2007 (1) TMI 585 - SC - VAT and Sales Tax

Rejection of books of accounts - Held that - Appeal dismissed. Carefully considering the order of the Tribunal which is the last fact-finding authority there were relevant considerations and relevant material on the basis of which the books of the assessee were rejected. The Tribunal has given various reasons for upholding the rejection of the assessee s books. For example there was no verification of the raw materials used and the work done on job-work basis has not been verified. The Tribunal also considered the assessee s submission regarding the difference in the production of 23 microns and 12 microns & observed that the appellant has nowhere mentioned that the chilling plant has ever remained closed and similar is the position with regard to the supply of electricity for labourers. The High Court has considered these reasons and has not interfered with the findings of the Tribunal as these are findings of fact and hence the High Court which could only interfere if there is an error of law rightly rejected the revision.

Summary

Issues:
1. Rejection of books of account and enhanced turnover by assessing authority.
2. Tribunal's rejection of appellant's explanations regarding electricity consumption and production.
3. Appellant's argument against rejection based on electricity consumption.
4. Non-maintenance of proper books of account by the appellant.
5. Tribunal's reasons for upholding rejection of books of account.
6. High Court's decision on the findings of the Tribunal.

The Supreme Court judgment dealt with an appeal against the High Court's decision in Trade Tax Revision Nos. 2407 to 2410 of 2004, concerning the rejection of the appellant's books of account and the enhanced turnover. The appellant, engaged in the manufacture of metallised plastic films, held an eligibility certificate under the U.P. Trade Tax Act, 1948. The assessing authority rejected the books of account and increased the turnover, a decision upheld in subsequent appeals and revisions.

The Tribunal and High Court rejected the appellant's explanations for discrepancies in electricity consumption and production levels. Despite the appellant switching from 23 micron to 12 micron goods, leading to higher electricity consumption, the authorities inferred suppression of production due to the mismatch between increased electricity usage and decreased production figures. The rejection was based on the belief that continuous electricity consumption during manufacturing closure was implausible.

The appellant argued that higher electricity consumption alone was insufficient grounds for rejecting the books of account. However, the Court noted discrepancies in the appellant's record-keeping, including failure to provide essential documents like the wage payment register and production register, crucial for verifying production levels. The absence of separate accounts for job-work and manufacturing further raised doubts about the accuracy of reported figures.

The Court upheld the rejection of the appellant's books of account, citing various grounds such as unverified raw material usage, lack of job-work verification, and discrepancies in production records. The Tribunal's detailed analysis and findings were considered valid, leading to the conclusion that the appellant's intention to suppress production and turnover was evident from excessive power consumption.

Despite the appellant's argument regarding the shift from 23 micron to 12 micron goods, the Court found the rejection of books of account justified based on the multiple discrepancies and lack of verifiable records. The High Court's decision not to interfere with the Tribunal's findings on improper record-keeping and suppression of production was upheld, emphasizing that these were factual determinations beyond legal error. Consequently, the appeal was dismissed, affirming the rejection of the appellant's books of account and the enhanced turnover.