M/S.V.N.C.Steel vs. The Assistant Commissioner(CT)

Held

The Court allowed the writ petitions. Firstly, on the issue of jurisdiction, the Court held that the Assessing Authority lacked the power to pass assessment orders under Section 27(1)(a) of the Act in the absence of an original assessment framed under Section 22(4). The Court reasoned that Section 27 is intended for escaped turnover or wrong availment of input tax credit, which requires a prior determination of the original turnover. In the absence of such an original assessment, a re-assessment is not permissible under the scheme of the Act. Secondly, on the merits, the Court referred to the Supreme Court's decision in Sodhi Transport Co. and the Commissioner's Circular No. 26/2014. The Court noted that the State itself had accepted that non-submission of a transit pass is not fatal if the dealer can produce legally valid documentary evidence proving inter-state movement. Since the petitioners had admittedly moved the goods under 'C' declaration forms and provided other documents evidencing inter-state movement, which was not denied by the Assessing Officer, the impugned orders were quashed.

Facts

The petitioners, M/s. V.N.C. Steels and M/s. V.N.C. Steel Distributors, are dealers of goods falling under the sixth schedule of the Act. For the period 2013-14, they transported goods from Tamil Nadu to West Bengal. While they obtained transit passes, these were not produced at the final check post before exiting the state. Consequently, the Assistant Commissioner (CT) detained the goods and issued notices. The petitioners contended that the goods had indeed moved inter-state and produced evidence like 'F' Forms. Despite this, the respondent proceeded to pass impugned orders under Section 27(1)(a) r/w 70(2)(c) of the Act, bringing the entire turnover to tax and imposing penalty, treating the goods as sold within the state due to non-surrender of the transit pass.

Key Issues

1. Whether the Assessing Authority had the jurisdiction to pass the impugned assessment orders under Section 27(1)(a) read with Section 70(2)(c) of the Act, in the absence of an original assessment framed under Section 22(4) of the Act? 2. Whether the non-production of a transit pass at the final check post, despite evidence of inter-state movement of goods, is sufficient ground to bring the entire turnover to tax under State law and impose penalty? Petitioner's arguments: The petitioner argued that the assessment was illegal as it was made under Section 27(1)(a) without a prior original assessment, rendering the reassessment invalid. They also contended that even if the transit pass was not surrendered, they had provided sufficient documentary evidence, including 'F' Forms, to prove the inter-state movement of goods, as permitted by the Commissioner's Circular No. 26/2014. Revenue's arguments: The respondent relied on Section 70(1)(c) of the Act, which deems goods as sold within the state if the transit pass is not produced at the last check post, making the owner liable for tax and penalty.