2022 (2) TMI 727 - HC - VAT and Sales Tax

Non acceptance of requisite forms - rejection of claim of goods return of applicant - goods have been returned within six months by the purchaser of the applicant - absence of any equipment/machinery with the applicant for finishing, surfacing, drilling the CI Casting the Tribunal - sale of CI Casting as machinery parts - Whether the tax which has been deposited by the applicant proof of the same were already on record the Tribunal was justified even in not giving the benefit of the same? Whether in view of judgment of this Hon'ble Court in the case of Dhan Prakash Cane Crusher Vs. Commissioner of Trade Tax 2002 (4) TMI 898 - ALLAHABAD HIGH COURT the Tribunal was justified in not accepting the requisite forms submitted by the applicant? - HELD TH AT - The Tribunal has fallen in error in rejecting the application filed by the assessee-revisionist under Section 12B of the U.P. Trade Tax Act, 1948. The Assessment Year in question was 1996-97 (U.P.). The assessment order was passed on 07.12.1999 whereas the first appeal order was passed on 12.9.2001. In the meanwhile i.e. after the conclusion of the original assessment proceedings but before the first appeal order came to be passed, the assessee-revisionist had obtained the disputed two forms III-B issued under the U.P. Trade Tax Rules, 1948 (hereinafter referred to as 'the Rules') from the purchasing dealer. Briefly the purchasing dealer had been enabled by law to purchase raw materials from the assessee-revisionist on a concessional rate of tax against forms III-B. In that regard the assessee-revisionist claims delay in issuance of forms III-B by the purchasing dealer. In the present case, though the assessee-revisionist claims to have always had knowledge of its entitlement to concessional rate of tax upon furnishing forms III-B, at the same time it has been submitted that such forms could not be adduced by the assessee-revisionist because the purchasing dealer did not issue the same to it. These two number of forms III-B came to be first issued to the assessee-revisionist on 08.4.2000 and 24.2.2001 respectively. The Assessment Year being 1996-97 and the forms having been issued prior to 16.12.2002 (the date when Rule 25- B(3) was amended) it clearly indicates that forms thus obtained by the assessee-revisionist were valid - the assessee-revisionist had adduced sufficient material and evidence to establish that it was prevented from bringing on record the evidence in the shape of two forms III-B before conclusion of the assessment proceedings. The Tribunal has rejected the application made by the assessee-revisionist to lead such additional evidence without considering the third situation when such evidence may be allowed to be admitted being where the evidence could not be brought on record despite due diligence. Clearly the Tribunal has fallen in error in acting in ignorance of the third situation where Section 12B of the Act would allow the appeal authorities to entertain additional evidence - In absence of any dispute as to the explanation furnished by the assessee-revisionist of it having pursued the matter with the purchasing dealers and of such dealer having issued the two number of forms III-B with delay, the question of law is answered in the negative i.e. in favour of the assessee-revisionist and against the revenue. Whether admittedly the goods have been returned within six months by the purchaser of the applicant which is duly supported by debit note, invoices, gate pass of the purchaser and the applicant has made correspondence entries in its books of account and has produced the same while filing the return in the subsequent months. The said documents are on record of the Tribunal, still the Tribunal was justified in rejecting the claim of goods return of the applicant? - HELD THAT - The appeal authority and the Tribunal erred in not taking care of the error committed by the Assessing Authority. Clearly in face of the findings recorded by the Assessing Authority accepting the claim of the goods-return and in face of the unrebutted debit note as has been shown to be reconciled with the excise gate passes, it could never be denied that the goods had been returned within a period of two months from the date of sale - In absence of any other dispute between the parties the assessee-revisionist was clearly entitled to the deduction in its turn over upon simple application of Rule 44A(b) of the Rules - the questions of law is again answered in the negative i.e. in favour of the assessee-revisionist and against the revenue. Whether in absence of any equipment/machinery with the applicant for finishing, surfacing, drilling the CI Casting the Tribunal was justified in treating the sale of CI Casting as machinery parts? - HELD THAT - The Tribunal, appeal authority and the Assessing Authority have clearly erred in applying a wrong principle in law. No party or assessee could have been saddled with a negative burden to establish that it did not have machining tools available or that it had not machined the castings. Merely because the word 'unmachined' or such other description was not found mentioned on certain bills whereas such mention was found on certain bills it may at the most have invited a suspicion on the part of the Assessing Authority. Such suspension may have driven the Assessing Authority to make a full fledged enquiry from the purchasing dealers of the assessee or he could have also made a survey of the assessee-revisionist's manufacturing facilities to determine if any machined castings were prepared and sold by the assessee-revisionist. In absence of such enquiry being made by the Assessing Authority either from the purchasing dealers of the assessee or by carrying out a survey of the revisionist's factory premises, the findings recorded by the Assessing Authority as upheld by the Tribunal are presumptuous based on nothing but conjectures. They are perverse and contrary to law - the question of law is answered in the negative and in favour of the assessee-revisionist and against the revenue. Whether the tax which has been deposited by the applicant proof of the same were already on record the Tribunal was justified even in not giving the benefit of the same? - HELD THAT - Once the assessee-revisionist claimed to have deposited any amount towards tax over and above that disclosed in its returns, the Assessing Authority became obligated to verify the same. The State is not an unscrupulous tax collector. In face it accounts for every rupee that the tax payer deposits with it. Merely because the assessee-revisionist may not have claimed the deposit in the original returns would be of no consequence as to computation of outstanding demand - Against the Tribunal has erred in refusing to allow such verification exercise. Accordingly the question of law is answered in the negative and in favour of the assessee-revisionist and against the revenue. The revenue authority shall now carry out a verification of the two forms III-B submitted by the assessee-revisionist by way of additional evidence and also of the amounts claimed to have been deposited by the assessee-revisionist after the assessment order. As to the claim of goods returned and liability of CI Castings, the demand created by the Assessing Authority as sustained by the Tribunal be deleted. The revision is allowed .

