2019 (8) TMI 743 - HC - VAT and Sales Tax

Levy of tax - excess stock found during inspection/survey conducted by the Income Tax Department - whether tax liability could have been fastened on the revisionist only on the basis of details provided by the Director of the revisionist company who was present at the time of survey operation rather than actual weighment of the goods? HELD THAT - This Court is of the considered opinion that there is no infirmity with the finding of the Revenue authorities that the revisionist had stock far in excess than what was recorded in their books of account and therefore this Court does not find any infirmity in the assessment proceedings or the impugned judgment and order passed by the Tribunal. Revision dismissed.

Summary

Issues:
Assessment of tax liability based on excess stock found, reliance on director's statement without actual weighment, legality of Tribunal's order.

Analysis:
The case involves a revision under Section 58(1) of the U.P. Value Added Tax Act against a judgment passed by the Commercial Tax Tribunal. The controversy revolves around a registered dealer in iron and steel business who was found with excess stock during inspections by the Income Tax Department and Commercial Tax Department. An assessment order was passed, levying a significant tax amount on the dealer. The First Appellate Authority partially allowed the appeal, reducing the tax liability. However, the Tribunal dismissed the second appeal, leading to the current revision before the High Court.

The revisionist challenges the Tribunal's order, alleging it to be illegal and arbitrary. The crux of the argument is that the finding of excess stock and tax evasion is based on estimation rather than actual weighment of the goods. The revisionist relies on a judgment in a similar case to support their argument.

On the other hand, the Revenue's Standing Counsel supports the Tribunal's order, highlighting a previous judgment where the matter was remitted to the Tribunal for reconsideration. The Tribunal's order under revision was passed in compliance with the High Court's previous directive.

The Tribunal's judgment records the excess stock as a basis for concluding tax evasion by the revisionist. The presence of the director during inspections, providing stock details, and signing survey notes are noted. The key question is whether tax liability can be imposed solely based on the director's statement without actual weighment of goods.

The High Court distinguishes the cited case law from the present situation, emphasizing the director's active involvement and lack of objections to his statements. The director's statement, disclosing actual stock weight, is considered reliable, given his position in the business.

The revisionist's argument against tax liability without weighment is rejected by the Court, citing the director's statement as a valid basis for determining stock weight. After considering submissions and records, the Court upholds the Revenue authorities' findings of excess stock, affirming the legality of the assessment proceedings and the Tribunal's order.

Ultimately, the High Court finds no merit in the revision and dismisses it, upholding the Tribunal's order based on the director's statement as a reliable source for determining excess stock and tax liability.