W.P.(C) No.23291/2016 - M/S BPL Ltd. v. State of Kerala and The Assistant Commissioner, Department of Commercial Taxes, Palakkad

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE N.NAGARESH** **TUESDAY, THE 26[TH] DAY OF JULY 2022 / 4TH SRAVANA, 1944** **WP(C) NO. 23291 OF 2016** ## **PETITIONER** **M/S BPL LTD BPL WORK, KOOTTUPATHA, PALAKKAD 679 335 REPRESENTED BY ITS COMPANY SECRETARY MR. D.KRISHNAN** **BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.RAJA KANNAN** ## **RESPONDENTS** - **1 STATE OF KERALA REPRESENTED BY ITS SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM 695 001** - **2 THE ASSISTANT COMMISSIONER DEPT OF COMMERCIAL TAXES, SPECIAL CIRCLE, PALAKKAD 678 001** **BY SMT.RESMITHA R CHANDRAN, GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.23291/2016 : 2 : ## **CR** ## **N. NAGARESH, J.** ````````````````````````````````````````````````````````````` ## W.P.(C) No.23291 of 2016 ````````````````````````````````````````````````````````````` _Dated this the 26[th] day of July, 2022_ ## **J U D G M E N T** ~ ~ ~ ~ ~ ~ ~ ~ ~ The petitioner, an incorporated Company and an assessee under the Central Sales Tax Act, 1956 and the Kerala Value Added Tax Act, 2003, is before this Court seeking to quash Ext.P5 and to direct the 2[nd] respondentAssistant Commissioner of Commercial Taxes to consider an assessment afresh, after affording an opportunity of hearing to the petitioner. 2. The petitioner states that the 2[nd] respondent completed assessment of the petitioner under the Central Sales Tax Act, 1956 for the year 2013-'14 by assessing the W.P.(C) No.23291/2016 : 3 : turnover of inter-State stock transfer at ₹20,00,95,588/- at the rate of 5% for non-production of Form-F, as per Ext.P1 Assessment Order dated 12.10.2015. The said assessment was made overlooking the fact that the officer who initiated assessment had given time to the petitioner for producing Form-F. 3. The petitioner hence filed W.P.(C) No.38553 of 2015, which was disposed of by this Court as per Ext.P2 judgment dated 18.12.2015 permitting the petitioner to file Form-F within one week and directing the 2[nd] respondent to reassess the tax. The petitioner produced Form-F to the tune of ₹15,52,67,558/- within one week, by 25.12.2015. The petitioner further produced Form-F for ₹66,05,067/- as per Ext.P3 letter dated 07.01.2016 and for ₹46,88,916/- as per Ext.P4 letter dated 21.01.2016. The 2[nd] respondent passed Ext.P5 fresh assessment order dated 30.03.2016, considering Form-F for ₹15,52,67,558/- only. 4. Exts.P3 and P4 Forms-F were ignored while passing Ext.P5. The petitioner hence filed Ext.P6 rectification W.P.(C) No.23291/2016 : 4 : application dated 22.06.2016. The petitioner states that apart from Exts.P3 and P4, the petitioner holds Form-F for turnover of ₹1,03,38,782/- and ₹22,13,327/-, as detailed in Ext.P7 Statement. The petitioner states that the non-production of Forms-F in time was for reasons beyond the control of the petitioner. From 2013-'14, the operation of Palakkad Unit of the Company was completely discontinued and all assessment related work had to be handled from Bangalore. It was difficult for the petitioner to retrieve Forms from the closed Unit at Palakkad. The 2[nd] respondent has passed Ext.P5 order in a mechanical manner. 5. Government Pleader entered appearance and resisted the writ petition. The petitioner has an alternate remedy against the assessment order, it was pointed out. The case of the petitioner does not fall under any of the exceptions to the rule of alternate remedy reiterated by the Hon’ble Apex Court in _**Genpact India Private Limited v. Deputy Commissioner of Income Tax and another** [2019 SCC OnLine SC 1500]_ , urged the Government Pleader. W.P.(C) No.23291/2016 : 5 : 6. This Court, in Ext.P2 judgment dated 18.12.2015, granted one week time to the petitioner to make available Form-F with a rectification application. The respondents were directed to pass a fresh assessment order expeditiously. The period stipulated by this Court for submission of Form-F expired on 25.12.2015. The petitioner produced Form-F only for a turnover of ₹15,52,67,558/-, which was taken into account while passing Ext.P5 order. 7. The 2[nd] respondent is not bound to consider any Form-F produced by the petitioner subsequently. This Court, in Ext.P2 judgment, directed that a fresh assessment “shall be made expeditiously”. Hence, Ext.P5 order was passed on 30.03.2016. The petitioner has to blame itself for non-production of Forms even within the extended time. 8. The Government Pleader pointed out that in the judgment in _**Kochi Refineries Ltd. V. State of Kerala** [2011 (4) KLT SN 123]_ , this Court has held that the Tribunal has no powers to grant indefinite time to obtain C Forms for production at any time the Dealer wants. In the judgment in W.P.(C) No.23291/2016 : 6 : ST(Rev) No.28 of 2016, a Division Bench of this Court imposed heavy costs on the assessee for failure for production of C Forms in time. 9. The Government Pleader relied on the judgment of the Hon’ble Karnataka High Court in _**New Kiran Cashews v. Union of India and others** [(2007) 9 VST 220 (Karn.)]