2019 (11) TMI 313 - HC - VAT and Sales Tax

Classification of goods - spent malt - Tribunal has treated the same to be unclassified goods and subjected them at a highest rate - rejection of books of accounts - Whether the Tribunal was justified in holding that spent malt is not cattle fodder and therefore not exempt from trade tax under Notification KA.NI.-3129/XI-9(40)/92 U.P. Act 15/48- Order-(38)2000, dated 30.9.2000 w.e.f. 1.10.2000? - HELD THAT - In absence of any ground of appeal having been raised by the revenue before the Tribunal seeking such enhancement on the ground of classification of the goods, the Tribunal has clearly erred in subjecting the goods spent malt treating them to be unclassified goods - In so far as the Tribunal has dismissed the assessee's appeal on that count and drawn a third conclusion that order is found to be lacking as noted above. It is, accordingly, set aside and the matter is remitted to the Tribunal to pass a fresh order in accordance with law. Rejection of books of accounts - Whether the Tribunal was justified in remanding the issue of books rejection and ordering for reexamination of figures furnished by the petitioner and passing assessment order afresh, when it had made a categorical finding that there is no material with the department to disapprove the figures furnished by the petitioner? - HELD THAT - The Tribunal appears to have recorded unsustainable findings, inasmuch as, in one breath it has recorded that though no books of account were produced by the assessee before it, yet on a prima facie basis, there is no deficiency in the same. Without having itself seen the books, the latter observation made by the Tribunal cannot be sustained. Being a fact finding authority and the rejection of books of account being an issue raised before it, Tribunal was bound to return a proper finding upon appraisal of material and evidence. Since the matter is being remitted to the Tribunal to record a finding on the issue of classification of the goods, it is desirable that the Tribunal may pass proper order on second issue regarding to rejection of books of account - Appeal allowed by way of remand.

Summary

Issues:
1. Classification of spent malt as cattle fodder for trade tax exemption.
2. Rejection of books of account and remand for reexamination.

Analysis:

1. Classification of spent malt:
The High Court considered the revisions filed by the assessee against the order of the Commercial Tax Tribunal. The Tribunal had treated spent malt as unclassified goods and subjected them to the highest tax rate, contrary to the first appeal authority's decision to tax them at 5%. The Court referred to the Supreme Court's ruling in a similar case involving damaged wheat as cattle fodder, emphasizing that the generic term "cattle fodder" includes items fed to cattle. The Court noted that spent malt is primarily used as cattle fodder at dairy farms and cited the Encyclopedia Britannica's description of brewers grains and corn distillers' soluble as animal feed. The Court found that the Tribunal did not adequately address the submissions made by the assessee and failed to consider the Supreme Court's principle in the Ram Chandra Asha Ram case.

2. Rejection of books of account:
The Court found the Tribunal's findings on the rejection of the assessee's books of account to be unsustainable. The Tribunal had acknowledged the absence of produced books but still concluded that there was no deficiency prima facie. The Court held that the Tribunal, being a fact-finding authority, should have properly evaluated the evidence before making such a determination. As the matter was remitted back to the Tribunal for a fresh order on the classification issue, the Court advised the Tribunal to address the rejection of books of account in a proper manner.

In conclusion, the High Court disposed of the revisions, setting aside the Tribunal's order and remitting the matter back to the Tribunal for fresh consideration in accordance with the law, emphasizing the need for proper evaluation and findings on both the classification of spent malt and the rejection of books of account.