Chennai: The Madras High Court has disposed of car maker Renault Nissan’s pleas challenging a revised assessment made under the Central Sales Tax Act over inter-state sales, asking the firm to prefer an appeal with the appellate authority.
Giving a thumbs down to straightaway filing writ petitions without first exhausting the alternative remedy available under the law, Justice K Ravichandrabaabu concurred with the submissions of Additional Advocate General Narmada Sampath that the disputed question of fact was to be looked into by the appellate authority.
Since the disputed question of fact is to be decided only by the fact finding authority (the appellate authority), the petitioner has to file a regular statutory appeal before it, the court held.
“Straightaway coming to this court and filing writ petitions against the orders of assessment made by the Assessing Authority or the orders in original made by the Adjudication Authority, without exhausting the alternative remedy of appeal, should not be entertained.”
Otherwise, the court will be flooded with writ petitions under Article 226 of the Constitution, the court said. Also, the statutory appellate remedies provided under relevant enactments would be redundant, it said.
Nissan’s petitions challenged the order of the Deputy Commissioner of Sales Tax, Large Tax payers Unit, Tamilnadu dated 28 July 2017 in revising the assessment made under the Central Sales Tax Act, in respect of assessment years 2014-15 and 2015-16.
According to the petitioner, the sale made by them to their marketing companies (Andhra Pradesh and Telangana) is the first sale and consequently, the sale made by the said marketing companies to their dealer is the second sale.
Hence, it is covered under section 3(b) of the Central Sales Tax Act, 1956, (governing title to goods; their movement from one state to another) and thus, the Central Sales Tax paid by them at the rate of 2 per cent on such sale was valid.
Narmadha Sampath, who appeared for the Large Taxpayers Unit submitted that in respect of the inter-state sales, the marketing companies placed order with an instruction to the petitioner firm to deliver the goods directly to its customers.
In effect, even before the commencement of movement of goods from Tamilnadu, the delivery instruction was given to deliver goods to different purchasers which are contrary to the provision of section 3(b) of the CST Act and hence it amounts to first sale, she submitted.
To avoid tax component for the actual sale value of such first sale, a new arm of marketing unit was created. Therefore, the levy of tax under section 3(a) (covering movement of goods from one state to another for sale) is sustainable and well within the jurisdiction of the authority, the government counsel said.
Nissan’s writ pleas were not maintainable and the impugned order was passed within the jurisdiction of the authority, she argued. The court allowed the company to file a statutory appeal before the Appellate Authority within 30 days from the date of receipt of its order and directed the tax authorities not to take any coercive steps against the petitioner till the appeal was filed.