2023 (8) TMI 1130 - HC - VAT and Sales Tax

Deletion of amount of tax levied by the assessing authority - rejection of account of books have been confirmed - illegal shifting the burden on the department - HELD THAT - From perusal of the provision of Section 16 of the UP VAT Act it is evidently clear that the burden of proof lies upon the dealer/opposite party - Merely showing the purchases through invoices from the registered dealer will not enough and sufficient to proof that the purchases have been made bona fidely. The Apex Court in the case of THE STATE OF KARNATAKA VERSUS M/S ECOM GILL COFFEE TRADING PRIVATE LIMITED 2023 (3) TMI 533 - SUPREME COURT while considering the pari materia of section 70 of the Karnataka Value Added Tax Act 2003 where the burden was upon the dealer to prove beyond doubt its claim of exemption and deduction of ITC has held that the primary responsibility of claiming the benefit is upon the dealer to prove and establish the actual physical movement of goods genuineness of transactions etc. In the case in hand from the verification of the registration numbers of the trucks provided by the dealer it was found that some of them are of two-wheeler passenger vehicles small three-wheeler and some of them could not be found. Therefore the dealer has miserably failed to prove the actual physical movement of goods which deemed to have been purchased from ex UP dealers. Once the dealer failed to establish the said purchases and the physical movement of the same the claim for non-taxability cannot be accepted - Once the dealer has failed to prove its purchases from registered dealer the levy of entry tax treating the same to be purchases from outside the local area and levying of entry tax on the HDEP bags is also justified. Revisions are allowed with a cost of Rs. 5, 000/- each which shall be deposited with the Department within a period of one month from today.

Summary

Issues Involved:
1. Legality of deleting the amount of tax levied by the assessing authority.
2. Justification of deleting specific amounts of tax.

Summary:

Issue 1: Legality of Deleting the Amount of Tax Levied by the Assessing Authority

The revisions pertain to the assessment year 2016-17 under section 28(2) of the VAT Act and section 9(4) of the U.P. Tax on Entry of Goods Act, 2007. The Commercial Tax Tribunal deleted the amount of tax levied by the assessing authority, shifting the burden of proof to the Department. The Tribunal confirmed the rejection of the books of account but accepted the declared turnover and tax, deleting the tax amount assessed by the assessing authority. The Court emphasized that under section 16 of the UP VAT Act, the burden of proof lies upon the dealer to prove the existence of circumstances for exemptions or reliefs. The dealer must prove beyond doubt the actual movement of goods. The Apex Court in "The State of Karnataka Vs. M/s Ecom Gill Coffee Trading Private Limited" held that the burden of proving the correctness of ITC remains upon the dealer, and mere production of invoices or payments by cheque is insufficient.

Issue 2: Justification of Deleting Specific Amounts of Tax

The Tribunal's decision to delete the tax amounts of Rs. 72,50,000/- and Rs. 12,50,000/- as well as Rs. 25,000/- was challenged. The Court noted that the dealer failed to prove the actual physical movement of goods, as some vehicle numbers provided were fictitious or belonged to two-wheelers and passenger vehicles. The Tribunal's observation of shifting the burden to the Department was contrary to section 16 of the UP VAT Act. The presumption by the assessing authority treating the purchases from unregistered dealers was justified. Consequently, the levy of entry tax on HDEP bags was also justified.

Conclusion:

The Court set aside the judgement and order dated 04.11.2022 passed by the Commercial Tax Tribunal, Aligarh Division, Aligarh, and allowed both revisions with a cost of Rs. 5,000/- each, to be deposited within one month. The questions of law were answered accordingly.