Shrana Industries vs Appellate Deputy Commissioner (CT) IV, Chennai and Another

Mrs. Chitra Venkataraman, J.—The petitioner has approached this court earlier in W. P. No. 26555 of 2004 (Sharana Industries v.

Commercial Tax Officer) challenging the assessment order dated July 7, 2004 on the ground that the order passed is contrary to the decision of

this court rendered in W. P. No. 10810 of 2000 dated December 4, 2001.

The said claim is related to the proceedings taken against the petitioner in respect of form XVII transactions. The petitioner contended that when

the goods are sold in form XVII, the Revenue cannot take action against the seller who has no obligation to enquire into whether the buyer is

engaged in process of manufacture or utilised the goods sold for the above-said purpose. Going by the decision rendered by this court in W. P.

No. 10810 of 2000 resulting in setting aside the order, the matter was remitted back to the assessing officer to determine the turnover covered by

valid form XVII.

Admittedly a revised order was passed on September 29, 2009 by giving effect, to this court''s order, refixing the turnover. The respondent

raised a demand for a sum of Rs. 24,970 after giving credit to the tax already paid and a sum of Rs. 1,249 was also demanded by way of

surcharge. The second respondent also imposed penalty u/s 16(2) of the Tamil Nadu General Sales Tax Act. Aggrieved by the said order, the

petitioner filed an appeal before the Appellate Assistant Commissioner, the first respondent herein. By order dated December 10, 2009, the

second respondent initiated recovery proceedings. In the meantime, the petitioner''s appeal filed before the Appellate Assistant Commissioner was

rejected on the ground that the order passed is not an appealable one as per the ratio of the judgment in Sumangala Steels Limited v. Chairman,

Tamil Nadu Sales Tax Appellate Tribunal [2004] 137 STC 517 (Mad). The petitioner was asked to show cause as to why the appeal should not

be rejected as not admissible.

It is seen that subsequent to the filing of the writ petition, the appellate authority has sent a notice as stated above indicating its intention to reject

the appeal. The learned counsel for the petitioner submitted that when this court had set aside the order in toto as against the assessment passed

u/s 16 of the Tamil Nadu General Sales Tax Act, 1959 on September 29; 2009, the petitioner has the right of appeal to the appellate authority and

hence, the appeal was rightly filed.

Per contra, the learned counsel for the Additional Government Pleader appearing for the respondents submitted that the impugned order is

passed consequent to the order passed by this court directing the assessing authority to reconsider the claim on form XVII turnover. Consequently,

there can be no cause of action to challenge the assessment order in respect of other issues.

It is seen that the decision rendered by the learned single judge in Sumangala Steels Limited v. Chairman, Tamil Nadu Sales Tax Appellate

Tribunal reported in [2004] 137 STC 517 (Mad) confirmed by the Division Bench of this court in Sumangala Steels Ltd. Vs. The Chairman,

Tamilnadu Sales Tax Appellate Tribunal, The Appellate Assistant Commissioner (CT-IV) and The Deputy Commercial Tax Officer, holding that

the rectification of assessment was not an appealable order. A perusal of the said decision shows that in the reported decision, the original

assessment therein was made on the petitioner under the Tamil Nadu General Sales Tax Act in respect of stock transfers not covered by form F

and turnover of inter-State sales covered by C forms. Subsequently the assessee filed form F pertaining to the turnover of stock transfer. After

verification of form F declaration, by order dated May 31, 2000, the assessing authority allowed the claim. As against the order, the

petitioner/assessee filed an appeal disputing the levy of tax at eight per cent on consignment sales not covered by form F. The appellate authority

rejected the appeal as not maintainable. Further the writ petition filed by the assessee was dismissed by this court. On appeal, the Division Bench

of this court held that when the officer had accepted the form F declarations and deleted the portion of the turnover from the liability, to that extent,

the order passed on March 24, 2000 stood rectified. Consequently, there was no change in the liability as regards the inter-State sales covered by

form C and consignment sales not covered by form F and thus the order passed on May 31, 2000 rectifying the first assessment order dated

March 24, 2000 was only a rectification. Since the order passed on May 31, 2000 is not an appealable order, no relief could be granted to the

petitioner. Further, it was pointed out by the Division Bench that under the appeal provisions in sections 31 and 31A, orders passed u/s 55 are not

appealable.

The situation in the case on hand cannot be compared to the reported decision. It is no doubt true that the directions of this court was as regards

the turnover covered by form XVII. However, while passing orders, this court set aside the entire assessment and had given directions to the

assessing authority to reconsider the matter afresh, particularly as regards the turnover covered by form XVII. Consequent on that, the assessing

authority had considered the claim pertaining to form XVII and passed the order on September 29, 2009. A perusal of the order dated September

29, 2009 shows that while working out the relief, the assessing authority has made fresh demand on refixation of turnover of sales by way of

reassessment.

The learned Additional Government Pleader submits that the order impugned is only a giving effect order, consequently no appeal will lie.

Though the said argument would be an acceptable one, if the order passed had confined itself to issue form XVII consequent on this court''s

directions, yet, as already pointed out, when the order passed on September 29, 2009 resulted in refixing of the turnover in entirety, the order

cannot be viewed as a mere consequential order. Quite apart, from that, even though other issues were not considered in the orders passed by this

court, yet, a reading of the order in W. P. No. 26555 of 2004 (Sharana Industries v. Commercial Tax Officer) dated November 14, 2007 shows

that the assessment order dated July 7, 2004 in entirety stood set aside. In the circumstances, going by the order passed by this court, the

refixation of the turnover and penalty imposed cannot be read as mere re-fixation. As such, I have no hesitation in allowing the writ petition with a

direction to the petitioner to deposit the entire tax within a period of ten days from today. On such deposit, the appellate authority shall take up the

appeal on file and hear the same on the merits. In the meantime, there shall be a stay of recovery of penalty imposed on the petitioner u/s 16(2) of

the Act.

In the circumstances, the writ petition is allowed by quashing the recovery proceedings initiated by the second respondent subject to compliance

with the above stated condition. No costs. Consequently, connected MPs are closed.