2023 (4) TMI 318 - HC - VAT and Sales Tax

Inclusion of value of damaged and obsolete/ unsaleable goods from previous assessment years in the assessable value (disallowance of deduction) - Form 53 not uploaded, which was a necessary pre-requisite to claiming such deduction - HELD THAT - The assessing authority has now accepted that the documents produced by the petitioner are reliable, and that the only reason for disallowing the claim of the assessee was the non-production of those documents along with Form 13 audit report, Form 13A audited Balance Sheet and the audited Profit and Loss Account for the year ended 31.03.2012, the said technical reasons need not be a reason to deny the petitioner the substantive benefit of deduction of the amounts from the taxable turnover for the year. Matter remanded back to the assessing authority for passing a fresh assessment order, taking into consideration the documents now produced by the petitioner before the assessing authority, and which were found as acceptable by the assessing authority, for the limited purposes of passing a revised assessment order.

Summary

Issues:
The issues involved in this case include the deduction claimed by the assessee on account of damaged and obsolete/unsaleable goods, the non-acceptance of the deduction by the assessing authority and subsequent appellate bodies, and the requirement of producing necessary documents to support the deduction claim.

Deduction Claim of Assessee:
The revision petitioner, an assessee under the Value Added Tax Act for the assessment year 2011-2012, claimed a deduction in the closing stock value for damaged and obsolete/unsaleable goods from previous assessment years. The assessing authority disbelieved this claim and added the amount to the taxable turnover after including gross profit. The appeals made by the petitioner against this assessment order were unsuccessful before the first Appellate authority and the Appellate Tribunal.

Non-acceptance of Deduction Claim:
The Appellate Tribunal found the petitioner's contention regarding damaged goods unacceptable as the necessary Form 53 was not uploaded, which was essential for claiming such a deduction. Despite the petitioner filing a rectification petition, it was also dismissed.

Production of Supporting Documents:
Upon the revision petition being presented before the court, the petitioner was directed to produce records demonstrating that the deduction in the closing stock truly represented obsolete unsaleable material. The petitioner submitted a reconciliation statement along with supporting records to establish the claim. The assessing authority verified these documents and confirmed their reliability, acknowledging that the only reason for disallowing the deduction claim was the non-submission of certain audit-related documents.

Judgment:
Considering that the assessing authority accepted the reliability of the documents produced by the petitioner and that the technical reasons for disallowance were solely related to the non-submission of specific audit reports and accounts, the court set aside the Tribunal's orders. The matter was remitted back to the assessing authority for a fresh assessment order, taking into account the now-accepted documents. The court emphasized that the failure to produce the documents along with audit reports should not be a reason to deny the deduction benefit to the petitioner. The assessing authority was directed to pass fresh orders within one month from the date of the judgment, with the petitioner required to appear before the authority for this purpose on a specified date.

Disposition:
The OT Revision was disposed of with the above directions, focusing on the acceptance of the supporting documents and the reassessment by the authority based on the newly presented evidence.