as a raw material in the manufacture of acid slurry and such manufacturing activity took place within the State of TN. The contract of sale was completed upon delivery of the goods at Ranipet within the State of Tamil Nadu. The seller, namely, the dealer had no contractual or other obligation to take the goods to another State. Thus, when the transaction /sale concluded within the State at Ranipet, which was an additional place of business of HLL, undoubtedly, the transaction was an intra-State sale and the dealer was entitled to avail of the concessional rate of tax on submission of form XVII declaration. [2016] 95 VST 118 (Mad) TAMILNADU PETROPRODUCTS LTD v. AC (CT), FAST TRACK ASSESSMENT CIRCLE II.

Alternative remedy: While coming to the conclusion, on the alleged adoption of wrong methodology followed by Inspecting officials, the Assessing officer had observed that in the absence of the correct figures, there was no other alternative except to adopt the figures as furnished by the dealers at the time of inspection. Therefore, it could not be said that the AO had totally ignored the contentions raised by the dealer. Since the contentions raised before court were on factual aspects they could be decided only by the appellate authority and not under Article 226 of the Constitution of India. [2016] 95 VST 134 (Mad) HIL LIMITED v. ASSISTANT COMMISSIONER (CT), MADHAVARAM ASSESSMENT CIRCLE.

Natural Justice: Though in taxation matters, court should be slow in interfering with the orders of assessment by issuing writs when the statute provides for a hierarchy of remedies, this rule would not apply, when the assessee is able to establish that the order is in violation of principles of natural justice, suffers from errors apparent on the face of the record or outcome of irrelevant consideration and when perversity is writ large on the face of the order. [2016] 95 VST 296 (Mad) HINDUSTAN UNILEVER LTD v. DC (CT)-II, LTU, EGMORE.

Attachment of property: The property was subject matter of mortgage with the bankers, who were secured creditors and they had brought the property for sale. The petitioner's vendor had purchased the property for valid consideration through the DRT ebts Recovery Tribunal and a certificate of sale was issued in his favour. As long as the said certificate of sale had not been cancelled or modified, the first respondent Department could not have any lien over the property. [2016] 95 VST 308 (Mad) ANSARI v. CTO, KOYAMBEDU ASSESSMENT CIRCLE.

Audit report : When a writ petition was moved to issue a writ of certiorari to call for the records on the file of the respondent and to quash the same, contending that though the petitioner had submitted form WW report on December 30, 2015 for the year 2014-15 and had stated that it had been regularly submitting the monthly returns, the respondent had not appreciated the audit report and had taken four years total turnover for framing an assessment dated November 30, 2015, the court allowed the petition, set aside the order dated November 30, 2015 and remanded the matter back to the respondent with a direction to receive form WW and decide the matter afresh, after giving an opportunity of personal hearing to the petitioner. [2016] 95 VST 331 (Mad) CONCRETE ADDITIVES AND CHEMICALS PVT. LTD. v. AC (CT) FAC, THIRUVALLUR ASSESSMENT CIRCLE.

Professional Updates- May 2017
Recent Decisions in TNVAT

Input Tax Credit: Non-intimation of change in constitution of an entity is an irregularity and not an illegality and the assessing authority is not correct in reversing the entire input tax credit on the ground for not informing the change in constitution and obtaining fresh registration. [2016-17] 22 TNCTJ167 (MAD) Sri Kamatchi Gas Service Vs AC (CT) Kanchipuram Assessment Circle.

Penalty: Wilful non-disclosure of any assessable turnover is the criteria for invoking the penal provisions of section 27(3) of the TNVAT act 2006 and if wilful suppression is not found levy of penalty is not justified. [2016-17] 22 TNCTJ 173 State of Tamil Nadu Vs Golden Homes Pvt Ltd

SEZ : Supply of Ready Mix Concrete to An SEZ Unit is exempt from tax vide Notification in GO Ms 193 dated 30.12.2006. [2016-17] 22 TNCTJ 184 (MAD) IJM Concrete Products Pvt Ltd., Vs AC CT Ponnamallee Assessment Circle

Rectification: A rectification order causes grievance to a dealer, then it is an appealable order u/s 55(4) of the TNGST Act and if the rectification request is successful, then any rectification order in this regard cannot be appealed. [2016-17] 22 TNCTJ 255 (MAD) P C W Castings Pvt Ltd Vs ADC CT Chennai (East).

