Dismissed

M/S Lohiya Industries v. the State of A.P.

Telangana HC11 Sept 2023TRC/90/2005

Case brief

AI extract

What is this about?

The High Court of Telangana dismissed tax revision cases challenging the Sales Tax Appellate Tribunal's confirmation of balance tax demanded under Section 6A of the CST Act, ruling that the petitioner failed to discharge the burden of proof via required declarations.

What did the court decide?

The revision cases numbers 90 of 2005 and 11 of 2006 are dismissed; the orders of the Appellate Tribunal are confirmed.

M/S Lohiya Industries Vs the State of A.P. — GST and Indirect Tax | Telangana HC (2023)

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[³³⁸⁶ ]

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYOERABAD

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MONDAY, THE ELEVENTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTYTHREE

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PRESENT

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THE HON'BLE SRI JUSTICE P.SAM KOSHY

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AND

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THE HON'BLE SRI JUSTICE LAXMI NARAYANA^ALISHETTY

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T.R.C.No .90 of 2005 & T.R.C No.'|1 of²⁰⁰⁶

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T.R.C.No.90 of 2005

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Tax revision under Section 22^{(1) (See Rule 40) UnderA.P.G.S.T. Act, aggrieved} by order dated 25-1 1-2005 in T.A.No.474^{of 2004 on the file of the SalesTax} Appellate Tribunal, Andhra Pradesh,^{Hyderabad, againstthe orderdated 11-O3-2OO4} made in G1.No.1459/2000-2001/CST Act 56 on the^{file of the Deputy Commissioner} (CT) Charminar, Hyderabad.

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Between:

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M/s Lohiya lndustries, Hyderabad.

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...Petitioner

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AND

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The State of A.P. rep. by the State^{Representative Before the Sales Tax} Appellate Tribunal, A.P. Hyderabad.

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...Respondent

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Counsel for the Petitioner: SRI AK. JAISWAL

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Counsel forthe Respondent:^SRI K.^{RA.JI REDDY}

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T.R.C No.11 of 2006

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Tax revision under Section 22 (1) (See Rule 40) Under A.P.G.S.T.^{Act, aggrieved} by order dated 25-1 1-2005 in T.A.No.617 of 2004 on the file of the Sales^Tax Appellate Tribunal, Hyderabad, against the order dated 31-03-2004^{made in} G|.No.1459/2000-2001/CST Act 56 on the file of the Deputy Commissioner^(CT) Charminar, Hyderabad.

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Between:

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M/s. Lohiya lndustries, Hyderabad.

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...Petitioner

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AND

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The State of A.P. rep. by the State Representative Before the Sales^Tax Appellate Tribunal, A.P., Hyderabad.

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...Respondent

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Counsel for the Petitioner: SRI A.K. JAISWAL

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Counsel for the Respondent: SRI K. RAJ I REDDY

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The Court made the following: COMMON ORDER

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HONOURABLE^{SRI JUSTICE P.SAM KOSTTY} AND HON'BLE SRI WSTICE^{LAXMI NARAYANA ALISHETTY}

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T.R.C.NO.9o 0F^{2005 & TREVC NO.11 0F 2006}

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COMMON^ORDER: G)er^{Hon'bleSri JusticeLaxtni Naragana Atislettyl}

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We have heard^{Sri A.K.Jaiswal, learnedcounsel for the} petitioner and Sri^{K'RajiReddy, learnedsenior Standing} Counsel for the^resPondents.

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T.R.C.No.9O of^{2O05 is filed challenging the order dated} 25.11.2005^{passedin T.A.No.474of 2OO4,whicharises from} final assessment^{order for the assessmentyear2OO0-O1} dated 11.03.2004.^{T.Rev.C.No.11of 2006 is frled challenging} the order dated^{25.11.2005passedin TA'No'617 of 2OO4'} which arises from^{penaltyproceedings of the Assessing} Offrcer for the^{assessmentyear2OO0-O1dated31'O3'2OO4'} Since both the^{matters are inter-connected, the same are} being decided by^{this common order.}

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T. R.C.NO.90^{()F 2005:}

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The present revision^{case is frled by the petitioner} aggrieved by the order^{of the Sales Tax AppellateTribunal(for}

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I SK,] & LN'A J t Rl: No 90 of )a05 & lttt:t7- No I I of2006

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short, Appellate Tribunal,), dated 25.1 1.2OOS in T.A.No.474 of 2OO4.

