2008 (7) TMI 922 - HC - VAT and Sales Tax

Whether the Tribunal was legally justified in holding that the transactions of purchases in question were the purchases for and on behalf of ex-U.P. principals despite the fact that evidence on record does not indicate that the purchases in question have been made in pursuance of the orders from ex-U.P. principals? Whether under the facts and circumstances of the case, learned member of Tribunal was legally justified in deciding the nature of disputed transactions as inter-State purchases contrary to the facts on record? Held that - A bare perusal of the order of the Tribunal would show that the Tribunal has not even touched or reversed the finding with regard to fabrication of the account books recorded by the two authorities below. The Tribunal has proceeded to decide the appeal by making general observations that from the account books before it, the facts of the case do show that the purchases were made on behalf of ex-U.P. principals. As a matter of fact, the Tribunal has not addressed itself to the real issue as to whether the account books maintained by the dealer are true or fabricated one. Moreover, from perusal of the order of the Tribunal it is evident that the Tribunal has not referred any specific account books which have been examined by it. It appears that the Tribunal has allowed the appeal without applying its mind to the real controversy involved. It has not taken care to record a finding as a fact whether the purchases were made on behalf of ex-U.P. principals. To determine the said issue, it was necessary for the Tribunal to have looked into the order book, despatch register, movement of goods, etc. In this view of the matter, the order of the Tribunal cannot be sustained and the same is hereby, set aside. Appeal allowed by way of remand.

Summary

Issues:
Assessment of purchases made on behalf of ex-U.P. principals for inter-State transactions.

Analysis:
The dealer, involved in the business of gur, claimed that purchases made on behalf of ex-U.P. principals for inter-State transactions were not subject to purchase tax. However, the assessing authority deemed the dealer's account books as unreliable and fabricated, leading to the rejection of the claim. This decision was upheld by the first appellate authority. The Tribunal, in its order under revision, allowed the appeals by the dealer, stating that the purchases were indeed made for ex-U.P. principals in the course of inter-State purchases. The legal contention raised questioned the Tribunal's justification for this conclusion without a thorough examination of the account books and factual evidence.

The Department's argument highlighted that the Tribunal failed to adequately review the findings of the lower authorities and the account books presented, merely relying on legal principles to decide in favor of the dealer. On the other hand, the dealer's counsel argued that the Tribunal had properly evaluated the case and concluded that the purchases were on behalf of ex-U.P. principals. The Tribunal's order was critiqued for not addressing the crucial issue of the authenticity of the dealer's account books and for making general observations without specific references to the evidence examined.

The Tribunal's decision was found lacking as it did not overturn the findings of the lower authorities regarding the fabricated nature of the account books. The Tribunal's failure to delve into the authenticity of the account books and its reliance on general observations to support its decision were deemed insufficient. It was emphasized that a factual determination regarding the purchases being made on behalf of ex-U.P. principals was essential, requiring a detailed examination of relevant documents like order books and despatch registers. The judgment concluded by setting aside the Tribunal's order, directing a rehearing of the appeals to establish the necessary factual findings in accordance with legal principles.

In conclusion, the revisions were partially allowed, the Tribunal's order was set aside, and the matter was remanded for a fresh decision with a focus on factual findings and adherence to legal requirements. No costs were awarded in this judgment.