1983 (8) TMI 244 - HC - VAT and Sales Tax

Summary

Issues:
- Disallowance of exemptions claimed by the petitioners
- Addition of voluntarily disclosed stock value to total turnover
- Best judgment assessments by the Commercial Tax Officer
- Burden of proof on the Revenue regarding disclosed stock sales
- Interpretation of the Voluntary Disclosure of Income and Wealth Act, 1976

Analysis:
The judgment by the High Court of Andhra Pradesh involved two Tax Revision Cases (T.R.Cs) concerning common issues, thus decided by a common judgment. The petitioners, one a dealer in general goods and the other in automobile parts, had filed returns disclosing turnovers, exemptions claimed, and net turnovers. The Commercial Tax Officer disallowed exemptions, added amounts based on spot inspection reports, and subjected the petitioners to best judgment assessments for voluntarily disclosed stock values. The petitioners contended that the disclosed stock values were under the Voluntary Disclosure of Income and Wealth Act, 1976, and should be exempt. The Revenue argued that the disclosed stock was part of suppressed stock and added it to the turnovers.

In one case, the dealer disclosed Rs. 25,000 stock value under the Act, which was added to the turnover. The Appellate Assistant Commissioner upheld the addition, stating that without evidence of recording sales of disclosed stock, it was justified. The Tribunal affirmed this decision. The High Court clarified the necessity of proving actual sales of disclosed stock to include it in turnover, citing a Supreme Court case precedent.

The High Court analyzed the burden of proof on the Revenue to establish the sales of disclosed stock during the assessment year. It criticized the Tribunal's approach, emphasizing that the burden lies with the Revenue, not the assessee, to prove the stock sales. The Court highlighted the need for evidence linking the disclosed stock to actual sales during the relevant assessment year.

Consequently, the High Court deemed the addition of the disclosed stock value to the turnover as illegal and directed the Commercial Tax Officer to revise the assessments by removing the added amounts. The judgment set aside the orders under revision concerning the added stock values, directing the revised assessments to exclude these amounts. The Court allowed both tax revision cases, with no costs awarded and specified advocate fees.

In conclusion, the judgment clarified the application of the Voluntary Disclosure Act, emphasized the burden of proof on the Revenue, and set aside the additions to turnover based on voluntarily disclosed stock values.