2013 (5) TMI 232 - HC - VAT and Sales Tax

Appeal u/s 78 - Gujarat Value Added Tax Act, 2003 - Department made the additions on the total sales of the appellant on an estimation basis without finding any irregularity, for the entire year on the basis of sales for one week and on that were made by the Sales Tax Officer under section 41 of the Act With the order, demand was raised by him by issuing a separate assessment order. Deputy Sales Tax Officer partly allowed the appeal. Against that order, the assessee approached the Gujarat Value Added Tax Tribunal by way of Second Appeal. Tribunal confirmed the order.The assessee preferred restoration application which was rejected. Aggrieved by the order filed the application before High Court. Held that - From the facts and material on record, it was an undeniable fact that the accounts of the assessee were fully audited. They were computerized accounts. In respect of all the sales, computerized bills were issued. The officers of the Department, who visited appellant s premises, did not notice any irregularity as such. The question of law formulated is answered in the negative in favour of the assessee. The appeal is allowed.

Summary

Issues:
1. Interpretation of sales figures for assessment.
2. Justification of additional demand based on estimated sales.
3. Error in upholding the Tribunal's decision on sales figures.

Analysis:
1. The case involved a partnership firm engaged in the hotel business, registered under the Gujarat Sales Tax Act, 1969. The dispute arose when the Sales Tax Officer estimated the total sales for the entire year based on sales for one week, leading to additional tax demand. The Deputy Sales Tax Officer partially allowed the appeal, reducing the demand. The Tribunal later confirmed the Deputy Commissioner's order, prompting the appellant to file a restoration application, which was rejected.

2. During the proceedings, the appellant contended that the additional demand lacked justification as there was no evidence of concealed taxable sales. The appellant maintained computerized accounts, and the officers' estimation of total sales for the year based on a one-week period was deemed unjustified. The respondent, however, supported the impugned order, arguing that the demand was determined based on sales figures.

3. The High Court noted that the appellant's accounts were fully audited and computerized, with computerized bills issued for all sales. Despite no irregularities found during the officers' visit, the additional demand was raised based on sales figures observed during a specific period. The Tribunal's decision to uphold the Deputy Commissioner's order was criticized for adopting an erroneous basis for determining sales figures, which was deemed conjectural and presumptive. The Court concluded that the Tribunal erred in confirming the additional demand without identifying any defects in the appellant's maintained accounts, ruling in favor of the appellant and allowing the appeal.