_ to contend that when statute provides a mechanism for the assessees to produce proof to show that a transaction is one of simple transfer and not one of sale, the assessee should stick to the manner in which proof is to be produced. The petitioner is liable to face the consequence of its failure to produce Forms-F even within the extended time granted by this Court in Ext.P2, asserted the Government Pleader. 10. Heard the learned counsel for the petitioner and the learned Government Pleader representing the respondents. 11. For the assessment year 2013-'14, the 2[nd] respondent assessed the turnover of inter-State stock transfer at ₹20,00,95,588/-. The petitioner could not produce W.P.(C) No.23291/2016 : 7 : certain Forms-F before the assessment. In fact, the Assessment Officer had granted time to the petitioner to produce Forms-F, which were not produced. Ext.P1 Assessment Order was passed without noting the said fact. The petitioner hence filed W.P.(C) No.38553 of 2015 and this Court permitted the petitioner to produce additional Forms-F within one week from 18.12.2015. The petitioner produced Form-F for ₹15,52,67,558/- within one week. 12. The grievance of the petitioner is that apart from the said Form-F for ₹15,52,67,558/-, the petitioner had produced Exts.P3 and P4 Forms-F by 21.01.2016, before the reassessment, which was on 30.03.2016 only. Yet, the 2[nd] respondent ignored Exts.P3 and P4 Forms-F while passing Ext.P5 order dated 30.03.2016. The defence of the 2[nd] respondent is that this Court, as per Ext.P2 judgment, granted the petitioner only one week time from 18.12.2015 to produce additional Forms-F and the 2[nd] respondent is not liable to consider any Forms produced thereafter. W.P.(C) No.23291/2016 : 8 : 13. Section 6A of the Central Sales Tax Act, 1956 deals with the situation where a Dealer claims that he is not liable to pay tax under the Act in respect of any goods, on the ground that the movement of such goods from one State to another, was in fact a transfer of such goods by him to any other place of his business, or to his agent or Principal, and was not consequent to any sale. Section 6A reads as: ## _**6A. Burden of proof, etc., in case of transfer of goods claimed otherwise than by way of sale**_ — (1) 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 goods from one State to another was occasioned by reason of transfer of 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 movement of those goods was so occasioned shall be on that dealer and for this purpose he may furnish to the assessing authority, within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration, duly filled 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 goods 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 sale. W.P.(C) No.23291/2016 : 9 : (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) 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 sub-section (3), be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale. (3) Nothing contained in sub-section (2) shall 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. Explanation — In this section, "assessing authority", in relation to a dealer, means the authority for the time being competent to assess the tax payable by the dealer under this Act. To avail the benefit of Section 6A, the Dealer has to furnish to the assessing authority within the prescribed time or within such further time as that authority may, for sufficient cause, permit, a declaration duly filled and signed by the Principal Officer of the other place of business. 14. Rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957 provides that: W.P.(C) No.23291/2016 : 10 : The declaration in Form C or Form F or the certificate in Form E-I or Form E-II shall be furnished to the prescribed authority within three months after the end of the period to which the declaration or the certificate relates: Provided that if the prescribed authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration or certificate within the aforesaid time, that authority may allow such declaration or certificate to be furnished within such further time as that authority may permit. 15. Section 6A would show that any claim to show that transfer of goods is otherwise than by way of sale should be made by a declaration in the prescribed Form and must be made “within the prescribed time or within such further time as that authority may, for sufficient cause, permit”. It is evident from Section 6A(1) that if sufficient cause exists, the assessing authority has to permit submission of declaration beyond the prescribed time. Section 6A(2) contemplates an enquiry by the assessing authority to ascertain the truthfulness of the declaration/claim. Nevertheless, such declaration has to be filed “within the prescribed time or within such further time as the authority may permit”. W.P.