1996 (11) TMI 427 - AT - VAT and Sales Tax

Summary

Issues:
1. Reduction of tax and penalty imposed under section 16(1)(i), Rajasthan Sales Tax Act, 1954.
2. Discrepancy in entries found during survey.
3. Burden of proof on the department regarding sales transactions.
4. Ignoring crucial evidence presented by the petitioner.
5. Maintainability of the application for revision.

The judgment pertains to an application for revision transferred to the Appellate Tribunal Rajasthan Taxation Tribunal from the Rajasthan High Court. The case involves the reduction of tax and penalty imposed under section 16(1)(i) of the Rajasthan Sales Tax Act, 1954, from Rs. 6,083 to Rs. 4,968 and from Rs. 12,166 to Rs. 9,936, respectively. The petitioner's business premises were surveyed, and loose papers and a diary without dates were seized, leading to an assessment order estimating sales of tyres and tubes at Rs. 1,06,612 with a tax levy at 10% and a penalty of Rs. 20,322. The appellate authority and the Tax Board further reduced the tax and penalty amounts based on the petitioner's submissions.

The petitioner contended that they dealt exclusively with tax-paid tyres and tubes, not being importers of taxable goods, and no "C" form was issued for purchasing them. The petitioner argued that the assessment order's mention of an evaded turnover of Rs. 1,06,612 solely related to tax-paid tyres and tubes, indicating no concealment or tax evasion. The petitioner emphasized that the diary entries were not made in the regular course of business and lacked verification of sales transactions, questioning the department's failure to prove the entries' relation to sales.

The department argued against the revision, claiming no legal issue existed and pointing out the petitioner's involvement in the business of tractor and motor parts, suggesting the turnover might not be solely from tyres and tubes. However, the petitioner's unrebutted affidavit supporting their exclusive dealings with tax-paid tyres and tubes was crucial evidence that the assessing authority ignored, contrary to established legal principles requiring its consideration.

The Tribunal highlighted the assessing authority's failure to examine purchasers mentioned in the loose papers to prove sales transactions, emphasizing the department's burden to establish sales. The absence of corresponding entries in the petitioner's account books for some entries in the seized papers raised doubts about the nature of those entries, indicating they might not relate to actual sales. The Tribunal concluded that the application for revision raised significant legal questions and was maintainable.

Consequently, the Tribunal allowed the application for revision, setting aside the tax and penalty imposed on tax-paid tyres and tubes. The orders of the assessing authority and the appellate authority were modified, and the Tax Board's decision was overturned. No costs were awarded in the matter.

In summary, the judgment addressed issues related to the reduction of tax and penalty, discrepancies in seized entries, burden of proof on the department regarding sales transactions, the importance of crucial evidence, and the maintainability of the application for revision. The Tribunal found in favor of the petitioner, emphasizing the assessing authority's failure to consider vital evidence and the department's inability to prove sales transactions, leading to the setting aside of tax and penalty on tax-paid tyres and tubes.