2011 (10) TMI 550 - HC - VAT and Sales Tax

Imposition of tax - failure to establish that opening stock of goods shown in the trading account was of sales tax paid goods - Held that - Cursory manner in which the learned Tax Board has accepted the trading account along with tax-paid bills produced by the assessee, does not appear to be justified since the Revenue lost its opportunity to cross-examine such evidence before the higher appellate forum of Tax Board. Particularly, when the Tax Board was aware of the matter that proceedings for 1998-99 on the issue of ₹ 1,79,812 demand was already remanded to the assessing authority who was seized of the said matter, the learned Tax Board in all fairness ought to have remanded the entire proceedings to the assessing authority for verification of documents and evidence produced before the Tax Board. Even though such documents and evidence might have been produced before the assessing authority at the time of original assessment order and, so also, before the Deputy Commissioner (Appeals), nonetheless, since the lower authorities did not accept this version of the assessee, without allowing an opportunity to cross examine to the Revenue such evidence the same on the face of it could not straightway be accepted by the learned Tax Board as it was a final fact finding body under the Act. matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Imposition of tax by the Deputy Commissioner (Appeals) based on the trading account.
2. Acceptance of evidence by the Tax Board without allowing cross-examination.
3. Justification of remanding the case back to the assessing authority.

Analysis:

1. The first issue revolves around the imposition of tax by the Deputy Commissioner (Appeals) based on the trading account of the assessee. The Deputy Commissioner rejected the appeal, holding that the assessee failed to prove that the opening stock of goods in the trading account was of sales tax paid goods. Consequently, tax liabilities were imposed on the assessee through the assessment order.

2. The second issue concerns the acceptance of evidence by the Tax Board without providing an opportunity for cross-examination by the Revenue. The learned Tax Board allowed the appeal filed by the assessee, considering evidence of goods being sales tax paid. However, the court noted that the Tax Board's acceptance of such evidence without allowing cross-examination was unjustified, especially since the Revenue lost the chance to scrutinize the evidence before the higher appellate forum.

3. The final issue addresses the justification of remanding the case back to the assessing authority. The court opined that the Tax Board should have remanded the entire proceedings to the assessing authority for verification of documents and evidence produced by the assessee. Despite the documents being presented earlier to the assessing authority and Deputy Commissioner (Appeals), the Tax Board's acceptance without allowing cross-examination was deemed inappropriate. Consequently, the court allowed the revision petitions filed by the Revenue and ordered the matter of assessment for the relevant years to be remanded back to the assessing authority for fresh assessment orders within six months.