2014 (5) TMI 837 - HC - VAT and Sales Tax

Denial of exemption or remission in disregard of s. 36 (3) (a) - Failure to produce evidences - Violation of principle of natural justice - whether the items mentioned in the proforma invoices were already covered by the said invoice Nos.001 and 002 - Held that - The appellant s explanation for proforma invoice Nos.1 to 114 require consideration in the light of the evidence already on record. The order of the Tribunal notes that an opportunity had also been given by the Tribunal to reconcile the statement, but that the appellant had not availed the same. - If they were, the appellant would not be liable under the proforma invoice Nos.1 to 114 - The appellant has admittedly paid the entire tax along with penalty and interest. The revenue is therefore, entirely protected. In the facts and circumstances of this case, the appellant ought to be afforded an opportunity of establishing its case for a refund - Order set aside - Matter remanded back - Decided in favour of assessee.

Issues:
1. Non-application of mind by authorities under the Maharashtra Sales Tax Act
2. Proper consideration of evidence on record
3. Imposition of interest and denial of exemption or remission

Analysis:

Issue 1: Non-application of mind by authorities under the Maharashtra Sales Tax Act
The High Court admitted the appeal based on questions of law regarding the non-application of mind by the authorities under the Maharashtra Sales Tax Act. The Court found that the authorities had not satisfactorily dealt with the material evidence and record available with the appellant. The appellant had produced voluminous evidence on record, but the authorities had wrongly observed that no evidence was produced, indicating a failure to exercise jurisdiction. The Court decided to set aside the impugned orders and remand the matter to the Maharashtra Sales Tax Tribunal (MSTT) due to this reason.

Issue 2: Proper consideration of evidence on record
The appellant, a unit manufacturing flasks, entered into an agreement to sell plant and machinery to another party. The Deputy Commissioner of Sales Tax held the appellant liable for sales tax based on proforma invoices. The Court noted that the items mentioned in the proforma invoices were actually sold as scrap under separate invoices. The main question was whether the items covered by the proforma invoices were already covered by the separate invoices. The Court found that relevant evidence indicating the contrary and supporting the appellant had not been considered by the authorities. The appellant's explanation for the proforma invoices also required consideration, and the Tribunal had given an opportunity to reconcile the statement, which the appellant did not avail.

Issue 3: Imposition of interest and denial of exemption or remission
The Court addressed the imposition of interest by the authorities under the Maharashtra Sales Tax Act and the denial of exemption or remission to the appellant. Despite the appellant having paid the entire tax along with penalty and interest, the authorities had not considered the relevant material and had not afforded the appellant an opportunity to establish its case for a refund. The Court set aside the impugned orders and remanded the matter to the Tribunal to determine the questions of fact and decide whether the assessment order and the first appellate authority had considered the relevant material or not. The appellant was granted the opportunity to establish its case for a refund.

In conclusion, the High Court's judgment focused on addressing the issues of non-application of mind by the authorities, proper consideration of evidence on record, and the imposition of interest and denial of exemption or remission under the Maharashtra Sales Tax Act. The Court set aside the impugned orders and remanded the matter to the Tribunal for further consideration and determination of the appellant's case.

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