2016 (1) TMI 829 - HC - VAT and Sales Tax

VAT assessment - AO disallowed the claim of sales return and imposed the tax on the ground that all the transactions were made prior to the date of VAT audit and the dealers have not produced the details before the Enforcement Wing Officials. - Held that - Admittedly, according to the petitioner, the entire documents are very much available with the petitioner. Simply, for the reason that those documents had not been produced before the Enforcement Wing Officials, the respondent cannot deny to accept those documents for perusal. Hence, for this reason, the impugned order is liable to be set aside and accordingly, the same is set aside and the matter is remitted back to the respondent for passing fresh orders. - Matter remanded back.

Summary

Issues:
Challenge to order disallowing sales return turnover for a specific period, violation of principles of natural justice, rejection of rectification petition without a personal hearing, failure to consider documents produced by the petitioner, applicability of Section 84 of the Act, and the duty of the assessing authority to independently consider evidence.

Analysis:
1. Challenge to Disallowance of Sales Return Turnover:
The petitioner, a dealer in medical equipment, challenged the order disallowing sales return turnover for a specific period. The petitioner contended that the assessing authority did not consider the objections filed and failed to independently assess the sales return details provided by the petitioner along with monthly returns. The petitioner argued that the assessing authority merely relied on the report of the Enforcement Wing without applying his mind independently.

2. Violation of Principles of Natural Justice:
The petitioner alleged a violation of the principles of natural justice, stating that the assessing authority did not provide a reasonable opportunity of being heard before rejecting the rectification petition filed under Section 84 of the Act. The petitioner emphasized the importance of a personal hearing before passing such orders.

3. Failure to Consider Documents Produced by the Petitioner:
The petitioner contended that the assessing authority failed to consider the books of accounts and documents produced, as required by law, without being influenced by the findings of the Enforcement Wing Officials. This failure to consider crucial evidence was argued to vitiate the entire assessment process.

4. Applicability of Section 84 of the Act:
Regarding the Section 84 application, the respondent argued that the provision only allows correction of obvious mistakes and cannot alter the original decision. However, the petitioner insisted that the assessing authority should have considered all evidence presented, regardless of previous findings.

5. Duty of Assessing Authority to Independently Consider Evidence:
Referring to the Madras Granites case, the Court emphasized the duty of the assessing authority to independently consider all records and documents presented before making a decision. The Court highlighted that the authority should apply its mind to the assessment issues and afford due opportunity to the concerned parties.

In conclusion, the Court set aside the impugned order disallowing sales return turnover and remitted the matter back to the respondent for fresh assessment. The petitioner was granted two weeks to submit all relevant documents, which must be considered by the assessing authority. The Court emphasized the importance of an independent assessment process and the duty of the authority to consider all evidence presented before making a decision.