2009 (2) TMI 781 - HC - VAT and Sales Tax

Whether the rejection of claim of the assessee that he had made export sales to Nepal is in violation of some principles of law or is it on account of mere appreciation of evidence in respect of an issue of fact? Held that - Tribunal in respect of Bhansar receipts, in the fats of the case, cannot be held to be wholly arbitrary or perverse or based on mere suspicion, surmise and conjectures. The findings leading to not accepting the export sales to Nepal are on consideration of all relevant facts and circumstances and such a finding cannot be said to be contrary to law or in violation of principles of natural justice. In fact, the Tribunal noticed the transportation receipts and the agreement to sale but these were not found reliable or sufficient to prove the claim that the goods had actually been exported to Nepal through the Indian Customs border which was required in ordinary course of business of export. In favour of revenue. According to section 6, the additional tax is chargeable at specified rate not exceeding two per centum of gross turnover. Hence, for levy of additional tax the gross turnover is the only relevant factor once it is found leviable in case of a particular dealer. The term gross turnover is defined under the Act and it is clearly same for the purpose of charging of sales tax as well as additional tax. But the taxing officer has enhanced the gross turnover for the purpose of additional tax in the present case by adding the amount of tax assessed on the gross turnover. This is patently against the provisions of section 6 of the Act which does not permit additional tax on the aggregate of gross turnover and tax assessed. In favour of the assessee and against the Revenue.

Issues Involved:
1. Tribunal's failure to decide all issues in its revisional order.
2. Reliability of Bhansar certificates.
3. Classification of sales as intra-State.
4. Rejection and enhancement of gross turnover.
5. Disallowance of sales of tax-free goods.
6. Levy of additional tax.
7. Levy of surcharge on net tax payable.
8. Legality of surcharge rate.

Issue-wise Detailed Analysis:

1. Tribunal's Failure to Decide All Issues:
The Tribunal failed to address all issues raised in its revisional order, later deciding some in the review order with a cryptic one-sentence order, stating that "reliefs not granted should be taken as rejected."

2. Reliability of Bhansar Certificates:
The Tribunal's finding that Bhansar certificates were unreliable was challenged as arbitrary and perverse. The Tribunal concluded that the assessee could not produce reliable materials to substantiate export claims to Nepal. The Tribunal corrected the lower authorities' overemphasis on payments not being through Nepal banks but found the Bhansar receipts insufficient to prove that goods crossed the Indian customs border. The Tribunal's findings were based on the appreciation of evidence and were not arbitrary or perverse.

3. Classification of Sales as Intra-State:
The Tribunal found that the goods transported from Muzaffarpur to Nepal could not be classified as export sales due to the lack of reliable evidence showing the crossing of the Indian customs border. The Tribunal's decision was based on the assessment of facts and evidence, and it was not contrary to law or principles of natural justice.

4. Rejection and Enhancement of Gross Turnover:
The rejection of the gross turnover shown and its enhancement by Rs. 15,91,019 to Rs. 2 crores was challenged as arbitrary and illegal. The Tribunal upheld the best judgment assessment due to the non-maintenance of cash book and register by the assessee for the period up to December 1984. This procedure was legally sanctioned, and no question of law needed to be answered.

5. Disallowance of Sales of Tax-Free Goods:
The disallowance of Rs. 21,33,618 out of the claim for sales of tax-free goods was challenged as illegal and arbitrary. The claim was supported by sale registers, stock registers, and purchase memos, but the non-production of ledger and cash book for the relevant period led to its disallowance. The Tribunal did not address this issue as it was not raised before it. The disallowance was not arbitrary or illegal as ledger and cash book have higher evidentiary value than purchase and cash memos.

6. Levy of Additional Tax:
The levy of additional tax was deemed arbitrary and without jurisdiction as the taxing officer included the tax amount in the sale price for calculating additional tax. According to Section 6 of the Act, additional tax should be charged on the gross turnover, not on the aggregate of gross turnover and tax assessed. This question was answered in favor of the assessee, requiring reassessment of additional tax.

7. Levy of Surcharge on Net Tax Payable:
The question of whether surcharge could be levied only on the net tax payable after reducing the admissible rebate was found unnecessary to decide as the assessee was not entitled to any rebate. Therefore, no deduction of rebate amount was required for the levy of surcharge.

8. Legality of Surcharge Rate:
The issue of the legality of the surcharge rate was not separately addressed in the judgment.

Conclusion:
Only question No. 6 was answered in favor of the assessee, requiring the reassessment of additional tax for both years. The reference was answered accordingly, and the tax cases were allowed to that extent only. No order as to costs was made, and a copy of the judgment was to be sent to the Tribunal for necessary action.

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