1996 (7) TMI 503 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Sales Tax Tribunal was justified in affirming the action of the Assessing Authority in refusing to treat certain sales as inter-State sales made by registered dealers.
2. Whether the Assessing Authority complied with the principles of natural justice in dealing with sales made to specific dealers.
3. Whether there was legal evidence to hold that the "C" forms and transactions vouched by them were not genuine.

Issue-wise Detailed Analysis:

1. Justification of the Sales Tax Tribunal's Affirmation:
The Tribunal affirmed the action of the Assessing Authority, which refused to treat sales amounting to Rs. 23,06,233.75 to five Bombay dealers as inter-State sales made by registered dealers. The Assessing Authority had determined that the sales did not qualify for the concessional rate of tax due to the non-genuineness of the "C" forms provided by the purchasing dealers. The Tribunal upheld this decision, finding that the sales were not genuine based on the evidence collected.

2. Compliance with Principles of Natural Justice:
The assessee argued that the Assessing Authority did not afford a reasonable opportunity to meet the stand taken, acting in haste and in a slip-shod manner. The material collected was not brought to the assessee's notice, violating the principles of natural justice. However, the Tribunal and appellate authorities found that the Assessing Authority had given the assessee an opportunity to produce evidence supporting the genuineness of the "C" forms. The plea of denial of opportunity was rejected by both the Deputy Excise and Taxation Commissioner and the Tribunal. The Tribunal stated that the discrepancies were duly confronted to the assessee, and the assessee failed to discharge the onus of proving the genuineness of the transactions.

3. Legal Evidence of Non-Genuineness of "C" Forms:
The main question referred for opinion was whether there was legal evidence to hold that the "C" forms and transactions vouched by them were not genuine. The Assessing Authority had collected material from the sales tax authorities in Bombay, revealing discrepancies such as the non-existence of firms, cancellation of registration certificates, and issuance of accommodation bills by brokers. The Tribunal found that this material was relevant and constituted legal evidence. The Tribunal also noted that the assessee did not seek a remand order for all transactions but only for sales to M/s. A.A. Diwakar and Sons, which were remanded for redetermination. The remaining transactions were held to be not genuine based on the material on record.

Conclusion:
The High Court answered the referred question in the affirmative, stating that the material collected by the Assessing Authority was legal evidence. The Tribunal's findings were upheld, and the plea of denial of opportunity was not considered as it was not part of the referred question. The reference was answered against the assessee, with no order as to costs.