2016 (11) TMI 461 - HC - VAT and Sales Tax

Suppression of facts - Held that - though the specific provision as found in the Tamil Nadu General Sales Tax Act, for production of the Books of Accounts, was not found in the TNVAT Act, that does not mean that the Assessing Officer can refuse to look into the Books of Accounts. The Assessing Officer, should bear in mind as to how the VAT regime works as it is a process of self assessment. Therefore, when the Assessing Officer takes up a case for revision of assessment, then obviously the dealer should be granted an opportunity to produce the Books of Accounts and other records to substantiate their stand. Therefore, the observation made by the Assessing Officer that he need not call for the Books of Accounts of the dealer is untenable. When the Appellate Authority is examining the correctness of the order passed by the Assessing officer, it is incumbent to examine all the facts. It is the settled legal position that the appeal is a continuation of the original proceedings and the appellate authority is entitled to re-examine all the factual issues. Therefore, what the Appellate Authority should have done is to direct the petitioner to produce the Books of Accounts and substantiate the claim that there is no sales suppression and they have not claimed any ITC on unreported purchases. Without doing so, the Appeal ought not to have been dismissed. Therefore, this is a fit case where the Appellate Authority should be directed to re-hear the appeal, examine the petitioner s Books of Account and then come to a conclusion. Petition allowed - matter remanded.

Summary

Issues: Challenge to orders passed by the Appellate Authority under TNVAT Act for the years 2013-14 and 2014-15.

Analysis:
1. The petitioner, a dealer in cement and iron & steel, challenged the orders passed by the Appellate Authority under the TNVAT Act. The petitioner contended that despite accounting for all transactions and not claiming any Input Tax Credit (ITC) on unreported purchases, the Appellate Authority confirmed the order of assessment without examining the records provided by the petitioner.

2. The Court noted that although the TNVAT Act did not explicitly require the production of Books of Accounts like the Tamil Nadu General Sales Tax Act, the Assessing Officer should consider the dealer's records during the assessment process. The VAT regime operates on self-assessment principles, necessitating the Assessing Officer to allow dealers to present their Books of Accounts for verification during a revision of assessment.

3. The petitioner's argument before the Appellate Authority highlighted that they were not a manufacturer and had not maintained a proper stock book. The Appellate Authority, however, failed to thoroughly examine the facts and dismissed the appeals without directing the petitioner to produce their Books of Accounts to substantiate their claims.

4. The Court emphasized that during appellate proceedings, the Appellate Authority must re-examine all factual issues from the original assessment. In this case, the Appellate Authority should have directed the petitioner to present their Books of Accounts to verify the absence of sales suppression and ITC claims on unreported purchases before dismissing the appeals.

5. Consequently, the Court partly allowed the Writ Petitions, setting aside the Appellate Authority's orders and remanding the matter for fresh consideration. The Appellate Authority was directed to provide a personal hearing to the petitioner, review the Books of Accounts, and other relevant documents. No costs were awarded in this matter, and the connected Miscellaneous Petitions were closed.