2015 (4) TMI 654 - HC - VAT and Sales Tax

Demand of tax - Stock difference - for the earlier notice petitioner has not stated about the godown for the first time it is stated and it is created for the purpose to avoid tax payable under The Puducherry Value Added Tax Act, 2007 - Held that - On verification of the registration records by the authorities on 19.11.2014 there is no such proof of existence of such a godown has been substantiated in the official registration records or the petitioner has been able to sustain the same. Therefore the presence of a godown and stock in the godown cannot be possibly be authenticated at a later point of time by the petitioner to the department only on 27.01.2015. Till date petitioner has not come to register godown and has created the same only to avoid the payment of tax - One more opportunity is given to the petitioner to appear before the authority and make his submissions. It is open to the respondent to verify the place of business before 30.04.2015. Petitioner shall deposit 35% of the tax amount less the amount already deposited if any - Decided partly in favour of assessee.

Summary

Issues:
1. Alleged stock difference in electrical items and paints.
2. Validity of notice issued by the sales tax department.
3. Existence of a godown and its registration.
4. Determination of tax amount payable.
5. Compliance with deposit requirements for appeal or revision.

Analysis:
1. The petitioner, a dealer in electrical items and paints, faced allegations of a stock difference amounting to Rs. 88,91,771 during a visit by the sales tax department. The notice of this stock difference was issued on 22.12.2015, following which the petitioner provided a list of materials in the godown and applied for registration on 21.01.2015. The respondent passed an order on 02.02.2015 without verifying the stock in the godown, leading to the current petition challenging the tax and penalty imposed.

2. The respondent argued that the petitioner's mention of the godown was a recent development to evade tax liabilities under The Puducherry Value Added Tax Act, 2007. The order was passed on 02.02.2015, citing the petitioner's objections dated 27.01.2015, and highlighted the absence of proof of the godown's existence in official records. The respondent contended that the petitioner's attempt to register the godown later was a tactic to avoid tax payments.

3. During the hearing, the court emphasized the need to determine the registered place of business and consider only the goods available with the petitioner for VAT payment. The petitioner expressed willingness to deposit the ordered tax amount and agreed to adjust the already deposited sum. The respondent mentioned the requirement for a 50% deposit if an appeal for revision is preferred. The court acknowledged that the respondent should have verified the godown's status before concluding on the tax amount, ultimately setting aside the order dated 02.02.2015.

4. In the final decision, the court allowed the writ petition, granting the petitioner another opportunity to present submissions and directing the respondent to verify the place of business before a specified date. The petitioner was instructed to deposit 35% of the tax amount, less any prior deposits, and a personal hearing was scheduled for further proceedings.

This comprehensive analysis covers the issues raised in the legal judgment, detailing the circumstances leading to the petition, arguments presented by both parties, and the court's final decision with specific directives for compliance.