Case: Ashok Leyland Limited Vs. Union of India &amp; Others

2. Ashok Leyland Limited, the appellant herein, is one of the major manufactures of trucks and other motor vehicles in India. Its registered office is at Madras (Chennai). The plants manufacturing trucks and motor vehicles are situated in the State of Tamil Nadu as well as in other States. The trucks and vehicles manufactured by it are sold all over the country. For its business purposes, it maintains Regional Sales Offices (RSOs) in different parts of the country like, Bangalore, Trivandrum, Vijayawada Pune, Nagpur, Indore, Calcutta, Bhuvaneshwar, Gauhati, Pondicherry, and so on. The appellant says that each of these RSOs maintains an office, a stock yard and other necessary paraphernalia for receiving, stocking, repairing and delivering motor vehicles to their customers. The appellant says that almost seventy percent of its sales are to parties other than State Transport Undertakings (STUs). The sales to STUs, are in the region of thirty percent of its production. The RSOs, the appellant says, contact the local purchasers and the STUs, book the orders and also deliver the vehicles to them pursuant to sales effected by them. The appellant always keeps the RSOs well stocked having regard to their requirements. By way of illustration, it is stated, the RSO at Hyderabad receives vehicles from Tamil Nadu from time to time. In respect of vehicles sold in Andhra Pradesh - whether to Andhra Pradesh State Road Transport Corporation or to other parties - sales tax is levied and collected by the State of Andhra Pradesh inasmuch as they are intra State sales for the purpose of the Andhra Pradesh General Sales Tax Act. Over the years, the appellant says, it has been sending the trucks, chassis and other vehicles to RSOs all over the country under F Form and at no time was the correctness of the F Forms produced by it questioned by any one. However, the State of Tamil Nadu has been seeking, in the recent times, to reopen the concluded assessments contending that the transfer of vehicles from Tamil Nadu to other States was not mere consignments (without effecting sales) but constitute inter State sales within the meaning of Clause (a) of S.3 of the Central Sales Tax Act, which are taxable in the State of Tamil Nadu by virtue of the provisions of the Central Sales Tax Act. The attempt of the State of Tamil Nadu is to treat the said movement of vehicles as inter State sales and tax them which would ultimately go back to that State by virtue of the provisions contained in Art.269 and 286 of the Constitution and the Central Sales Tax Act. The appellant says that it did not effect any inter State sales and that there was only one sale in the other State which has already been taxed under the sales tax law of that other State. The appellant complains that the same transaction cannot be taxed twice, once as an intra State sale by one State and again by the State of Tamil Nadu as an inter State sale. The appellant complains that the reopening of assessments in some cases, even the reassessment has been made and Central sales tax levied - and taxing the same transaction once against (by the State of Tamil Nadu is causing serious harassment to the appellant, making it impossible for it to carry on its business operations in a smooth and orderly manner, it approached the Madras High Court with the said grievance. Though a number of factual issues were also raised in the writ petitions filed by the appellant, it was stated by their counsel at the time of hearing that they do not propose to invite the decision of the High Court on these factual issues and that they would confining their submissions only to the questions of law, viz., the interpretation of S.6A of the Central Sales Tax Act and the power to reopen the orders accepting F Forms. In certain other writ petitions filed by the appellant, several State governments were impleaded as respondents. The Prayer in these writ Petitions was that inasmuch as sales to STUs, of those States are being treated and taxed as inter State sales by the State of Tamil Nadu, the levy of tax under the other State sales tax enactments treating the very sales as intra State sales within those respective States is unsustainable, and, therefore, those State governments should be directed to refund the tax collected by them to the appellant. The High Court has dismissed the writ petitions holding that (i) the Madras High Court cannot direct the other State government to refund the tax levied and collected under their respective State sales tax enactments. The appellant has to approach the authorities under those Acts or the courts in those States for such relief, if they are so advised. (ii) the provisions contained in S.6A have no special status or content and cannot be elevated to the status of a constitutional provisions; it is like any other provision under the Central Sales Tax Act. The order accepting Form F is nothing more than a step in aid of, or a part and parcel of, the assessment proceedings, (iii) an order passed by the assessing authority accepting Form F cannot be reopened except in accordance with S.16, 32 and 55 of the Tamil Nadu General Sales Tax Act read with Sub-sections (2) and (2A) of S.9 of the Central Sales Tax Act. A mere change of opinion is not sufficient to reopen the order accepting Form F. Having declared the law thus, the High Court directed the appellant to prefer appeals before the appropriate appellate authority where an order of assessment has been made and to go and show cause to the assessing authority where the appellant has approached the High Court at the stage of show cause notice.

