2016 (3) TMI 385 - HC - VAT and Sales Tax

Validity of an order passed by the Tribunal - Whether the KAT was justified in upholding the lower authorities orders in a routine manner without considering the documents on record submitted by the petitioner independently on merits, which would prove that the product sale consideration under the contract between the petitioner and its customer/client, is inclusive of warranty period replacements and has already suffered tax? - Held that - the finding is recorded by the Tribunal that there is failure to discharge the burden and if the appellant is to contend that there was no failure to discharge the burden, such shall be an essentially a question of fact and not the question of law as sought to be canvassed. The second ground contended that, as it was not a case of transfer of stock and therefore, no declaration was required to be filed, in our view, cannot be accepted on the face of Section 6-A of the CST Act more particularly when on facts there is a finding that, the appellant has failed to discharge the burden by placing valid material to show that the goods were not transferred to any other place of business or to his agent or his principal. The petition does not deserves to be entertained. Hence, dismissed. - Decided against the appellant.

Summary

Issues:
1. Whether the KAT justified upholding lower authorities' orders without independent consideration of petitioner's contentions?
2. Whether the KAT erred in not considering documents proving product sale consideration inclusive of warranty replacements?
3. Whether the KAT erred in rejecting petitioner's contention on non-taxable turnover for warranty replacements?
4. Whether the KAT erred in not considering petitioner's case against levy of interest?
5. Whether the KAT erred in not considering petitioner's case against levy of penalty?
6. Whether the KAT's order amounted to an abuse of process of law warranting interference?

Analysis:

1. The petitioner challenged a reassessment notice issued under the CST Act for the assessment year 2011-12. The DCCT passed a re-assessment order, which was partly allowed by the JCCT but confirmed the levy of tax, penalty, and interest. Subsequent appeals to the Tribunal were dismissed, leading to the current petition before the High Court under Section 65 of the K-VAT Act.

2. The Tribunal's order emphasized the burden of proof on the dealer under Section 6-A of the CST Act regarding the movement of goods. The Tribunal found that the appellant failed to provide valid material to support their contentions, leading to the rejection of claims related to warranty replacements being non-taxable turnover.

3. The High Court noted that the Tribunal's findings were based on the appellant's failure to discharge the burden of proof by not submitting necessary declarations and supporting documents. The Court referred to a previous judgment highlighting the importance of fulfilling statutory requirements for claiming exemptions.

4. The Court rejected the appellant's argument that the goods were not transferred, hence no declaration was required, emphasizing the statutory provisions under the CST Act. The Court held that the failure to provide valid material to show non-transfer of goods warranted the assessment of tax, penalty, and interest as per the statutory provisions.

5. Ultimately, the Court dismissed the petition, stating that the Tribunal's findings were based on the failure to discharge the burden of proof, which was a question of fact rather than a legal issue. The Court upheld the Tribunal's decision, concluding that the petition did not merit further consideration.

6. The Court's decision to dismiss the petition led to the disposal of the interim application as well, indicating a comprehensive rejection of the petitioner's claims and upholding the lower authorities' orders.