1981 (2) TMI 211 - HC - VAT and Sales Tax

Summary

Issues:
- Claim for deduction under section 9(1)(iii) of the Bombay Sales Tax Act, 1959
- Genuineness of sales transactions made by the assessees to Messrs. H. Amrutlal and Company

Analysis:
The applicants, registered as a dealer under the Bombay Sales Tax Act, 1959, sought to deduct the turnover of two sales made to Messrs. H. Amrutlal and Company for the assessment period of April 1966 to March 1967. The Sales Tax Officer disallowed the deduction, alleging the sales were not genuine but a means to evade tax. The Assistant Commissioner and the Sales Tax Tribunal upheld this decision. The Tribunal focused on the cancellation of registration certificates of Messrs. H. Amrutlal and Company, holding that the applicants were not entitled to the deduction due to the cancellation. However, the Tribunal failed to address the crucial issue of whether the sales were actually made to Messrs. H. Amrutlal and Company. The Court reframed the question to determine if the disallowance of the deduction was justified, emphasizing the need to establish the genuineness of the transactions. The Court found the Tribunal's statement inadequate and remanded the case back to the Tribunal for a supplemental statement focusing on the authenticity of the sales transactions in question.

This judgment revolves around the interpretation and application of section 9(1)(iii) of the Bombay Sales Tax Act, 1959, concerning deductions for sales made to licensed dealers. The primary issue is the genuineness of the sales transactions claimed by the applicants to Messrs. H. Amrutlal and Company. The Sales Tax Tribunal's decision to disallow the deduction was based on the cancellation of registration certificates of the buyer without thoroughly examining whether the sales were indeed made to the said buyer. The Court highlighted the importance of establishing the authenticity of the transactions before determining the eligibility for deductions under the Act. The Court's decision to remand the case back to the Tribunal underscores the significance of a comprehensive assessment of the facts and findings related to the sales transactions in question.

In conclusion, the judgment emphasizes the need for a thorough examination of the genuineness of sales transactions claimed for deductions under the Bombay Sales Tax Act, 1959. The Court's decision to remand the case back to the Tribunal reflects the importance of a detailed analysis of the facts surrounding the sales made by the applicants to Messrs. H. Amrutlal and Company. By directing the Tribunal to provide a supplemental statement focusing on the authenticity of the transactions, the Court ensures a comprehensive review before making a final determination on the eligibility for the claimed deductions under the Act.