Going Concern: When a person might carry on several lines of business and each line of business would a unit of business by itself; if there was a sale of that unit of the business, as a whole, then the assessee would not be liable to be taxed either on the general principle that there was no sale in the course of business, since closure of a line of business could not be incidental or ancillary to its carrying on or on the alternative basis of application of Explanation III, to sub-section (41) of section 2 of the Tamil Nadu Value Added Tax Act, 2006, [2016] 95 VST 494 (Mad) VTX INDUSTRIES LIMITED v. AC (CT), FTAC, POLLACHI, COIMBATORE

Mutuality: As the levy of tax on the sale of food and drinks to members of a club should be clear, the matter should be referred to a larger Bench framing the questions (i) whether the doctrine of mutuality was still applicable to incorporated clubs or any club after the insertion of article 366(29A) in the Constitution of India, (ii) whether the judgment of the court in JCTO v. Young Men's Indian Association [1970] 26 STC 241 (SC) still held the field even after the 46TH of the Constitution of India, and whether the decisions in Cosmopolitan Club [2009] 19 VST 456 (SC) and Fateh Maidan Club [2008] 12 VST 598 (SC) which remitted the matter applying the doctrine of mutuality after the Constitutional amendment could be treated to state the correct principle of law, and (iii) whether the Forty-sixth Amendment to the Constitution, by a deeming fiction provided that provision of food and beverages by incorporated clubs to their permanent members constituted sale liable to sales tax. [2016] 96 VST 20 (SC) STATE OF WEST BENGAL AND OTHERS v. CALCUTTA CLUB LIMITED

Professional Updates- April 2017

Discount: Sub-section (20) was inserted in section 19 of TNVAT Act, on August 19, 2010 with retrospective effect from January 1, 2007 and provided that "where any registered dealer had sold goods at a price lower than the price of the goods purchased by him, the amount of the input tax credit over and above the output tax of those goods shall be reversed". The writ petition challenging the vires of the provisions of section 19(20) and its retrospectivity was dismissed by the High Court. The Apex Court held that there was no right, inherent or otherwise, vested with dealers to claim the benefit of input tax credit but for section 19 of the Act. There were valid and cogent reasons for inserting section 19(20). The main purport was to protect the Revenue against clandestine transactions resulting in evasion of tax. Also held that the amendment failed to meet the tests laid down by the court in testing the validity of retrospective operation of fiscal laws. Sub-section (20) of section 19 is altogether a new provision introduced for determining the input tax in a specified situation, could not have retrospective effect, especially when vested rights had accrued in favour of the dealers in respect of purchases and sales made between January 1, 2007 and August 19, 2010. Thus, the vires of sub-section (20) of section 19 was upheld but not the retrospective effect from January 1, 2007. [2016] 96 VST 1 (SC) JAYAM & CO .v. AC CT AND ANOTHER

Input tax credit, reversal: The Input tax credit reversal for sales with C forms at 3% as per the provision to section 19(2))v) of TNVAT Act 2006, is held to be applicable for the proviso (v) only and not to the other clauses of section 19(2). M/s EVEREST INDUSTRIES LIMITED Vs 1. THE STATE OF TAMIL NADU, 2 THE DC CT FAST TRACK ASSESSMENT CIRCLE-II, COIMBATORE [2017] (Mad) W.P.No.7969 of 2014 and others DATED: 06.02.2017

