IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 24.08.2010 CORAM: THE HONOURABLE MS. JUSTICE K.B.K.VASUKI W.P.Nos.15226 and 15227 of 2010 and M.P. Nos. 1 , 1 of 2010 Tvl.Sastha Enterprises Rep. by its Partner Mrs.V.Unnamalai No.55, Ist floor Anderson Street Chennai-600 001. .. Petitioner Vs. 1.The Appellate Deputy Commissioner (CT)II (FAC) VI Floor, Kuralagam Annex Chennai-108. .. 1st respondent in W.P.No.15226 of 2010 2.The Assistant Commissioner (CT)(FAC) Kothawalchavadi Assessment Circle Chennai-600 108. .. 2nd respondent in W.P. No.15226 of 2010 and sole respondent in W.P.No.15227 of 2010 Prayer in W.P.No.15226 of 2010: Writ Petition filed under Article 226 of the Constitution of India praying for issuance of Writ of Certiorari, to call for the impugned proceedings of the first respondent in AP1/2009/CST and to quash the impugned order dated 24.03.2010 as illegal and contrary to law laid down by the Madurai Bench of the Madras High Court in W.P.Nos.809 to 813 of 2006. Prayer in W.P.No.15227 of 2010: Writ Petition filed under Article 226 of the Constitution of India praying for issuance of Writ of Certiorari, to call for the impugned proceedings of the respondent in CST/92160/2003-2004 and to quash the impugned order dated 26.04.2010 as illegal and contrary to law laid down by the https://hcservices.ecourts.gov.in/hcservices/ Madurai Bench of the Madras High Court in W.P.Nos.809 to 813 of 2006. For Petitioner : Mr.P.R.Kumar (in both W.Ps.) For Respondents : Mr.J.Ganesan Government Advocate (CT) (in both W.Ps.) C O M M O N O R D E R On consent, the writ petitions are taken up for final hearing. 2.Both the writ petitions are filed to quash the re-assessment orders passed by the assessing authority, thereby disallowing the exemption given on transit sales, while W.P. No.15226 of 2010 is filed against the re-assessment orders dated 16.02.2009 pertaining to assessment year 2001-2002 as confirmed by the appellate authority by order dated 24.03.2010, W.P.No.15227 of 2010 filed against the identical re-assessment order for the assessment year 2003-2004. As both the writ petitions are filed by the same partnership against identical orders pertaining to different assessment years for identical reliefs based on identical set of facts involving identical issues, both the writ petitions are disposed of by common order. 3.The petitioner herein, is the registered dealer in papers and boards under the provisions of the Tamil Nadu General Sales Tax Act, 1959 and Central Sales Tax Act, 1956 (hereinafter referred to as TNGST Act and CST Act). The petitioner has for the assessment years 2001-2002 and 2003-2004 effected transit sales to the tune of Rs.5,10,80,073/- and Rs.1,83,21,354/- respectively. Thereafter, he filed the necessary returns along with E1 and C forms having respectively obtained from the original seller and the purchaser. The assessing officer i.e. the Assistant Commissioner (CT) has after detailed study, passed the original assessment order thereby allowing exemption to the turn over in respect of transit sales, however, the same assessing officer has reopened the assessment proceedings and issued notice to the petitioner as to why exemption already granted in respect of transit sales cannot be disallowed and tax liability and penalty be imposed. The same is followed by the re-assessment order thereby disallowing the exemption granted in respect of transit sales in the turn over in the original assessment order. The petitioner has challenged the re- assessment order relating to assessment year 2001-2002 before the first respondent / appellate authority and the first respondent appellate authority has confirmed the order of the assessing authority. Both the assessing authority and the appellate https://hcservices.ecourts.gov.in/hcservices/ authority have in their orders, disallowed the exemption mainly on the ground, the C form obtained from the purchaser and produced by the petitioner herein, is on subsequent verification found to be not genuine as the same was not issued by the concerned assessing authority and has treated the turn over in respect of transit sales as turn over escaping assessment and brought the total amount of turn over with the tax liability and the said orders of assessing authority and appellate authority are now brought under judicial review before this Court in these two writ petitions. 4.According to the learned counsel for the petitioner, the transaction of transit sales is genuinely effected and the same is evident from E1 Form obtained from the original seller and the petitioner cannot be liable for false documents produced on the side of the purchaser and the petitioner has no role in production of such false documents. It is further argued by the learned counsel for the petitioner, inasmuch as the transaction is genuine, the question of disallowing the exemption for the transaction effected does not arise herein and the order of the assessing authority for the assessment years 2001-2002 and 2003-2004 and the order of the appellate authority confirming the re-assessment order relating to the assessment year 2003-2004 are illegal, unfair, arbitrary and contrary to the well laid legal principles. 