2022 (4) TMI 513 - HC - VAT and Sales Tax

Affirmation of remand order passed by the Additional Commissioner - reassessment proceedings were only initiated on the ground that tax could not be levied on the essential oil - change of opinion or not - burden to prove - second remand order - HELD THAT - Admittedly, the dealer has acted as a commission agent for purchase of goods for and on behalf of Ex. U.P. Principals to which the various agreements have been referred in the original assessment order. The Tribunal being the last court of fact ought to have considered on legal issues as well as on the fact. This proceeding is not the original proceeding but it is a reassessment proceeding. The burden is heavily on the revenue to prove its case. The reassessment order was passed against the dealer. Against which the first appeal was preferred and the matter was remanded. Against the second remand, the assessee has already filed materials to prove its case though it is incumbent upon the Tribunal to have decide the issue itself. It is not the case that the dealer has failed to product material to prove its case. The Tribunal has further erred in holding that under Section 9 of U.P. Trade Tax Act the first appellate authority is not competent to look into the facts of the case. The matter is remanded back to the Tribunal to decide the issue afresh only on the basis of material available before the Tribunal - Revision allowed.

Summary

Issues:
1. Interpretation of remand order by Tribunal.
2. Validity of reassessment proceedings.
3. Competency of the First Appellate Authority.
4. Burden of proof on the revenue in reassessment proceedings.

Interpretation of Remand Order by Tribunal:
The High Court considered the connected sales/trade tax revisions against the order passed by the Commercial Tax Tribunal. The revisions questioned the correctness of the remand order passed by the Additional Commissioner, Grade-2 (Appeal)-H, Commercial Tax Bareilly. The key legal issue was whether the Tribunal was right in affirming the remand order, ignoring the original assessment order and the absence of fresh material for reassessment. The Court analyzed the submissions made by both parties and emphasized the need for the Tribunal to consider both legal and factual aspects in reassessment proceedings.

Validity of Reassessment Proceedings:
The revisionists argued that the reassessment proceedings were initiated based on a change of opinion, which is impermissible under the law. They contended that all relevant documents and materials were already on record, and there was no new evidence to warrant reassessment. The Standing Counsel, on the other hand, supported the initiation of reassessment proceedings, citing the inability of the dealer to justify purchases on behalf of Ex. U.P. Principals and the non-leviability of central tax on essential oil. The Court examined the facts, highlighting the dealer's role as a commission agent and the necessity for the revenue to substantiate its case in reassessment proceedings.

Competency of the First Appellate Authority:
The Court addressed the issue of whether the First Appellate Authority had the competence to examine the facts of the case. The revisionists argued that the Tribunal erred in holding that the First Appellate Authority lacked the authority to verify the dealer's books of accounts. The Court emphasized the importance of the Tribunal considering all available material and deciding the issue itself, especially in reassessment proceedings where the burden of proof lies heavily on the revenue.

Burden of Proof on the Revenue in Reassessment Proceedings:
The judgment underscored that in reassessment proceedings, the burden is on the revenue to establish its case. It noted that the Tribunal should have independently decided the issue based on the material before it, rather than remanding the matter back to the dealer. The Court set aside the impugned orders of the Commercial Tax Tribunal and remanded the case for a fresh decision based on the existing evidence. It directed the Tribunal to expedite the process due to the age of the matter and emphasized the importance of timely compliance by the revisionists to benefit from the order.