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By the impugned order, the Tribunal conhrmed the ler.y of higher rate of tax on the direct inter_state sa-les to which C-forms were filed. The Appellate Tribunal, by majority decision, had confirmed the order of the rejection of the Assessing Authority on the claim of concessionar rate of tax ln respect of C-forms.

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5 The brief facts leading to frling of the present revision are as under:

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The petitioner is the registered dealer dealing in manufacture of rehned oils. The petitioner purchases raw crude oil within and outside the State of Andhra pradesh as well as import crude oil from outside the country and manufactures refined oil and sells the same within and outside the State of Andhra pradesh. petitioner filed audit report for the assessment year 2000_01 (CST) as required under A.P.G.S.T. Act and the Rules and claimed exemption on a turnover of Rs.7,78,7g,963 /_ on consignment saIes.

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PSKJ A LN,4,J TR( No.90^{o/ 2005} & I|AVC No ll 012006

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The Assessing Authority i.e., Deputy^Commissioner (CT), Charminar Division, aJter investigating^{into the said} transaction of consignment sales and^{relying upon the} information^gathered by the^{investigating team, hadissued} show-cause notice dated^{O7.O2.2OO2to the petitioner.A} revised show-cause notice dated^{13.O2.2OO2and further,} show-cause notice dated^{27 .OL.2OO4 was also issued,to} which petitioner submitted detailed^{reply along with} voluminous material evidence^{running into 47Opages.} However, the Assessing Authority^{vide order dated} 11.03.2004^passed final^{assessment order for the year2000-} 01 demanding payment of balance^{tax of Rs.49,45,929} l-.

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Aggrieved by the same, petitioner^{preferredappeal} before the Sales Tax Appellate Tribunal^{videT.A.No.474of} 2OO4 along with stay application^{vide TMP No. 152 of 2OO4.} The Sales Tax Appellate Tribunal^{vide order dated 24.O2.2OO5} in TMP No.152 of^{2OO4 passedconditional order dtectingthe} petitioner to pay a sum of Rs. 10.4O,00O/-. Petitioner challenged the^{said order before this Court} in^{W.P.No.6649of} 20O5. This^{Courtvide its orderdated29.O3.2OO5 directed the} petitionerf^{deposit a sum of Rs.3,15,0OO/-} as^petitioner had

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/'5(J,t 1I7./ rRa ,itr 90 rf200j,\ TRIalt No lt of 2t)(ta

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already deposited an amount of Rs. 1,8O,OO0/ - pending appeal before the Appellate Tribunal and directed the Tribunal to dispose of the appeal within two months from the date of the order. Thereafter, the Tribunal passed impugned order dated 25.11.2OO5, which is under cha-llenge.

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The learned counsel for the petitioner submitted that the Assessing Authorit5r, while passing order dated 1 1.03.2004 did not consider the reply along with voluminous material submitted by the petitioner. Learned counsel further submitted that the Appellate Tribunal without appreciating and considering the voluminous documents hled by the petitioner, had confrrmed the order of the Assessing Authority. He further submitted that the Appellate Authority was not right in confrrming the order of the assessing authority, who did not follow the principles of natural justice since no reasonable opportunity was afforded to the petitioner to rebut the evidence gathered by the Department nor was any opportunity was given to the petitioner to crossexamine the Agents from whom the Department was alleged to have collected statements.

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PSK,J & LNA.J TRC )\o 90 of 2005 & I RIjVC No I^{t oI} 2N6

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He further submitted that the^{AppellateTribunal was} not.right in coming to the^{conclusionthat the petitioner had} not furnished any documentary^{evidence in supportof its} claim despite the^{petitioner placing voluminous documenta4r} evidence along with reply^{before the AssessingAuthority,} which includes sale^patties, evidence^{of dispatchof goods,} mode of payment etc., which^{show that the transaction is} otherwise than by way of sale^{as contemplatedunderSection} 6A of the CST Act. He also^{submittedthat the members of} Sales Tax Appellate Tribunal have^{passed threedifferent} conflicting orders relating to factual^{aspectsof the case. He} further contended that the material^{gatheredbythe} Department during the course of investigation^{was not made} available to the^petitioner to enable them^{to rebut and the} sarrre is gross violation of the^{principlesof natural justice.}