Summary

Issues:
1. Acceptance of requisite forms by the Tribunal
2. Rejection of claim for goods return by the Tribunal
3. Treatment of sale of CI Casting as machinery parts
4. Verification of tax deposited by the applicant

Analysis:

Issue 1: Acceptance of requisite forms by the Tribunal
The assessee filed a revision against the Tribunal's order, citing the delay in obtaining forms III-B for concessional tax rates. The Court found the Tribunal erred in rejecting the application under Section 12B of the U.P. Trade Tax Act, 1948. The assessee established due diligence in pursuing the forms, which were issued before the amendment date. The Court held that the Tribunal overlooked the provision allowing additional evidence if due diligence was exercised, as seen in a similar case. The Court ruled in favor of the assessee, directing the Tribunal to consider the additional evidence.

Issue 2: Rejection of claim for goods return by the Tribunal
The deduction claimed by the assessee for goods returned within six months was disputed. The Court noted discrepancies in the Assessing Authority's findings, accepting then rejecting the goods-return claim. The Tribunal failed to rectify this error and denied the deduction. The Court emphasized that the assessee was entitled to the deduction as per the Act and Rules. Consequently, the Court ruled in favor of the assessee, directing the allowance of the deduction.

Issue 3: Treatment of sale of CI Casting as machinery parts
The Tribunal and authorities erred in presuming the sale of CI Casting as machinery parts without proper verification. The Court stated that burdening the assessee to prove the absence of machining tools was unjust. The authorities' findings were deemed presumptuous, based on conjectures, and contrary to law. The Court ruled in favor of the assessee, directing the deletion of the demand related to CI Castings.

Issue 4: Verification of tax deposited by the applicant
The Court emphasized the obligation of the Assessing Authority to verify any tax deposits claimed by the assessee, even if not initially disclosed. The Tribunal's refusal to allow verification was deemed erroneous. The Court ruled in favor of the assessee, directing the verification of the deposited amounts and adjustment of any verified amounts in the outstanding demand. As a result, the revision was allowed, and the demand related to goods return and CI Castings was to be deleted by the revenue authority.