2014 (8) TMI 92 - HC - VAT and Sales Tax

Liability of tax - Rejection of books of accounts - Enhancement in turnover of company - Held that - Perusal of impugned assessment order passed under U.P. Vat Act shows that in relevant year 2010-11 the turn over declared by the assessee is ₹ 8,14,461.93 but on the basis of survey dated 07.10.2010 the Assessment Officer has not accepted the account books of the assessee as well as turn over declared by him and has enhanced turn over to ₹ 1,89,00,000/-. First Appellate Authority as well as Tribunal both has upheld rejection of account books and turn over fixed by Assessment Officer. - According to survey report dated 07.10.2010 at the time of survey account books were not produced. It has been mentioned in the survey report that at the time of survey employee of assessee Jogesh was present who informed that account books are with munim ji. It is apparent from the survey report that at the time of survey the work in the factory of assessee was over and labourers had gone. Therefore, there appears reasonable ground for non-production of account books at the time of survey. Perusal of impugned order of assessment passed under Entry Tax Act shows that Assessment Officer has himself mentioned that levy of entry tax on cement has been abolished with effect from 19.02.2010 even then the Assessment Officer has levied entry tax at the rate of 2% on cement fixing turn over of ₹ 10,00,000/-. Thus the levy of entry tax on the said turn over of cement by Assessment Officer is illegal and the assessment order passed by Assessment Officer is contrary to law but neither First Appellate Authority nor Tribunal has considered this aspect in their impugned judgments - Perusal of impugned judgement passed by Tribunal shows that Tribunal has not considered any objection raised by assessee against assessment order passed under Entry Tax Act and has dismissed the appeal filed in respect of assessment made under entry tax without application of mind. - matter remanded back - Decided in favour of assessee.

Summary

Issues Involved:
1. Revision filed under Section 58 of U.P. Value Added Tax Act, 2008 against judgments passed by Commercial Tax Tribunal.
2. Rejection of account books and turnover enhancement by Assessment Officer.
3. Alleged discrepancies in stock found at the time of survey.
4. Levy of entry tax on cement and saria at incorrect rates.
5. Tribunal's failure to consider objections raised by the assessee.
6. Legality and reasonableness of the Tribunal's judgments.

Analysis:

1. Revision under U.P. Value Added Tax Act:
The revisions were filed by the assessee against the judgments of the Commercial Tax Tribunal. The Tribunal had dismissed the appeals filed by the assessee against the orders passed under the VAT Act and Entry Tax Act for the assessment year 2010-11. Both parties agreed for a final disposal of the revision on merits.

2. Rejection of Account Books and Turnover Enhancement:
The Tribunal upheld the rejection of the account books and the turnover enhancement by the Assessment Officer. The assessee argued that the Tribunal failed to consider important issues, such as the reason for rejecting the account books and the reasonableness of the turnover fixed by the Assessment Officer. The Tribunal's decision was challenged on the grounds of lack of consideration of relevant points raised by the assessee.

3. Discrepancies in Stock Found at Survey:
Allegations of discrepancies between the stock entered in the account books and the stock found at the time of survey were raised. The assessee provided explanations regarding the alleged differences, stating that no physical verification was conducted by the authorities. The Tribunal was criticized for accepting the rejection of books without considering the explanations provided by the assessee.

4. Levy of Entry Tax on Cement and Saria:
The Assessment Officer levied entry tax on cement and saria at rates that were against the law. Despite the abolition of entry tax on cement and specific rates for saria, the Assessment Officer imposed taxes at incorrect rates. The Tribunal and the First Appellate Authority failed to address these issues in their judgments.

5. Failure to Consider Objections:
The Tribunal did not consider the objections raised by the assessee regarding the levy of taxes on saria and cement. This failure to address the objections was highlighted as a critical flaw in the Tribunal's decision-making process.

6. Legality and Reasonableness of Judgments:
The High Court found that the Tribunal had committed gross irregularities in deciding the appeals of the assessee. Consequently, the High Court set aside the judgments passed by the Tribunal and remanded both appeals for a fresh order in accordance with the law, emphasizing the need for proper hearing opportunities for both parties.

This detailed analysis outlines the key issues raised in the legal judgment and the critical points considered by the High Court in its decision-making process.