National Mineral Development Corporation Limited vs Commercial Tax Officer and Others

P. Venkatarama Reddi, J.—The petitioner seeks a writ of certiorari quashing the impugned order dated October 20, 1999 in R.C. No. 1396/99-2000 passed by the first respondent herein. By the said order, the petitioner-company was subjected to tax under the Central Sales Tax Act, 1956 (hereinafter referred to as "the C.S.T. Act") on a turnover of Rs. 11,58,49,711 and tax of Rs. 1,17,65,468 was demanded. Originally by an order dated September 6, 1995, the petitioner was assessed to tax for the year 1992-93 under the Central Sales Tax Act on a net turnover of Rs. 26,20,711 by the assessment order dated September 6, 1995. The impugned order which was passed on October 20, 1999 purports to be a revised assessment order made as a sequel to the order of the Sales Tax Appellate Tribunal in T.A. No. 413 of 1996 arising out of APGST assessment for the year 1992-93. The disputed turnover in T.A. No. 413 of 1996 was Rs. 11,76,29,000 which is made up of two items : (1) "premium" received by the petitioner on "surrender" of REP licences to State Bank of India ; (2) Amount received from MMTC on account of sale of licences ("exim-scrips") effected by MMTC--Rs. 2,88,70,000. As far as first item is concerned, the Tribunal held that it was taxable inasmuch as the surrender of REP licences amounted to sale of goods. On this aspect, the Tribunal''s order is being contested by the petitioner in a T.R.C. filed in this Court. With regard to second item, the Tribunal remanded the matter to C.T.O. to verify the factual correctness of the claim that MMTC was the seller of the licences and if so, to exempt the amount in appellant''s hands. After the disposal of the appeal by the Tribunal, the first respondent issued a show cause notice on September 14, 1989 proposing to refix the turnover for the year 1992-93 under the C.S.T. Act and to subject the following net turnover to tax under the C.S.T. Act Rs. 21,88,966 (earlier assessed under the C.S.T. Act and tax already paid) and Rs. 11,76,60,745 (which was the subject-matter of assessment under Andhra Pradesh General Sales Tax Act and appeal before the Tribunal). In the said show cause notice, the first respondent stated that the Tribunal directed verification of the facts pertaining to the sales that took outside the State of Andhra Pradesh. It is further stated in the notice that the petitioner-company filed some documents on August 21, 1999 and they have to be verified with the books of accounts and in the absence of books of accounts and details regarding the nature of transactions effected the turnover of Rs. 11,76,28,000 is liable to be taxed under the C.S.T. Act pursuant to the directions of the Tribunal.

To say the least, the order of the Tribunal has been misquoted and misread. We have already adverted to the operative portion of the order in T.A. No. 413 of 1996. The directions given in T.A. No. 412 of 1996 pertaining to the earlier order of assessment for the year 1991-92 under the A.P.G.S.T. Act were assumed to be the observations made in T.A. No. 413 of 1996 (relating to assessment year 1992-93, A.P.G.S.T.). As already stated, out of Rs. 11,76,29,000 subjected to tax under the A.P.G.S.T. Act, the Tribunal in fact upheld the assessment on a turnover of Rs. 8,87,59,000 and in regard to the balance turnover of Rs. 2,88,70,000, the matter was remanded to ascertain whether the sale in question was effected by MMTC or the petitioner. It is surprising that even in the counter-affidavit filed by the first respondent, the operative part of the order of S.T.A.T. in T.A. No. 412 of 1996 which does not pertain to the assessment year in question is extracted and the first respondent has stated as follows :

"I humbly submit that I had understood this part of the order to mean that the taxable turnover should be added to the assessment under the C.S.T. Act and taxed accordingly. On that basis I had undertaken assessment under the C.S.T. Act."

There is absolutely no basis for such understanding of the Tribunal order in T.A. No. 413 of 1996. There was no direction whatsoever--either express or necessarily implied that the same turnover which was dealt with and treated as turnover of local sales, has to be included in the C.S.T. turnover as if the sales have taken place in the course of inter-State trade. As far as the year 1992-93 is concerned, it was never in issue that the disputed turnover--wholly or in part related to sales other than local which were taxable under the C.S.T. Act. In fact, the finding of the Tribunal was that bulk of the turnover was taxable under A.P.G.S.T. Act and that is why, the petitioner preferred T.R.C. aggrieved by the order of the Tribunal. There was no scope to misunderstand the order of the Tribunal in the manner in which the first respondent did, unless he was utterly careless and callous or overzealous to raise a fanciful demand purporting to draw support from a non-existent order of the Tribunal. Curiously, the reply to the show cause notice furnished by the petitioner was an equal match to the first respondent''s attitude. It confused one order for the other and raised an objection not strictly relevant to the issue. In the reply dated September 20, 1999, the petitioner quoted the order passed in T.A. No. 412 of 1996 and submitted as follows :

"That the remand directions in respect of the said assessment was for checking up of the quantum of sale outside the State and the quantum of the monetary payment received from MMTC by the appellant and then to exempt both."

As already noted, the direction given in T.A. No. 413 of 1996 was quite different.

A survey of the facts narrated above could reveal that the first respondent has completely forsaken his duty as a quasi-judicial authority, blatantly misconstrued the order of the Tribunal in T.A. No. 413 of 1996 and clutched at the jurisdiction not vested in it to revise the assessment under C.S.T. Act on the basis of a non-existent directive of the Tribunal. The first respondent out stepped his jurisdiction in projecting the very same turnover that was assessed under the A.P.G.S.T. Act into the C.S.T. assessment by reviewing the C.S.T. assessment order. The question of revision of assessment would only arise if any turnover had escaped assessment or had been subjected to lower rate of tax. The Tribunal''s order in an appeal arising out of the A.P.G.S.T. assessment does not even contain a whisper or hint that any part of the turnover would attract tax under the C.S.T. Act. By figment of imagination, the first respondent proceeded to revise the assessment under the C.S.T. Act and the order of the Tribunal is used as a cloak to raise a fanciful demand of Rs. 1.17 crores. It would be travesty of justice if the impugned assessment is allowed to stand. It is one of the extraordinary cases where we are called upon to exercise the jurisdiction under Article 226 of the Constitution to prevent further harassment to the assessee. It is not at all just and. appropriate to relegate the petitioner to the remedy of appeal. In the result, the writ petition is allowed and the impugned order of the assessment is quashed. However, as the petitioner has its share of blame, we refrain from awarding costs though it would otherwise have been a fit case for awarding costs.