2008 (7) TMI 888 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case the Trade Tax Tribunal was legally justified in knocking off the State revision and allowing fully dealer s revision without considering the fully adverse facts which were available on the records? Whether on the facts and in the circumstances of the case the Trade Tax Tribunal was legally justified to quash the assessment order by accepting the dealer s version despite the fact that purchases of oil at Rs. 26, 36, 523 were not verifiable and most sellers of these purchases were found not in existence? Held that - The fact that all the account books have been reduced to ashes in fire on July 31 1985 was not disclosed to the Surveying Officer who visited the place immediately after two days i.e. on August 2 1985. The assessing officer opined that theory of fire is nothing but a cock and bull story and has been set up purposely. The said finding has not been reversed or ever touched by the Tribunal. The Tribunal was under legal obligation to have taken into consideration those aspects of the case also which were considered by the authorities below in negating the case of the dealeropposite party more so while reversing the order of the authority below to it. Viewed as above the order of the Tribunal is unsustainable and indefensible. The said order is hereby set aside and it is held that the Tribunal was not justified in allowing the appeal filed by the dealer-opposite party. The Tribunal has committed error while dismissing the appeal filed by the Department. It is further held that the Tribunal was not justified in accepting the dealer s version that on the purchase of oil amounting to Rs. 26, 36, 523 no tax could be levied.In the result the revision succeeds and is allowed. The order of the first appellate authority is restored.

Summary

Issues:
Challenging the legality and validity of the Trade Tax Tribunal's order, questions of law raised in the revision, justification of the Tribunal's decision, burden of proof on the dealer, factual findings by the assessing authority, existence of selling dealers, exemption claims, relevance of section 12A of U.P. Trade Tax Act, errors in the Tribunal's decision, account books destruction due to fire, justification of the first appellate authority's order.

Analysis:
The case involves questioning the legality and validity of the Trade Tax Tribunal's order in a revision filed by the Commissioner of Trade Tax. The dispute pertains to the assessment year 1984-85 concerning a dealer engaged in the manufacture and sale of oil. The dealer disclosed a turnover but admitted no tax liability. Despite opportunities, the dealer failed to participate in assessment proceedings. The assessing authority levied tax on the turnover, which was challenged in subsequent appeals leading to the Tribunal's decision under revision.

The main legal questions raised in the memo of revision include the justification of the Tribunal's decision in accepting the dealer's version without considering adverse facts and quashing the assessment order based on unverifiable purchases. The Tribunal's decision was contested by the learned Standing Counsel, arguing that the Tribunal erred in accepting the disclosed turnover without account book verification. The respondent's counsel supported the Tribunal's decision, citing it as findings of fact not warranting interference.

The Tribunal's decision was found unsustainable and indefensible due to various reasons. The dealer failed to prove local purchases of oil, crucial for claiming exemption. The burden of proof lay with the dealer, and failure to establish necessary facts rendered the exemption claim invalid. The Tribunal's reliance on previous court decisions was deemed misplaced as the specific provision of section 12A of U.P. Trade Tax Act was not considered. Errors in presuming unregistered purchases and overlooking crucial aspects like account book destruction due to fire were highlighted.

Ultimately, the revision succeeded, and the Tribunal's decision was set aside, restoring the first appellate authority's order. The Tribunal was deemed unjustified in accepting the dealer's version and dismissing the Department's appeal. The judgment emphasized the importance of fulfilling the burden of proof for exemption claims and the necessity of considering all relevant aspects in tax assessment proceedings.