2017 (1) TMI 130 - HC - VAT and Sales Tax

Levy of tax @ 12.5%, interest as well as penalty u/s 61 of the Act - explanation provided and records found establishing the sales effected - Held that - in the instant case there are no statements recorded of the owner/proprietor of the respondent firm and there is no deficiency/discrepancies and rather they have supported with proper bills and vouchers, which in my view is a finding of fact recorded by both the appellate authorities - petition dismissed - decided in favor of assessee.

Summary

Issues:
1. Discrepancies in tax assessment and imposition of penalty.
2. Validity of findings by lower appellate authorities.
3. Reliance on evidence and lack of opportunity for cross-examination.

Analysis:

Issue 1: Discrepancies in tax assessment and imposition of penalty
The case involves a tax dispute arising from a survey conducted by revenue officers, leading to the discovery of discrepancies in the stock register and sales figures of the petitioner. The Assessing Officer (AO) found disparities amounting to ?8,35,453 and imposed tax, interest, and penalty under the Rajasthan Value Added Tax Act, 2003. The Deputy Commissioner (Appeals) later overturned the decision, stating that the petitioner had adequately explained the discrepancies. The Tax Board upheld the decision of the DC(A), prompting the petitioner to challenge the orders, arguing that the discrepancies were not properly explained and that subsequent evidence presented was unreliable as it was created after the survey. However, the court found no merit in the petitioner's contentions, emphasizing that the AO had failed to conduct thorough enquiries and provide the opportunity for proper explanations during the assessment process.

Issue 2: Validity of findings by lower appellate authorities
The petitioner contended that the lower appellate authorities erred in accepting the explanations provided by the petitioner, claiming that the evidence presented post-survey was an afterthought and should not have been considered. Conversely, the respondent argued that the evidence presented before the AO, including challans and VAT declaration forms, supported their case and that the reliance on materials from other entities without allowing cross-examination was unjustified. The court examined the records and upheld the findings of the lower appellate authorities, emphasizing that the petitioner was not given the opportunity to challenge the evidence relied upon by the AO, rendering the findings unsustainable.

Issue 3: Reliance on evidence and lack of opportunity for cross-examination
The court scrutinized the reliance placed by the AO on transactions with other parties, noting the absence of proper enquiries and cross-examination opportunities for the petitioner. The court highlighted that the AO's reliance on photocopies without verifying with the concerned entities was a procedural flaw. Additionally, the court underscored that both the AO and the appellate authorities failed to provide the petitioner with a chance to cross-examine the evidence against them, which was deemed a violation of natural justice. Ultimately, the court found no legal grounds to interfere with the orders of the lower authorities, dismissing the petition due to the lack of merit in the petitioner's arguments.