Input tax credit, Mismatch: The petitioners contend that the moment the tax is paid to the selling dealer and tax invoice is issued, the input tax credit is available to the purchasing dealer. The default of the selling dealer in not filing returns or not paying tax at his end cannot result in the denial of credit to the purchasing dealer. For the revision notice or order in this regard, the held that the settled legal principle is that change of opinion or change of officer is no ground to reopen an assessment. The reasons for reopening should not only be explicitly stated, but should be duly supported with adequate information. Invariably in all cases, the Assessing Officers merely state that on going through the details in the official website, it is seen that there is mismatch in transaction and the dealer is called upon to explain as to why the input tax credit availed by him, should not be directed to be reversed. M/s JKM GRAPHICS SOLUTIONS PRIVATE LIMITED Vs THE CTO, CHENNAI [2017] (Mad) WP.No.105/2016 Date: 01.03.2017 and others

Professional Updates- March 2017


Transit pass:
When the imported goods were transferred to Pondicherry, it was detained for absence of a transit pass. When it was contended that, in view of section 88(3)(i) of the TNVAT Act, 2006, the clarification issued by the Commissioner of Commercial Taxes, Chennai, in Circular Acts Cell-IV /69980/2000 dt 23.11.2000 would apply, the court held that section 70(2)(a) of the TNVAT Act, 2006 clearly provides that when any goods specified in the Sixth Schedule are sold or consigned or transferred by any goods vehicle to another State from any place within the State, the seller or consignor or transferor of the goods shall obtain a transit pass in the prescribed form and in the prescribed manner from the assessing authority and produce it at the time of crossing the check-post. Admittedly, the goods were transferred from one State to another State. Hence, according to section 70(2) of the TNVAT Act, 2006, the dealer had to necessarily obtain a transit pass in the prescribed form and in the prescribed manner. The plea of the dealer that the said Circular of Act Cell-IV would apply was not tenable as it would have no force in law after the coming into force of the 2006 Act. [2013] 64 VST 541 (Mad) SHIV A POLYMERS v. DCTO, KANDAMANGALAM CHECK-POST, VILLUPURAM DISTRICT

Opportunity: The petitioner filed a writ petition contending that due to compelling reasons for making arrangements for its daughter's marriage, the petitioner could not go before the authority for filing objections within the time prescribed and pleading for an opportunity to file its objections. The court considering the plea made by the petitioner to give him an opportunity to file objections to the demand notice and the reasons assigned by him for not filing the objections, directed the petitioner to file his objections within the specified time. 2014] 69 VST 133 (Mad) ESTEEM ALLOY CASTINGS P. LTD. v. CTO, EGMORE-II ASSESSMENT CIRCLE, CHENNAI

Consignment sales: In respect of consignment sales exemption claim, the rule 4(3A) of the 1957 Rules provides for the particulars to be furnished by the dealer when called for by the assessing authority. The assessing authority referred to a few instances and drew the inference that the entire transactions were inter-State sales. It was not clear whether the dealer filed the statutory declaration and whether any enquiry was held in respect of individual transactions. The assessing authority came to the conclusion on the basis that the entire goods sent as consignment were sold as one lot within a couple of days which could not be done unless there was a pre-existing order for the goods and that loads had been moved upon specific orders only. Thus without examining the individual transactions, the entire transactions were treated as inter-State sales falling under rule 4(3A) of the 1957 Rules. The matter was remitted to the assessing authority for fresh consideration after affording sufficient opportunity to the dealer in respect of each transaction based on decisions of the Supreme Court in Ashok Leyland Ltd. v. State of Tamil Nadu [2004] 134 STC 473 (SC) ; [2004] 2 RC 249. [2013] 66 VST 277 (Mad) SRI AMBIKA SAW MILL AND TRADERS v. STATE OF TAMIL NADU

Clarification and penalty: A clarification cannot go beyond the scope and ambit of the provision of law. The levy of penalty without considering the bona fides of the assessee cannot be sustained. [2014] 68 VST 406 (Mad) STATE OF TAMIL NADU v. SREEJEE AND CO.