5.Per contra, the learned counsel for the respondents would strenuously attempt to support the orders impugned herein on the ground that as the C Form licence produced from the purchaser is found to be false, the exemption granted to the petitioner is rightly disallowed by the authorities concerned. 6.Heard the rival submissions made on both sides and the records are perused. 7.It is true that the exemption allowed to the petitioner in the original assessment order is based on E1 Form obtained from the original seller and C Form obtained from the actual purchaser of the goods. It is equally true that once the transaction of transit sales is over, the petitioner has no control over the purchaser and he has no occasion to verify the C Form produced from the side of the purchaser. The petitioner has only submitted the document as it is given to him by the purchaser. On the basis of the documents produced from the seller as well as the purchaser, the petitioner was granted concession in the original assessment order. However, the same concession is disallowed because of the act of fraud said to be committed by the purchaser in respect of, which the petitioner has no control once the transaction is over. Unless and otherwise, it is based on concrete material, found out that the transaction is not true or the petitioner is party to the act of fraud said to be committed by the purchaser, the question of https://hcservices.ecourts.gov.in/hcservices/ disallowing the exemption already given to the petitioner for the transaction actually effected between the parties, does not at all arise. 8.The learned counsel for the petitioner has also in the course of argument drawn the attention of this Court to an order passed by the Hon'ble Division Bench of our High Court in the batch of writ petitions dated 04.12.2001 in W.P. No.10610 of 2000 and order dated 12.07.2007 in the batch of W.P.Nos.809 to 816 of 2006, while the subject matter of the scrutiny in the case decided by the Hon'ble Division Bench is Form-17, the document under dispute in the batch of writ petitions decided by the Hon'ble Single Judge of this Court in C form. In both the writ petitions, the Hon'ble Division Bench and the learned Single Judge are of the view that it is not the duty of the seller dealer to launch any enquiry as to whether or not either Form 17 or C Form produced by the buyer is genuine or not and as the seller dealer has acted in good faith upon the buyer's representation, he is entitled to the benefit of concessional rate of tax. Both the orders passed are based on the earlier Judgment of Supreme Court. The Division Bench has referred to the three Bench Judge of the Apex Court reported in Volume-18 STC 222 in the State of Madras v. Radio and Electricals Limited and another, whereas the learned Single Judge of this Court in para-6 at page-6 of its order referred to various Judgments of Supreme Court, other High Courts and our High Court, which are relied upon by the petitioners therein, in support of his contention that the seller dealers cannot be held for higher tax liability and consequential penal action for the false declaration of the documents produced on the side of the buyer and it is for the revenue to take action against the purchaser dealer in accordance with law under the provisions of Act and the exemption cannot be disallowed. As a matter of fact, the learned Single Judge has in the batch of writ petitions set aside not only the re-assessment orders, but also the demand for additional tax as well as penalty, without any relief being asked for to that effect. The impugned assessment orders are set aside mainly on the ground that it is for the revenue to proceed against the purchaser dealer for any controversion of law for giving wrong declaration in the manner known to law and no penal action can be warranted against the seller dealer. 9.It is strenuously argued on behalf of the petitioner herein that in spite of the ratio laid down in the Judgments as above referred to is brought to the notice of both the assessing authority and the appellate authority, the impugned orders came to be passed without considering the legal position, if that is so, applying the ratio laid down in the orders above referred to, the impugned orders are liable to be quashed, however, with liberty given to the revenue to proceed against the purchaser dealer for any controversion in the manner known to law. https://hcservices.ecourts.gov.in/hcservices/ 10.In the result, the writ petitions are allowed as prayed for. The connected miscellaneous petitions are closed. No costs. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar. kj To 1.The Appellate Deputy Commissioner (CT)II (FAC) VI Floor, Kuralagam Annex Chennai-108. 2.The Assistant Commissioner (CT)(FAC) Kothawalchavadi Assessment Circle Chennai-600 108. 2 ccs to Mr.P.R. Kumar, Advocate, Sr. 62711, 62712 1 cc to Spl. Government Pleader, Sr. 62886 W.P.Nos.15226 and 15227 of 2010 and M.P. Nos. 1 , 1 of 2010 GG (CO) kk 21/9 https://hcservices.ecourts.gov.in/hcservices/