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During the course of hearing, learned counsel for^the petitioner had referred to the order passed by the Appellate Tribunal in great detail and also the conflicting observations of the members of the Appellate Tribunal and finally submitted that despite placing voluminous documents including C-forms, .F-Forms,^{the same were not consideredby the assessing}

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PSr_.t & l.nA.J TRC No rA.4 20Aj & tRt.tl: !,to 1l ol )t)05

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authority as well as the Appellate Tribunal. He finally prayed to allow the Revision and set aside the order of the Appellate Tribunal. The learned counsel for the petitioner had also relied upon the^judgment of this Court in case of M/s. J.R.Exports v. The Deputy Commissioner (CTf and othersl in support of his contentions

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Per contra, learned Senior Standing Counsel for the respondent would submit that that the order passed by the Appellate Tribunal is proper and the sarne was passed on due consideration of the material as well as Rules of APGST, 1957. He has specilically referred to Section 6,{ of CST Act, as per which, when the dealer claims that he is not liable to pay tax in respect of the goods sent from one State to another State i.e., to any other place of his business, or to his agent or principal, as the case may be and not by reason of sale, the burden of proving the same is on the dealer.

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l,earned senior standing counsel further contended that since the burden is on the dealer and he has to prove the same either by way of Form-F or any other documentary evidence to show that the transaction is otherwise than by way of sale and

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I 2017 SCC Online Hyd 523

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ISK.J & I,NA-J TRC No 9a af 20oi at TRlivCNotti)406

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also evidence of dispatch of^{goods.He further contendedthat in} the present case,^petitioner did^{not produce evidence and thus,} failed to discharge his burden and^{on the other hand,the} assessing authority had enquired^{into the matter as well as the} material placed by the^{petitioner and havingnot satisfied with} tle same, the assessing authority^{has rightJy passed final} assessment order and hnally^{prayedfor dismissai of the} Revision.

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CONSIDERATIONI

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On careful consideration of^{the facts and material placed,} this Bench is of the view that the^{Tribunal has recorded detailed} reasons for its hndings both on facts^{and law.}

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It is relevant to extract Section 6A^{of the CST Act, which} reads as under:

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(5.6A. Burden of proof, etc., ln case of transfer of goods clalmed otherwlse than by way of^sale. -

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(I) Where any dealer claims that he is not liable to^pay tax under this Act, in respect of any^{goods,on the ground} that the movement of such^{goodsfrom one Stateto} another was occasioned by^{reasonof transferof such} goods by him to any other^place of his business or to^his agent or principal, as the case may^be, and^{not by reason} of sale, the burden of^proving that the^{movementof those} goods was so occasioned shall be on that dealer and for

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-it .:rr.i - ,:!l '

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psK_J ,t LNA..| TR<^.o 9A ol2005 & rP,ltt .\o ll0[2006

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this purpose he may fumish to the assessing authorit]., within the prescribed time or within such further tinle as that authority may, for sufficient cause, permrt, a declaration, duly frlled and signed by the principal officer of the other place of business, or his agent or principal, as the case may be, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, along with the evidence of despatch of such goods² [and if the dealer fails to furnish such declaration, then, the movement of such goods shall be deemed for all purposes of this Act to have been occasioned as a result of salel.

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(2) If the assessing authority is satisfied after making such inquiry as he may deem necessary that the particulars contained in the declaration furnished by a dealer under sub-section (1)3 [are true and that no inter-State sale has been effected, he may, at the time of, or at anY time before, the assessment of the tax payable by the dealer under this Act, make an order to that effect and thereupon the movement of goods to which the declaration relates shall, subject to the provisions of subsection (3)] be deemed for the purpose of this Aclr to have been occasioned otherwise than as a result of sale.

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Explanation. -[n this section, "assessing authoriq/, in relation to a dcaler, means the authodty for the time being competent to assess the tax payable by t}le dealer under this Act.

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(3) Nothing contained in sub-section (21 shatl preclude reassessment by the assessing authority on the ground of discovery of new facts or revision by a higher authority on the ground that the findings of the assessing authority are contrary to law, and such reassessment or revision may be done in accordance with the provisions of general sales tax law of the State.

