2018 (10) TMI 881 - HC - VAT and Sales Tax

Liability of VAT - tax on Pan Masala, Gutkha etc - UPVAT Act - Revisionist is a registered dealer engaged in the sale and purchase of Pan Masala, Gutkha etc - Submission is that since assessee is neither manufacturer nor importer, therefore, the liability to pay tax cannot be imposed upon it - assessment year 2013-2014 - Held that - It is admitted that liability to pay tax would not be dependent upon the date of registration of assessee so far as sale of goods are concerned. If it is found, as a matter of fact, that the assessee was engaged in sales of Pan Masala and Gutkha, prior to registration also, the liability of paying tax could be imposed upon it. In the facts and circumstances of the present case, however, the documents which have been found at the time of survey, relates to the previous year. The admissibility of such materials and finding that it relates to the assessee has already been confirmed - Once that be so, the liability to pay tax cannot be resisted. Observation of this Court in Honey Furnitures 2006 (7) TMI 628 - ALLAHABAD HIGH COURT are clearly distinguishable - It appears that in Honey Furnitures, survey was made in which no material relating to the period of assessment was found against the assessee, and on such basis of materials seized for a subsequent period the authorities proceeded to enhance the turn over for previous year also. No evidence of escaped assessment pertaining to previous year was otherwise brought on record. It was in that context that this Court observed in para-8 that in the absence of any other materials, the assessment made previously cannot be altered. Revision dismissed.

Summary

Issues:
1. Interpretation of the definition of "manufacturer" under the Uttar Pradesh Value Added Tax Act, 2008.
2. Burden of proof in assessment proceedings under Section 16 of the Act.
3. Liability of tax on the basis of documents found during a survey.
4. Impact of registration date on tax liability.
5. Reliance on previous judgments regarding turnover enhancement based on survey findings.

Analysis:
1. The judgment addressed the interpretation of the term "manufacturer" under the Uttar Pradesh Value Added Tax Act, 2008. It was highlighted that a selling agent making sales on behalf of the manufacturer falls within this definition. The case involved a registered dealer engaged in the sale of Pan Masala and Gutkha, where documents found during an inspection indicated sales not reflected in the dealer's books. The Tribunal rejected the dealer's defense, emphasizing the burden of proof on the dealer to establish purchases from manufacturers to avoid being treated as a manufacturer liable for tax.

2. Section 16 of the Act concerning the burden of proof in assessment proceedings was discussed. The Tribunal's decision was based on the lack of evidence from the dealer regarding the source of the goods sold. The judgment emphasized that the burden lay on the dealer to prove purchases from manufacturers, failing which the dealer would be considered a manufacturer for tax liability purposes. The Tribunal's decision was supported by the Act's provisions, and the dealer's defense was found to be disbelieved.

3. The liability of tax based on documents recovered during a survey was a significant issue in the judgment. The documents found at the dealer's premises indicated sales from previous months, leading to the Tribunal's rejection of the dealer's defense. The Tribunal's reasoning, supported by the records, highlighted the lack of justification for maintaining old records if they were related to independent hawkers. The judgment upheld the Tribunal's decision, emphasizing the importance of evidence and the dealer's failure to prove the source of the goods sold.

4. The impact of the registration date on tax liability was also discussed in the judgment. The dealer argued that no liability could be imposed before the registration date. However, the judgment clarified that tax liability is not dependent on the registration date if the dealer was engaged in sales before registration. The judgment distinguished this case from previous judgments, emphasizing the factual differences and confirming the dealer's liability based on the documents found during the survey.

5. The judgment referred to previous judgments regarding turnover enhancement based on survey findings. It highlighted the relevance of incriminating materials found during a survey for assessing tax liabilities. The judgment differentiated the present case from previous cases where no such materials were found, emphasizing the admissibility of materials found during the survey in determining tax liabilities. The judgment dismissed the revision, affirming the tax liability based on the documents recovered during the survey and rejecting the dealer's arguments regarding registration dates and previous judgments.