2002 (9) TMI 803 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability of trade tax under the U.P. Trade Tax Act.
2. Liability of tax under the Central Sales Tax Act.
3. Validity of the assessment orders and the remand order.
4. Right to cross-examination and principles of natural justice.
5. Admissibility and consideration of new evidence by the Tribunal.
6. Interpretation and application of section 3-D of the U.P. Trade Tax Act.
7. Jurisdiction of the High Court in revision applications.

Issue-wise Detailed Analysis:

1. Liability of trade tax under the U.P. Trade Tax Act:
The assessing officer levied a trade tax of Rs. 11,25,000 on the opposite party-dealer, which was set aside by the Deputy Commissioner and remanded for fresh assessment. The Tribunal annulled the order of the Trade Tax Officer, declaring the assessee non-taxable for the year 1992-93. The Tribunal found no material to justify that deliveries were taken by the opposite party-dealer in U.P., and concluded that goods moved directly from the business premises of the dealers to Goa, hence the opposite party-dealer could not be held liable to tax under the U.P. Trade Tax Act.

2. Liability of tax under the Central Sales Tax Act:
The Tribunal upheld the Deputy Commissioner's finding that there was no evidence of inter-State sales by the opposite party-dealer. The goods were sold by the dealer at Meerut and then dispatched to Goa, with the purchaser and seller being the same entity, thus negating the possibility of inter-State sales. The Tribunal confirmed that no liability of tax under the Central Sales Tax Act could be imposed.

3. Validity of the assessment orders and the remand order:
The Tribunal dismissed the appeals filed by the Commissioner of Trade Tax against the Deputy Commissioner's orders. The Tribunal held that the Deputy Commissioner should have examined the agreement between dealer "G" and dealer "M" himself rather than remanding the matter. The Tribunal found the remand unnecessary as the assessment orders against the Kanpur and Moradabad dealers indicated that goods were sent directly to Goa, and no liability could be fastened on the opposite party-dealer.

4. Right to cross-examination and principles of natural justice:
The Tribunal observed that the denial of the right to cross-examine the employees of dealer "G" seriously violated principles of natural justice. The adverse material obtained from their statements could not be relied upon without cross-examination. The Tribunal emphasized that cross-examination was crucial as the employees' statements were the basis for adverse inference against the opposite party-dealer.

5. Admissibility and consideration of new evidence by the Tribunal:
The Tribunal considered documents such as the assessment order of dealer "M" at Goa, challans signed by Rajasthan check-post authorities, and the stock register of dealer "M" at Goa. These documents supported the contention that goods were consigned directly to Goa. The Tribunal justified accepting these documents even if submitted for the first time at the stage of the second appeal, as they were examined in the presence of the departmental representative without objection.

6. Interpretation and application of section 3-D of the U.P. Trade Tax Act:
The Tribunal noted that under section 3-D(2) of the Act, the seller of the notified commodity (deshi ghee) was liable to pay tax if sales were made to an unregistered dealer. Since no forms III-C were obtained by the opposite party-dealer, he was treated as an unregistered dealer, making the selling dealer liable for tax. The Tribunal found the assessment order unsustainable as it ignored the provisions of section 3-D(2).

7. Jurisdiction of the High Court in revision applications:
The High Court emphasized that it does not interfere with findings of fact recorded by the Tribunal unless they are unsupported by material on record or are perverse. The Tribunal's findings were based on relevant material and were not perverse. The High Court upheld the Tribunal's decision, dismissing the revision applications filed by the Commissioner.

Conclusion:
The High Court dismissed the revisions, affirming the Tribunal's findings that the opposite party-dealer was not liable to tax under the U.P. Trade Tax Act or the Central Sales Tax Act. The Tribunal's decision was based on a thorough examination of evidence and adherence to principles of natural justice. The High Court found no grounds to interfere with the Tribunal's order.