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PSK,I & LNA,J rRC ;'o 90 t{ ?qt)j & TR[Y('No ll of 2006

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As per clause (1) of Section 6A, a dealer who claims to have effected consignment transfers, either must file F-form or any other documentar5r evidence to show that the transaction is otherwise than by way of sale and also the evidence of despatching of the goods. Clause (2) of Section 6A contemplates that the assessing authority can take up enquiry to ascertain whether the particulars contained in the documentary evidence produced and whether the particulars contained in Form-F hled are correct or not. Therefore, as per clause (i) of Section 6A, the burden is on the dealer to prove that the movement of the goods was not because of sale, but was for transfer of such goods by him to any other place of business or to his agent or principal outside the State.

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The Appellate Tribunal considered and relied upon the following^judgments:

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i) Assam Compaay (India) Ltd., vs. Commlssloner of Taxes, Assam, Gowahatl and others2;

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ii) Commercial Tax OIIicer, Anti Evasion, Alwai v. Goodwill Ilalnt ltrdustries3 ;

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iii) CPK Tradiag Co. V. Addl.Sales Tax OIIicer, III Circle, Malta[chery and aaothefl;

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7 107 SrC 154

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3 117 SII:71

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igs{c 2t

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ISI: J & I,NA.J TRt'J,ia 90 of200j & fRrrcNottof2006

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iv) Ashok Leyland v. State of Tamilnadus;

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v) Jay Industrles v. State of A.P.6.

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The Appellate Tribunal, on due consideration of facts, material, and settled legal position, has come to a conclusion that in terms of clauses (1) and (2) of Section 6A, the burden is cast on the petitioner to prove that the goods have moved otherwise than by way of sales. It is not in dispute that the petitioner has not furnished/produced any documentary evidence while filing CST returns in proof of claim of exemption. Oniy when the assessing auttrority has taken up investigation/ enquiry, the petitioner had addr_rced some documentary evidence. Therefore, the burden so cast on the petitioner to prove that the transactions were effected by it are otherwise, than by way of sale has not been discharged initially at the time of filing of returns.

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Perusal of the order passed by the Appellate^.tribunal clearly reflects that the Appellate Tribuna_l had considered both factual and legal aspects, recorded elaborate reasons while allowing the appeal and also referred to and relied upon various judgments for its conclusion. The Appellate Tribunal had also

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t 134 src +23

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-^{J-14ApsTl 140}

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PSK / & I.NA,J lREY(: No l1 of 2406

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discussed the purport of Section 6A of CST^{Act as well as Rule} 14(3) of under CST Act^(A.P.) Rules, 1957 and^{hnally, confirmed} the order of rejection of the assessing^{authority on the claim of} concessional rate of tax in respect of C-forms.

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The^judgment relied upon by the^{learnedcounsel for} petilioner no way help the contention of the^{learned counsel} since the facts of the said case^{are different and the sameare} distinguishable with the facts of^presentcase.

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In considered opinion of this^Bench, the^submissions made by the learned counsel for^petitioner as^{well as the} observations of the Appetlate Tribunal referred^{to by the learned} counsel for petitioner are all in factual in nature^{and further,} learned counsel for petitioner failed to^point out the^questionof law to be considered by this Bench and therefore, the Revision fail s.

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CONCLUSION:-

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In view of the facts explained above, the petitioner failed to make out any case warranting interference of this Bench with the order passed by the Sales Tax Appellate Tribunal.

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For all the aforesaid reasons, we are of the hrm view that the g.r6tion of law framed by the Court, while admitting the

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I'SK.,J & LN,4 .1 lR( i'o 90 of 200j & fRDt(: Na 1l of 2AA6

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revision, deserves to be decided in the negative. Thus, the TRC No.90 of 2005 desewes to be and is accordingly dismissed, confirming the order of the Appellate Tribunal.

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T.Rev.C.No.l1OF 20o6.

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This case is frled challenging the order dated 2S.11.2O05 of the Appellate Tribunal passed in TA No.617 of 2OO4. By the impugned order, the Appellate Tribunal confirmed thc penalty proceedings of the assessing authority, i..., Deputy Commissioner (CT), Charminar Division dated 31.03.2004. The penalty proceedings dated 31.03.2004 challenged under this revision are consequential to the hnal assessment order dated 11.03.2004.

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Since, T.R.C.No.9O of 2005, which is hled challenging the final assessment order dated 25. I 1.2OOS, is dismissed, consequently, T.Rev.C.No.1 | of 2006, which is hled challenging the consequential penalty proceedings also fails and is accordingly dismissed.

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