2010 (8) TMI 868 - HC - VAT and Sales Tax

Whether the learned Tribunal has erred in law in upholding the order of learned AETC passed on September 25, 2006 when the said order was passed without complying with the earlier two orders passed by the Tribunal itself, whereby specific directions were given to the authority to act in a particular manner and conduct the enquiry accordingly? Whether the deduction under section 5(2)(a)(ii) of the PGST Act, 1948 can be disallowed in the case of selling dealer even if it has furnished the declaration form ST-XXII obtained from purchasing dealers and has complied with rule 26(1) of the PGST Rules, 1949? Whether in a case where Government Printed ST-XXII forms are issued by the purchasing dealers to the selling dealer, it is the duty of Department to find to whom these declarations have been issued and how the said dealers have accounted for those forms and no onus can be shifted upon the selling dealer on these issues? Held that - mere denial by the said purchasing dealers was self-serving and could not be held against the petitioner. If declaration furnished by the purchasers was found to be defective, the said dealers would be liable to pay the tax. The learned counsel for the Revenue is unable to show either that the concerned dealers, who were sought to be summoned, were produced or that there was no requirement in law to do so. In such situation, the finding to the effect that the petitioner failed to discharge burden of sales being genuine, cannot be sustained in law. The questions of law have to be answered in favour of the petitioner-dealer and against the Revenue.

Summary

Issues:
1. Delay in filing the revision petition under Punjab VAT Act, 2005.
2. Disallowance of deduction under section 5(2)(a)(ii) of the PGST Act, 1948.
3. Duty of Department to verify genuineness of ST-XXII forms issued by purchasing dealers.

Issue 1: The court addressed the delay in filing the revision petition under the Punjab VAT Act, 2005. The petitioner cited the reason for delay as the expiration of the limitation period during the decision-making process on an application for rectification. The court considered the facts and circumstances of the case, condoned the delay, and proceeded to hear the matter on its merits.

Issue 2: The petitioner, a registered dealer under the Punjab General Sales Tax Act, 1948, claimed deductions on the gross turnover for sales to registered dealers based on ST-XXII forms. The Assessing Authority initially allowed these deductions, but the revisional authority set them aside on the grounds that the forms were not issued by the purchasing dealers. Despite the matter being remanded twice by the Tribunal for verifying the genuineness of the sales, the purchasing dealers were not produced for cross-examination, as requested by the petitioner. The court noted the petitioner's argument that the revisional authority did not allow the opportunity to summon the record of purchasing dealers or cross-examine them, which was not adequately addressed by the Tribunal. The Tribunal's finding that the sales were not genuine was deemed a violation of natural justice.

Issue 3: The court examined the duty of the Department to verify the genuineness of ST-XXII forms issued by purchasing dealers. The Tribunal found that the forms submitted by the petitioner were not obtained from a genuine source, as they were issued to dealers in other districts and not to the district where the purchasing dealer was located. The court emphasized that the burden of proving the genuineness of the deduction claim lay with the petitioner, which was not discharged. The court concluded that the finding of the revisional authority that the sales were not genuine was flawed due to the denial of opportunity for cross-examination and lack of evidence from the concerned dealers. Consequently, the court ruled in favor of the petitioner-dealer, quashed the impugned orders, and remanded the matter for fresh decision in accordance with the law.