2014 (2) TMI 205 - HC - VAT and Sales Tax

Levy of purchase tax - assessee has provided new TV sets in lieu of the old TV sets - Levy of tax on Exchange / Barter purchase - Imposition of penalty - Held that - The transaction is certainly sale as the assessee was a dealer of Akai TV, has provided new TV sets in lieu of the old TV sets. Therefore, even exchange/barter, in my view, will fall within the definition of sale/purchase as defined under the Act. Had the assessee purchased goods,Assessee purchased goods, which were exempted or had the assessee proved that the initial purchaser, who had come with the old TV set for replacement/exchange by a new TV set had proved that it was a tax paid item, then possibly the contention of the assessee may have had some substance. It has been observed that the assessing officer repeatedly required the assessee to provide basis and evidence as to whether the initial purchaser had paid tax, but it is already on record that despite of repeated time having been allowed, no evidence was placed. Here is a case where neither sale/purchase was recorded in the books of accounts nor even shown in the return of income, neither even the credit notes were entered in the books of accounts, nor were shown in the return of sales tax - the penalty is leviable. Decided against assessee.

Summary

Issues Involved:
1. Taxability of 82 exchanged television sets.
2. Applicability of penalty under Section 65 of the Rajasthan Sales Tax Act.

Detailed Analysis:

1. Taxability of 82 Exchanged Television Sets:
The primary issue was whether the exchange of 82 old television sets for new Akai television sets, with only the differential amount charged, constituted a sale or purchase under the Rajasthan Sales Tax Act, 1994. The court examined the definition of "sale" under Section 2(38) of the Act, which includes every transfer of property in goods for cash, deferred payment, or other valuable consideration. The court concluded that the transaction indeed fell within the definition of a sale, as the petitioner, a dealer of Akai TVs, provided new TV sets in exchange for old ones, thereby constituting a transfer of property.

The court also analyzed Section 11, which deals with the levy of purchase tax. It was noted that the petitioner failed to provide evidence that the initial purchasers had paid tax on the old TV sets. Despite multiple opportunities, no proof was presented. The court acknowledged that while it is generally assumed that sales tax is paid on such goods, judicial notice can be taken that goods are often sold without proper bills and vouchers. Therefore, the burden of proof lay on the petitioner to show that the exchanged items were tax-paid, which was not discharged. Consequently, the assessing officer's decision to levy purchase tax on the value of the credit notes amounting to Rs. 7,45,000/- was upheld.

2. Applicability of Penalty under Section 65:
The second issue was whether the imposition of a penalty under Section 65 of the Act was justified. The court noted that the transaction involving the exchange of TV sets was not recorded in the books of accounts, nor was it shown in the sales tax return. The petitioner also failed to produce the books of accounts during the survey and even at the appellate stages. The court found that there was a deliberate attempt by the petitioner to conceal the transaction and evade tax liability.

The court referred to the case of Union of India & Ors v. Dharamendra Textiles Processors & Ors, which emphasized the importance of compliance with tax laws and the imposition of penalties for evasion. Given the petitioner's failure to disclose the transaction and the absence of records, the court concluded that the penalty was rightly imposed.

Conclusion:
The court dismissed the revision petition, affirming the taxability of the exchanged television sets and the imposition of the penalty. Both issues were decided in favor of the Revenue and against the petitioner. No order as to costs was made.