1996 (1) TMI 389 - HC - VAT and Sales Tax

Summary

Issues:
- Disallowance of claim of deductions in the sale of cotton seed
- Use of best judgment estimate for the sale of cotton seed
- Invocation of penal provisions for misuse of registration certificate

Disallowed Deductions in Sale of Cotton Seed:
The case involved three Sales Tax Cases where the State of Haryana sought a direction to refer questions of law to the Court regarding the disallowance of deductions in the sale of cotton seed. The dealer claimed deductions for sales to registered dealers, which were disallowed by the Assessing Authority as ingenuine. The Appellate Tribunal later reversed the findings of the Assessing Authority, stating that it had not been conclusively proven that the sales were not genuine. The Tribunal found that the dealer had not maintained separate accounts for cotton seeds purchased within the State and imported from other states. The case was remanded to the Assessing Authority to re-examine the issue.

Use of Best Judgment Estimate for Sale of Cotton Seed:
The Assessing Authority used its best judgment estimate to determine the sale of cotton seed purchased from within the State without payment of tax and used in the manufacture of goods sent for sale outside Haryana. The dealer claimed that the cotton seeds used for consignment despatches were imported and did not attract tax liability. The Assessing Authority, however, calculated the proportion of cotton seeds used in consignment sales based on purchases made within and outside Haryana. The Tribunal found the Assessing Authority's ratio calculations illogical and remanded the case for re-examination.

Penal Provisions for Misuse of Registration Certificate:
The Assessing Authority invoked penal provisions under section 50 of the Act for misuse of the registration certificate by the dealer in all three years in question. The penalties were imposed for using cotton seeds purchased within the State without payment of tax in the manufacture of goods sent for sale outside Haryana. The Tribunal rejected the State's applications to refer questions of law to the Court, stating that the issue to be re-examined was in line with previous judgments. The Court upheld the Tribunal's decision, stating that no question of law arose from the Tribunal's order remanding the case to the Assessing Authority.

In conclusion, the Court dismissed the applications, upholding the Tribunal's decision, and emphasizing the need for the Assessing Authority to re-examine the issue of determining the proportion of cotton seeds used in consignment sales and the misuse of the registration certificate.