Dismissed

Asst.Commissioner,Spl.Circle,Bhilwara v. M/S Grasim Industries

Rajasthan HC23 Nov 2023CR/495/2005

Case brief

AI extract

What is this about?

The High Court affirmed the Rajasthan Tax Board's order holding that cement transfer between Vikram Cement and Aditya Cement units of Grasim Industries was not a sale. The court ruled that both units are divisions of the same legal entity, rejecting the appellant's claim of separate entity status.

What did the court decide?

The S.B. Civil Revision Petition No. 495/2005 was dismissed with no order as to costs.

Asst.Commissioner,Spl.Circle,Bhilwara Vs M/S Grasim… — Service and Employment | Rajasthan HC (2023)

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[2023:RJ-JD:39559]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Civil Revision Petition No. 495/2005

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Assistant Commissioner, Special Circle, Bhilwara.

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----Petitioner

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Versus

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M/s Grasim Industries Limited, Nimbaheda District Chittorgarh.

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----Respondent

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For Petitioner(s)	: Mr. Sunil Bhandari
For Respondent(s)	: Mr. P.K. Bohra

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HON'BLE MS. JUSTICE REKHA BORANA

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Order

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23/11/2023

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The present revision petition has been filed against the order dated 19.09.2003 passed by the Member, Rajasthan Tax Board, Ajmer in Appeal No.1211/1999/chittorgarh whereby while allowing the second appeal as preferred by the respondent firm, it set aside the order dated 29.07.1999 passed by the Deputy Commissioner (Appeals), Commercial Taxes, Udaipur whereby the order dated 30.08.1996 passed by the Assessing Authority had been affirmed. 2. The brief facts of the case are as under : (i) Vide order dated 15.04.1994, the Assessing Authority passed the assessment order qua the respondent firm for the period from 01.04.1993 to 31.12.1993. Aggrieved against the said order, an appeal was preferred before the Deputy Commissioner (Appeals), Udaipur who remanded the matter for decision afresh. After remand, the Assessing Authority passed a detailed assessment order dated 30.08.1996 imposing tax, penalty and interest.

[2023:RJ-JD:39559]

[CR-495/2005]

(2 of 4)

(ii) The case of the respondent firm is that Vikram Cement and Aditya Cement are the units of Grasim Industries and hence the transfer of cement between these two units cannot be termed to be sale and hence, no tax can be levied on the same. Whereas, the case of the Department is that the firm Vikram Cement is registered with the Department as Grasim Industries Limited, Nimbaheda, Vikram Cement Depot, Nimbaheda and it receives cement from Vikram Cement, Kher upon Forms 18A & F, therefore, the cement transferred from one unit to another factory for construction purposes upon declaration of Forms 18A & F amounts to sale and hence is liable for tax.

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(iii) The Assessing Authority while relying upon the judgment in the case of Rajasthan Spinning and Weaving Mills Limited Vs. Commercial Taxes Officer, Special Circle, Udaipur and Anr., 1986 WLN UC 347, held that the cement received on Form 18A definitely falls in the category of “Deemed Sale” and even in terms of Clause 29A of Article 366 of the Goods Act, it amount to a sale.

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With the said finding, the Assessing Authority proceeded on to pass the detailed assessment order keeping into consideration the deductions as permissible and ultimately while holding the firm liable for an amount of Rs.11,58,96,645/-, ordered for refund of Rs.1,38,283/- adjusting the Advanced Deposited Tax of Rs.11,60,34,928/-.

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(iv) The order dated 30.08.1996 as passed by the Assessing Authority was challenged by the respondent firm by way of filing first appeal. The order as passed by the Assessing Authority was affirmed by the First Appellate Authority but the said order was

[2023:RJ-JD:39559]

[CR-495/2005]

(3 of 4)

reversed by the Rajasthan Tax Board in the appeal preferred by the non-petitioner Company, against which, the present revision petition has been filed.

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The controversy in question can be summed up on the issue whether both the cement units in question are two different divisions of the same registered company having separate registration under the Sales Tax Law or they are two different legal entities.

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The Tax Board while relying upon the annual report as well as the account reports of years 1993-94 and 1994-95 of Grasim Industries Limited concluded that Aditya Cement, Sawa was just a division of Grasim Industries Limited. The Board reached to the said finding on basis of the balance-sheets and profit & loss accounts of Grasim Industries available on record which reflected that the profit and loss account of both the units was a joint one. The Board further concluded that although the units had separate registration under the Sales Tax Law, the said separate registration would not make them separate legal entities. With the said observations, the Tax Board held that the unit at Nimbaheda and unit at Sawa were both the divisions of Grasim Industries Limited only and the cement transferred to new unit of Aditya Cement at Sawa by unit of Vikram Cement at Nimbaheda cannot be termed to be a sale.

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In the specific opinion of this Court, the findings of learned Tax Board being totally based on material available on record and in consonance with law, does not deserve any interference.

[2023:RJ-JD:39559]

[CR-495/2005]

(4 of 4)

As held in (1994) 95 STC 442(Raj.), Manilal & Company

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Vs. Commercial Tax Officer (Raj.) , if the goods have been sent from branch office to head office or vice versa, it cannot be said that there is transfer of property in goods from one person to another and irrespective of the fact that branch or head offices are separately registered, it cannot be considered to be a sale.

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Testing on the touch stone of the ratio as laid down by above judgment, there is nothing on record to show that the two units are two separate legal entities.

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Learned counsel for the petitioner could not point out any document to prove that the two units of the respondent firm at Nimbaheda and at Sawa are separate legal entities.

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As it is the settled position of law, even if two units were registered separately under the Sales Tax Law, the said fact cannot make them two separate legal entities. As clear on record, the balance-sheets and the profit & loss account of both the units are being governed by the parent firm i.e. respondent firm hence, their existence as separate legal entities cannot be concluded. The finding of Tax Board of both being divisions of the respondent firm deserves no interference and the order dated 19.09.2003 passed by the Rajasthan Tax Board is hereby affirmed.

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The revision petition is thus dismissed.

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(REKHA BORANA),J

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Vij/-

Asst.Commissioner,Spl.Circle,Bhilwara v. M/S Grasim Industries

Case brief

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What did the court decide?

Asst.Commissioner,Spl.Circle,Bhilwara v. M/S Grasim Industries

Case brief

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What did the court decide?

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