2016 (7) TMI 120 - HC - VAT and Sales Tax

Waiver of pre-deposit - Input tax credit - petitioner submitted that the Assessing Officer had not given sufficient opportunity to the petitioner and the order of Assessing Officer was passed in great hurry. In any case there was no material on record to suggest that the petitioner s transactions with Diamond Oil Industries were bogus. Merely because Diamond Oil Industries did not reflect its full sales to the petitioner in the tax returns would not automatically imply that the petitioner had not made such purchases or not paid corresponding tax. Held that - Even if we were to accept the statement made by the Director of Diamond Oil Industries in the said affidavit and discard the assertions made in the letter dated 24.9.2015 it would emerge that the entire sale turnover of Diamond Oil Industries during said period was to the petitioner of which he admits that the sale of 24.38 crores was not shown in the returns. The pre-deposit condition is modified by providing that the petitioner shall deposit 30 per cent of the principal tax with interest excluding penalty. - Decided partly in favor of petitioner.

Summary

Issues:
Challenge to assessment order disallowing input tax credit on purchases from a specific seller, rejection of appeal by Tribunal due to non-fulfillment of pre-deposit condition, contention regarding sufficiency of opportunity given by Assessing Officer, discrepancy in sales figures between petitioner and seller, authenticity of sales transactions, modification of pre-deposit condition.

Analysis:
The judgment pertains to a challenge against an assessment order disallowing input tax credit claimed on purchases from a particular seller. The petitioner, a trader in oils, had declared a total turnover and purchases for the assessment year, including claimed input tax credit. The Assessing Officer found discrepancies in the purchases from a specific seller, Diamond Oil Industries, leading to disallowance of tax credit and imposition of a substantial demand. The petitioner contended lack of opportunity and absence of evidence suggesting bogus transactions. On the other hand, the Government Pleader argued that the discrepancies were evident, justifying the pre-deposit condition imposed by the appellate authority and upheld by the Tribunal.

The Tribunal rejected the appeal due to the petitioner's failure to comply with the pre-deposit requirement set by the appellate authority. The petitioner argued against the haste in the assessment order and maintained the legitimacy of transactions with Diamond Oil Industries. However, the Government Pleader highlighted the glaring defects in the sales figures discrepancy between the parties, supporting the pre-deposit condition as appropriate. The petitioner's reliance on a letter from Diamond Oil Industries' Director admitting to oversight in reporting sales in VAT returns was countered by the Government Pleader's emphasis on the significant unreported sales amount.

The High Court analyzed the facts, acknowledging the discrepancies in sales figures and the conflicting statements from Diamond Oil Industries. Despite the Director's affidavit acknowledging genuine sales to the petitioner, the unreported sales amount raised doubts on the authenticity of transactions. The Court modified the pre-deposit condition, requiring the petitioner to deposit a percentage of the principal tax with interest, restoring the appeal to the first authority upon compliance. The judgment aimed to balance the competing contentions while upholding the pre-deposit requirement to address the uncertainties surrounding the transactions with Diamond Oil Industries.

In conclusion, the judgment addressed the issues of assessment order challenge, pre-deposit condition, discrepancies in sales figures, and authenticity of transactions with a specific seller. By modifying the pre-deposit requirement, the Court provided a nuanced resolution considering the conflicting assertions and the need for further verification of the sales transactions, emphasizing the importance of compliance with procedural conditions in tax appeals.