2016 (2) TMI 1015 - HC - VAT and Sales Tax

Exemption of sale - Bhutan sales - sale of tea through auction - denial on the ground that separate books of accounts were not maintained by the assessee in respect of the tea sold through auction and the tea sold through private treaties - Held that - If separate accounts pertaining to the two types of purchases are reflected in the same book but are not relatable to each other, such separate accounts or records of such purchases can be regarded as sufficient compliance with the notification without such records being required to be physically maintained in two separate sets of books or registers - It would serve the interest of justice best if the petitioner is required to produce the relevant records or accounts before the Board for the Board to make an independent assessment as to whether the accounts or records are separately maintained in accordance with law - matter on remand. The order impugned does not indicate that the Board was dissatisfied with the documents pertaining to the Bhutan transactions or that such documents were not conclusive as to the export being actually made as claimed by the petitioner - the matter pertaining to the Bhutan transactions is also remanded to the Board for the Board to look into the best documents that may be produced by the petitioner in support of his assertion as to the export of tea to Bhutan. Appeal allowed by way of remand.

Summary

Issues:
1. Disallowance of full exemption for Bhutan sales by the petitioner.
2. Disallowance of exemption for tea sold through auction due to lack of separate records.
3. Requirement for separate records as per relevant notification.
4. Assessment of Bhutan transactions for export claim substantiation.
5. Remand of matters to the Board for fresh consideration.

Analysis:
The petitioner challenged the order by the West Bengal Commercial Taxes Appellate and Revisional Board, raising two main grounds. Firstly, the petitioner contended that full exemption for Bhutan sales was erroneously disallowed. Secondly, the petitioner argued that the exemption for tea sold through auction was incorrectly denied due to the absence of separate records. The dispute pertained to the fourth quarter ended March 31, 2006 under the Central Sales Tax Act, 1956. The appellate authority acknowledged that the petitioner had not been given a fair hearing initially but decided to modify the assessment instead of remanding the case to the assessing officer.

Regarding the disallowance of exemption for tea sold through auction, the petitioner maintained that although separate accounts were kept for private tea sales and auction tea sales in the same register, they were not interlinked. The petitioner argued that the requirement for separate records did not mandate physical maintenance in distinct books but rather necessitated maintaining distinct records without cross-references. The court found merit in this argument and directed the petitioner to provide relevant records to the Board for independent assessment to determine compliance with the law.

Concerning the Bhutan transactions, the petitioner asserted that no specific receipts or certificates were mandated by rules or practice for export validation. The petitioner contended that transport documents and related challans were typically sufficient, but emphasized the need for substantive evaluation. The court noted that the Board did not express dissatisfaction with the provided documents for Bhutan transactions or conclusively reject the export claim. Consequently, the matter was remanded to the Board for a thorough review of the documents to ascertain the legitimacy of the export claim and make a decision on the exemption accordingly.

In conclusion, the court partially allowed the petition by overturning the Board's findings on Bhutan transactions and the denial of exemption under the relevant notification. Both issues were remanded to the Board for a fresh assessment based on the court's observations. No costs were awarded, and urgent certified copies of the order were to be provided to the parties upon request, adhering to formalities.