2018 (2) TMI 757 - HC - VAT and Sales Tax

Demand of interest - Whether the Hon ble Tribunal has erred in law and in facts in deleting levy of interest u/s 30(5) of the Gujarat Value Added Tax Act in respect of tax paid on turnover related to marketing scheme? - Held that - the Tribunal found that there was full compliance with the provisions of sub-section (2) of section 30 of the Act and, therefore, sub-section (5) thereof was not attracted. In view of the fact that the respondent dealer had furnished returns as required under sub-section (1) of section 29 of the Act and had paid into the Government treasury the whole of the amount due from him according to such return and had duly complied with the provisions of sub-section (2) of section 30, no infirmity can be found in the impugned order passed by the Tribunal in holding that the provisions of sub-section (5) of section 30 would not be attracted - the question does not merit acceptance. Whether the Hon ble Tribunal has erred in law and in facts in reversing the order of the first appellate authority and deleting levy of tax, interest and penalty to the extent of amount of stock difference of ₹ 7,50,000/- which was found by Income Tax authorities during survey proceedings and disclosure made before the Income Tax authorities? Whether the Hon ble Tribunal has erred in law and in facts in confirming order of the first appellate authority and deleting levy of tax, interest and penalty to the extent of stock difference of ₹ 7,50,000/- which was found by the Income Tax authorities during survey proceedings and disclosure made before the Income Tax authorities and thereby rejecting cross objection of the appellant herein? Held that - the assessing authority had relied only on the statement made before the Income Tax authorities and had not taken into consideration the fact that the Income Tax authorities had not taken into consideration the stock lying at the exhibition place as well as the fact that the books of accounts were closed and adjusted and audited by a Chartered Accountant and the investigation report of the department had given a clean chit to the appellant. It is in this backdrop that the Tribunal found no justification in confirming the order of the first appellate authority and set aside the same and for the very same reason, dismissed the cross objections filed by the appellant - the findings recorded by the Income Tax authorities during the course of search, could have been made a starting point for inquiry as regards the discrepancy in the physical stock and that shown in the stock register. However, the statement made by the dealer, ipso facto, could not have been the basis of an addition. The Tribunal was wholly justified in setting aside the order of the first appellate authority to the extent it had confirmed the demand which had no legal basis, and confirming the order to the extent it had reduced the tax liability imposed by the assessing authority - these questions also does not merit acceptance. Appeal dismissed.

Summary

Issues:
Challenges to the order of the Gujarat Value Added Tax Tribunal under the Gujarat Value Added Tax Act, 2003 regarding interest levy, tax, interest, and penalty deletion based on stock difference found by Income Tax authorities during survey proceedings.

Analysis:

Interest Levy Issue:
The appellant challenged the Tribunal's decision to delete the interest levy under section 30(5) of the Act related to a marketing scheme. The Tribunal found that the dealer had complied with tax payment requirements by filing returns and paying the tax due, thus not warranting interest levy. The Tribunal's decision was upheld as the dealer had followed statutory provisions, and the interest provision was deemed inapplicable.

Tax, Interest, and Penalty Deletion Issue:
Regarding the deletion of tax, interest, and penalty based on a stock difference of ?7,50,000 found by Income Tax authorities, the dealer argued that the stock variance was minimal and due to factors like surprise physical stock checks. The assessing authority and first appellate authority relied solely on the dealer's statement to impose tax liability without verifying facts. The Tribunal noted discrepancies in the authorities' approach, as the Commercial Tax Department's search found no stock differences. The Tribunal rightly set aside the previous decisions, emphasizing the need for independent verification before tax imposition.

In conclusion, the High Court dismissed the appeals, upholding the Tribunal's decisions. The Court found no legal flaws in the Tribunal's orders, emphasizing the importance of independent verification before imposing tax liabilities based solely on statements. The judgments highlight the significance of thorough investigations and adherence to legal procedures in tax matters.