2023 (3) TMI 829 - HC - VAT and Sales Tax

Legality of default assessment framed by the VATO - levy of penalty - sales of SKO were exempted from tax or not - alleged clerical error in reported sale in return - contravention to provision of Section 86(10) of DVAT Act - Opportunity of hearing not provided - violation of principles of natural justice - HELD THAT - The Appellate Tribunal accepted the appellant s contention that it was not afforded any opportunity to clarify the doubts that had crept in the mind of OHA regarding genuineness of transportation of goods for the reason that the Value Added Tax Inspectors (hereafter VATI ) were unable to verify the transportation of goods by some transporters. The Appellate Tribunal was of the view that it would be in the interest of justice to afford the appellant an opportunity to substantiate its claims regarding inter-state sales. Accordingly, the Appellate Tribunal remanded the matter to the OHA for consideration and decide afresh. Similarly, the Appellate Tribunal also remanded the matter to OHA to consider the movement of goods in respect of invoice dated 20.05.2005. The question regarding levy of penalty under Section 86(10) of the DVAT Act with regard to inter-state sales was also remanded for consideration afresh by the OHA. Whether the Arbitral Tribunal had erred in not accepting that there was a clerical error in reporting the sales as ₹1,38,82,000/- instead of ₹13,82,000/-? - HELD THAT - It is relevant to note that there is no dispute that the tax computed in the said returns was commensurate with the turnover of ₹13,82,000/-. The appellant claims that the same was correctly computed. Thus, prima facie, the contention that a typographical error had crept in the sales figure as reported is not insubstantial - More importantly, it is not disputed that the appellant had produced his books, which were subjected to audit. The same would have clearly revealed the sales turnover as recorded in the books of accounts. The appellant had also filed a revised return which was produced before the Appellate Tribunal. In addition, the appellant had also filed a chartered accountant s certificate confirming that the turnover as reflected in the books of account for the relevant period is ₹13,82,000/- - this Court is unable to concur with the decision of the Arbitral Tribunal to disregard the revised returns or the chartered accountant certificate, which are undeniably relevant for deciding the question whether a typographical error had crept in the returns. The impugned order, to the extent that it outrightly rejects the appellant s contention that its turnover was erroneously reported at ₹1,38,82,000/- instead of ₹13,82,000/-, is set aside. This issue is remanded to the OHA to consider afresh - appeal disposed off.

Summary

Issues involved:
The appeal impugned an order passed by the Delhi Value Added Tax Appellate Tribunal, questioning the correctness of turnover reported and the penalty imposed under Section 86(10) of the DVAT Act.

Turnover Reporting Issue:
The appellant contested the turnover reported in the order, claiming a clerical error in reflecting sales as Rs. 1,38,82,000 instead of Rs. 13,82,000. The Appellate Tribunal rejected the explanation, stating that the correct turnover could have been ascertained from the books of accounts. The appellant filed revised returns and a chartered accountant's certificate to support the actual turnover, but the Tribunal did not consider them due to being filed belatedly. The Tribunal's decision was deemed incorrect as the relevant documents were crucial in determining the reported turnover accurately. The matter was remanded to the Objection Hearing Authority (OHA) for reassessment based on all evidence provided.

Penalty Imposition Issue:
Regarding the penalty under Section 86(10) of the DVAT Act for inter-state sales, the Tribunal remanded the decision to the OHA for fresh consideration. The respondent clarified that only the interest on sales of SKO and the penalty thereon were upheld, while further levy under Section 86(10) was to be reconsidered. The ambiguity in the penalty imposition was acknowledged, and the second question raised by the appellant was deemed irrelevant. The Tribunal's decision on the penalty was subject to review by the OHA, focusing on the specific amount in question.

Conclusion:
The High Court set aside the Tribunal's rejection of the reported turnover discrepancy and directed the OHA to reevaluate the correct turnover after examining all relevant records. The appeal was disposed of accordingly, emphasizing the importance of considering all evidence presented in determining tax liabilities accurately.