(C) No.23291/2016 : 11 : 16. The proviso to Rule 12(7) is drafted in a more liberal language and states that if the authority is satisfied that the person/assessee was prevented by sufficient cause from furnishing such declaration in time, that authority may allow such declaration to be submitted within such further time as that authority may permit. It is therefore evident that the assessing authority may permit submission of declaration even after the prescribed period, provided the authority is satisfied that the person/assessee was prevented by sufficient cause from submitting the declaration within the time prescribed. The assessing authority is expected to make an enquiry also on the claim made by the assessee. Nevertheless, it has to be kept in mind that the power given by Section 6A is for the purpose of assessment of tax and therefore, the assessing authority may not be justified in granting time for submission/production of declarations, after passing an assessment order. 17. However, in the petitioner's case, the specific pleading of the petitioner is that before passing the first W.P.(C) No.23291/2016 : 12 : assessment order at Ext.P1, the earlier assessing authority had given time to the petitioner to produce additional Forms-F by the petitioner. It is in such circumstances that this Court interfered in Ext.P1 assessment order and unsettled Ext.P1 order, for assessment afresh. 18. Though this Court did not specifically set aside Ext.P1, the direction was for fresh assessment. Assessment order afresh was passed on 30.03.2016. But, before the said assessment, the petitioner had submitted Exts.P3 and P4 Form-F declarations. As the assessment proceedings were open, the 2nd respondent ought to have considered Exts.P3 and P4 Form-F declarations which were submitted by the petitioner before the said assessment and should have ascertained whether the petitioner had sufficient cause to produce the declarations belatedly. 19. The consistent case of the petitioner is that their Palakkad Unit was shut down permanently and the concerned Department was operating from Bangalore, which caused hurdles for the petitioner to obtain Form-F W.P.(C) No.23291/2016 : 13 : declarations. It was in the said circumstances that this Court interfered in the assessment proceedings and passed Ext.P2 judgment. If the statement is true, _prima facie_ the petitioner had reasons for delayed submission of Forms-F and any such declarations filed by the petitioner ought to have been taken note of by the 2nd respondent and subjected to such enquiry the assessment authority deems fit. 20. This Court is of the firm view that when the authority is empowered by the CST Rules to accept belated filing of Forms-F, the authority has to exercise the said power in a just, equitable and judicious manner. The very empowerment under the proviso to Rule 12 is intended to arrive at a fair assessment of tax, without sticking to the technicality of limitation, when an assessee submits Form-F after the stipulated time for justifiable reason/s. Hence, when the petitioner produced Exts.P3 and P4 Forms-F before the reassessment, the 2[nd] respondent should have considered whether the petitioner was prevented by sufficient cause from producing the declarations. W.P.(C) No.23291/2016 : 14 : 21. Form-F is a declaration of inter-State stock transfer which does not amount to sale. When an assessing authority treats such inter-State Stock transfer as sale, the assessee will be subjected to excessive taxation, which is not the intent of the CST Act or of any other taxation statute, for that matter. The petitioner is entitled to succeed for the afore reasons. The writ petition is therefore allowed. Ext.P5 is set aside. The petitioner is granted one month time to submit additional Form-F declarations for the year 2013-'14. The 2[nd] respondent is directed to make assessment afresh for the year 2013-'14, in accordance with law. Sd/- **N. NAGARESH, JUDGE** aks/25.07.2022 W.P.(C) No.23291/2016 : 15 : ## **APPENDIX OF WP(C) 23291/2016** ## **PETITIONER'S EXHIBITS** **EXHIBIT P1 THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 12-10-2015 PASSED BY THE 2ND RESPONDENT FOR THE YEAR 201314 UNDER THE CST ACT** **EXHIBIT P2 THE TRUE COPY OF THE JUDGMENT DATED 18-12-2015, IN W.P(C) NO 38583/2015,PASSED BY THE HON'BL COURT OF KERALA EXHIBIT P3 THE TRUE COPY OF THE LETTER DATED 07-01-2016 FILED BY THE PETITIONER AND ACKNOWLEDGED BY THE 2ND RESPONDENT** **EXHIBIT P4 THE TRUE COPY OF THE LETTER DATED 21-01-2016 FILED BY THE PETITIONER AND ACKNOWLLEDGED BY THE 2ND RESPONDENT** **EXHIBIT P5 THE TRUE COPY OF THE ORDER OF ASSESSMENT DATED 30-03-2016 ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 201314,UNDER THE CST ACT** **EXHIBIT P6 THE TRUE COPY OF THE RECTIFICATION APPLICATION DATED 22-06-2016 FILED BY THE PETITIONER AND ACKNOWLEDGED BY THE 2ND RESPONDENT** **EXHIBIT P7 THE TRUE COPY OF THE STATEMENT OF FORM F AND COPIES OF FORM F REPRESENTING THE TURNOVER OF RS. 1,03,38,782/- AND RS. 22,13,327/-**