2019 (7) TMI 1458 - HC - VAT and Sales Tax

Proceedings under Section 48(5) of the U.P. Value Added Tax Act, 2008 - Whether on the facts and circumstances of the case, the Commercial Tax Tribunal was legally justified in remanding the matter back on those grounds which were neither taken by the assessing authority while framing the penalty order nor has been pleaded before the 1st Appellate Authority? - HELD THAT - Once the Tribunal has set aside the order of the first appeal authority, it should have left open to the first appeal authority to pass a fresh order in accordance with law. However, to dictate to the subordinate authority the manner in which an enquiry is to be done especially in a case such as this where merely an incomplete enquiry has been made, may often stifle the parties to their prejudice in the proceedings on remand. Therefore, it should have been left open to the first appeal authority to pass an order upon making such complete enquiry on the basis of plea and evidence that may be brought before it by the assessee as also the revenue. The submission advanced by learned counsel for the assessee that a new case has been set up, is not correct. Revision allowed.

Issues Involved:
1. Legality of the Tribunal's remand on grounds not raised by the assessing authority or first appellate authority.
2. Legality of the Tribunal's remand when both dealers were registered at the time of transaction and supported by tax invoices.
3. Possibility of penalty under Section 48(5) of the U.P. Value Added Tax Act.

Issue-wise Detailed Analysis:

1. Legality of the Tribunal's Remand on New Grounds:
The assessee contended that the Tribunal remanded the matter on grounds not previously raised by the assessing authority or the first appellate authority. The Tribunal's remand was challenged on the basis that it introduced new grounds for consideration, which were not part of the original penalty order or the first appeal. The court found this argument unpersuasive, noting that the Tribunal's remand did not constitute making out a new case but rather addressed the deficiencies in the first appellate authority's reasoning. The Tribunal's directions for a fresh enquiry were within its purview to ensure a thorough examination of the facts.

2. Legality of the Tribunal's Remand Given Registration Status and Tax Invoices:
The assessee argued that both the purchasing and selling dealers were registered at the time of the transactions, and the transactions were documented with tax invoices. The first appellate authority had accepted the tax invoices and purchase ledger, finding them supportive of the assessee's claims. However, the Tribunal found that the first appellate authority did not provide a detailed reasoning or discussion about the validity of these documents or the timing and effect of the selling dealer's registration cancellation. The Tribunal's remand aimed to address these gaps, ensuring a comprehensive enquiry into whether the selling dealer was bona fide and whether the transactions were legitimate.

3. Possibility of Penalty Under Section 48(5) of the U.P. Value Added Tax Act:
The court examined whether a penalty under Section 48(5) was justifiable. The assessee maintained that the penalty was imposed hastily, without considering that the selling dealer's registration was valid at the time of the transactions. The revenue countered that the penalty was not solely based on the cancellation of the selling dealer's registration but also on doubts about the bona fides of the dealer and the transactions. The court noted that the first appellate authority failed to provide a clear finding on these issues. The Tribunal's remand was intended to facilitate a thorough enquiry, allowing both parties to present evidence. The court emphasized that the remand should not be biased or prescriptive but should enable a fair reassessment based on all available evidence.

Conclusion:
The court upheld the Tribunal's decision to remand the matter for a fresh enquiry but modified the Tribunal's directions to avoid any bias. The first appellate authority was instructed to conduct a comprehensive enquiry and pass a fresh order based on the evidence presented by both the assessee and the revenue. The court clarified that the remand did not introduce a new case but aimed to address the deficiencies in the original assessment and appellate proceedings. The revision was allowed to the extent of ensuring a fair and unbiased reassessment.

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