2013 (6) TMI 343 - HC - VAT and Sales Tax

Entry tax imposed under Section 9(4) of the Entry of Goods Act, 2000 - addition made under Rule 41(8) (State) - assessee has sold the molasses against the Form-3B - Held that - Undoubtedly, the dealer is having the turnover of more than Rs.25 crores, so the Form-3B used for more than Rs.5.00 lakhs is applicable in the present case. This aspect was not examined by the lower authorities. Similarly, from the balance-sheet, it appears that the assessee has purchased the goods from unregistered dealer for meager amount except a few. The Department has not examined the genuineness of the transaction. By adopting short cut method, additions were made merely by looking the balance-sheet. No other verification was sought by the lower authorities before making the addition. No opportunity was given to the assessee to justify the genuineness of the transactions by the lower authorities - matter is remanded back to the Tribunal to examine the same denovo.

Summary

Issues:
1. Revision filed against common judgment under U.P. Trade Tax Act, 1948.
2. Imposition of entry tax under Section 9(4) of the Entry of Goods Act, 2000.
3. Addition made under Rule 41(8) (State).
4. Use of Form-3B for transactions exceeding Rs.5 lakhs.
5. Purchase of goods from unregistered dealers.
6. Allegations of concealment and genuineness of transactions.
7. Examination of transactions by lower authorities.
8. Setting aside lower authorities' orders and remanding the matter to Tribunal for fresh examination.

Analysis:
The judgment involves two revisions filed under Section 11 of the U.P. Trade Tax Act, 1948 against a common judgment by the Commercial Tax Tribunal. The assessment year in question saw the imposition of entry tax under Section 9(4) of the Entry of Goods Act, 2000, and an addition under Rule 41(8) (State). The revisionist, a registered company engaged in sugar manufacturing and sales, sold molasses to another company against Form-3B. The Assessing Officer levied tax on the excess amount beyond Rs.5 lakhs, and also made additions for purchases from unregistered dealers, which were upheld by appellate authorities, leading to the revisions.

Regarding the use of Form-3B, the counsel argued that as per Rule 25(B) of the U.P. Trade Tax Act, 1948, exceptions exist for dealers with turnovers exceeding Rs.25 crores. This aspect was not considered by lower authorities. Additionally, the purchases from unregistered dealers were defended on grounds of regularity and genuine transactions, with payments made through banking channels. The genuineness of transactions, especially those exceeding Rs.20,000, was emphasized, pointing out the lack of examination by the Department and the need for proper verification before making additions.

The judgment highlighted the necessity for a thorough examination of the matter by the Tribunal, emphasizing the importance of providing a reasonable opportunity for the assessee to justify transactions. It set aside all impugned orders, including those of the lower authorities and the Tribunal, remanding the matter for a fresh examination in light of the observations made. The revisions were disposed of with these directives, emphasizing the need for a fair and comprehensive review of the issues raised by the revisionist company.