2012 (11) TMI 1064 - HC - VAT and Sales Tax

Disallowance of sales to exporters - exemption denied and the tax and penalty was imposed - Held that - If some documents have already been produced and accepted by the authority and if there is a doubt on the mind of the authority, it is open to the assessing officer to call upon the assessee to file necessary application for summoning the documents that may be required. No opportunity has been given in this case and the order has been passed unmindful of the earlier order of assessment accepting the documents. Therefore, the authority shall grant an opportunity to the assessee to produce the documents or file necessary petition for summoning the documents that may be required in addition to what has already been furnished and accepted in the earlier round of assessment. The reasoning in the impugned proceedings on the face of it appears to be arbitrary and has been passed in violation of principles of natural justice and accordingly, the same is liable to be interfered with. Impugned order is set aside and the matter is remitted to the respondent for reconsideration. W.P. allowed by way of remand as above.

Summary

Issues:
1. Disallowance of sales to exporters for Rs. 12,67,000.
2. Exemption on turnover towards direct export sales.

Analysis:
1. The petitioner, a registered dealer, filed returns for the assessment year 2005-06, reporting a total taxable turnover under the Central Sales Tax Act, 1956. The Assistant Commissioner considered two issues: exemption on sales to exporters and exemption on direct export sales. Sales to exporters, M/s. Gem Forgings Private Limited and M/s. Sparex India, were supported by form H, bill of lading, and other records, leading to exemption. However, own export for Rs. 4,23,340 was denied exemption, resulting in a revision notice issued by the Department. The subsequent order disallowing exemption is challenged.

2. The petitioner argued that the revision was based on a misconception of submitted documents, including invoices, bill of lading, and Central excise documents. The court examined specific documents related to sales to exporters, highlighting discrepancies in the authority's reasoning. Despite supporting evidence, the authority denied exemption on the grounds of lack of proof of export, specifically foreign buyer's orders and relevant packing lists. The court noted that the documents submitted by the petitioner aligned with shipping documents, contradicting the authority's claim of no documentary evidence.

3. The court emphasized that the assessing authority's inconsistency in accepting documents, as seen in the previous order, raised concerns about the arbitrary nature of the revision. Referring to a Division Bench decision, the court outlined the importance of providing an opportunity to produce additional documents if doubts exist, ensuring fairness and adherence to statutory requirements. The impugned order was deemed arbitrary and a violation of natural justice, leading to its setting aside and remittance for reconsideration in line with the Division Bench decision.

4. The judgment concluded by allowing the writ petition for remand, emphasizing the authority's obligation to reevaluate the matter with a time limit for disposal. No costs were awarded, and connected miscellaneous petitions were closed, ensuring a fair and just reconsideration of the exemption issues in light of the legal principles outlined in the Division Bench decision.