2021 (12) TMI 670 - SC - VAT and Sales Tax

Suit for recovery - mortgage transactions - defence of the respondent was that there was no relationship of mortgagor and mortgagee between the parties but that the relationship was as landlord and tenant - whether the alleged bills forming the claim in the suits have been raised on the basis of the fictitious and fraudulent transactions? - HELD THAT - The respondents have admitted that no sales tax is payable by a dealer to a dealer. By necessary implication, the respondents are admitting the appellant to be a dealer as also the respondents to be dealer under the Delhi Sales Tax Act, 1975. It is only on account of sales made by a dealer to a dealer that the sales tax is not be payable as the incidence of payment of tax would be when the goods are sold to a consumer. The respondents as wholesaler, were getting the benefit of trade discount, which is an agreed term of sale. The witness examined by respondent no.1 in his cross examination admitted his signature or that of the representative of company on invoices, debit notes and on ST-1 Form. The respondent had led no evidence in respect of fraud or duress apart from self-serving statement. The consignment of goods was sent from the month of November 1985 to January 1986. The respondent had signed large number of documents during this period. However, no complaint was made to any person or authority or even to the plaintiff. It is a denial of receipt of goods without any basis raised only in the written statement filed. Such stand is wholly bereft of any truth and is thus rejected. The debit notes stamped and signed by the respondents were in respect of trade discount on the wholesale price mentioned in the invoice. Having accepted the trade discount, which is evident from the stamp and signatures not only on the debit notes but also on the invoice as well as on ST-1 Form, shows that the goods were actually lifted by the respondents for which payment has not been made. The respondents have taken up wholly untenable ground that the documents were signed under duress - The High Court in the appeal has gravely erred in setting aside the reasoned order of the learned Single Bench on the grounds which were not even raised by the respondents. The suit is decreed for recovery of ₹ 96,41,765.31 and future interest on the principal sum of ₹ 71,82,266/- @9% p.a. from the date of filing of the suit till realisation - Appeal allowed.

Issues Involved:
1. Validity of the alleged bills and transactions.
2. Proof of registration as a dealer with the Sales Tax Authorities in Delhi.
3. Admissibility of account books and documents.
4. Onus of proof regarding the genuineness of transactions.
5. Allegations of fraud, duress, and fictitious transactions.

Detailed Analysis:

1. Validity of the Alleged Bills and Transactions:
The appellant filed a suit for recovery of ?96,41,765.31, claiming that the respondent, a wholesale dealer, had defaulted on payments for goods worth ?72,27,079/- supplied between November 1985 and January 1986. The respondents denied the transactions, alleging that the bills were based on fictitious and fraudulent transactions. The Division Bench of the High Court dismissed the suit, finding that the appellant failed to prove the transactions. However, the Supreme Court noted that the invoices, debit notes, and ST-1 Forms were stamped and signed by the respondents, indicating the receipt of goods.

2. Proof of Registration as a Dealer with the Sales Tax Authorities in Delhi:
The Division Bench dismissed the suit partly on the ground that the appellant failed to prove its registration as a dealer in Delhi. The Supreme Court found this reasoning erroneous, as the appellant provided a registration certificate as a reseller dealer in Delhi, which was not disputed by the respondents in their written statement. The appellant's invoices bore the registration number, further supporting their claim.

3. Admissibility of Account Books and Documents:
The respondents argued that the appellant did not produce account books, only extracts, which are not admissible in evidence. The Supreme Court held that the invoices, debit notes, and ST-1 Forms were maintained in the regular course of business and were stamped and signed by the respondents. The appellant's witness confirmed the authenticity of these documents, and the respondents admitted their signatures on these documents during cross-examination.

4. Onus of Proof Regarding the Genuineness of Transactions:
The Division Bench held that the appellant failed to prove the genuineness of the transactions. The Supreme Court clarified that since the respondents alleged the transactions were fictitious and fraudulent, the onus of proof was on them. The respondents failed to discharge this burden, as they did not produce their account books, claiming they were damaged during reconstruction. The Supreme Court found this defense unconvincing and noted that the respondents did not provide any evidence of fraud or duress apart from self-serving statements.

5. Allegations of Fraud, Duress, and Fictitious Transactions:
The respondents claimed that the transactions were tainted with fraud and that they signed documents under duress. The Supreme Court rejected these allegations, noting that the respondents did not make any complaints during the period the transactions took place. The large number of documents signed over three months made the claim of duress implausible. The court found that the respondents' denial of receipt of goods was baseless and aimed at defeating the appellant's legitimate claim.

Conclusion:
The Supreme Court set aside the Division Bench's order, reinstating the Single Bench's decree in favor of the appellant. The suit was decreed for recovery of ?96,41,765.31 with future interest on the principal sum of ?71,82,266/- at 9% p.a. from the date of filing of the suit till realization. The appeal was allowed, emphasizing that the respondents failed to prove their allegations of fraud and fictitious transactions, and the appellant's documents were duly authenticated and admissible.

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