Court's reasoning:
12. We find difficult to agree with Sri Parasaran that S.6A creates a conclusive presumption. It is true that if the particulars stated in the declaration/Form F are found to be true, the assessing authority shall pass an order, either at the time of making of the assessment or at any time before, that the contents of Form F are accepted as true. On such order being made, it shall be deemed that the movement of goods to which the form relates has been occasioned otherwise than as a result of sale. But there are no words in S.6A which can be said to create a conclusive presumption or clothe the "deemed" fact with a conclusive character. All that it says is that if the particulars stated in Form F are true, certain fact shall be presumed - or shall be or deemed to have taken place, as the case may be. It is not possible to agree that the word "deemed" in Sub-section (2) of S.6A can be understood as creating a conclusive presumption nor is it possible to agree that the fact "deemed" is final and conclusive. S.6A merely states a rule of evidence. It says that where a dealer claims that certain goods have been moved from one State to another and that such movement has occasioned otherwise than as a result of sale, the burden of proving the same lies upon him. Besides creating the said rule of evidence, the section also sets out how the said burden can be discharged. It can be discharged by producing Form F and on the particulars stated in the said form being found true on being enquired into by the assessing officer. From this it does not follow that once an order is made accepting Form F as true, it is not subject to the power of reopening or revision contained in S.16 and 32 of the Tamil Nadu General Sales Tax Act read with S.92 of the Central Sales Tax Act. After all, S.6A is also one of the provisions in this Act. There is no reason to elevate it to a higher status than the rest of the provisions. If it were the intention of the Parliament to invest the "deemed" fact with the status of a conclusive presumption, the Parliament would have said so. The Court cannot supply that requirement. Ordinarily speaking, an order accepting or rejecting - Form F as true will be passed only during the assessment proceedings. There may be cases where such an order is passed earlier to the making of the assessment. Even so, such an order is incidental to and integrally connected with the assessment of the dealer. The High Court has characterised the said provision as a step in aid of assessment. Be that as it may, if the very assessment is subject to the power of reopening or revision, it is ununderstandable as to how an order under S.6A(2) is not similarly amenable. The power to reopen can be exercised under S.16 of the Tamil Nadu General Sales Tax Act "where for any reason, the whole or any part of the turnover of business of a dealer has escaped assessment to tax". The power is very wide, though it may be that it should not be mechanically or lightly exercised.We are, therefore, of the opinion that S.6A does not create a conclusive presumption and that an order accepting Form F, whether passed during the assessment or at any point earlier thereto, is ultimately a part and parcel of the order of assessment. Its amenability to power of reopening and revision depends upon the provisions of the concerned Slate sales tax enactment by virtue of S.9(2). It is also not possible to agree that an order under S.6A(2) has an independent existence. It does not have. An order refusing to accept Form F may or may not be appealable independently depending upon the provisions of the local sales tax enactment but it is certainly capable of being questioned in the appeal preferred against the order of assessment - for the simple reason that an order accepting or rejecting Form F does affect the quantum of turnover taxable under the Act. So far as the power of reopening is concerned, it is enough for us to say that if the order(s) accepting Form(s) F is sought to be reopened, it can be done as part of reopening of assessment or, may be, independently - that depends upon the language of the relevant provision in the local sales tax enactment. In the present case, the provision relevant is S.16 of the Tamil Nadu General Sales Tax Act. From the language of S.16, it appears that it may be possible to reopen an order accepting Form F as true without, at the same time, reopening the assessment. Even so, it must be noticed that such a reopening necessarily leads to revision/modification of the assessment order. It is equally obvious that if the reopening is confined to the order accepting Form F as true, the inquiry shall be confined to the matters relevant thereto. Whether that power has been exercised validly in these cases does not fall for our consideration. Hence, no opinion need be expressed on that aspect. The fact that the assessments are sought to be reopened only in respect of the turnover relating to sale of vehicles to State Transport Undertakings in various State but not with respect to turnover relating to sales to persons other than STUs cannot be a ground to invalidate the proceedings taken.Having thus disposed of the main contentions of the appellant, we must yet say that the situation the appellant is facing is no doubt real, which may indeed put it in good amount of jeopardy. If the vehicles which have been sold to, say, Maharashtra STU have been moved to the appellants RSO in Maharashtra and that RSO has issued Form F (which Form F has been accepted by the Tamil Nadu authorities during the course of assessment of the appellant for the relevant assessment year) reopening the said assessment/orders accepting Forms F after a number of years, seeking to treat the said movement of goods as consequent upon or incidental to contract(s) of sale (and, therefore, amounting to inter State sale taxable in the State of Tamil Nadu does present the appellant with a serious problem inasmuch as it says that it has already paid tax on sale of said vehicles in Maharashtra under the Bombay Sales Tax Act.In the interest of inter State trade and commerce, the suggestion for creation of a central mechanism to decide such dispute - which are really in nature of inter State disputes - may be well worth considering; every dealer affected may not be in a position to approach this Court for appropriate directions. It is for the Government of India to consider this aspect and take necessary decision in that behalf.