2017 (1) TMI 271 - HC - VAT and Sales Tax

Survey - Interest - Penalty - Held that - it appears that none of the above certificates were before the AO and they have been obtained after the assessment was completed on 12.11.2008. I also notice that none of the certificates has been referred to by the DC(A) also in its order, and all the certificates do find place in the order of Tax Board only - Even the learned counsel for the assessee has provided the certificates during the course of final hearing before this court, and not filed in advance nor had given a copy to the counsel for the Revenue. In my view, though the assessment years are more than ten years old, but it would be appropriate to set aside the order of Tax Board and to remand the same to the Assessing Officer to take into consideration the same and to re-decide the issue afresh in the light of the material or any other material in this regard - Appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of tax liability on goods misdeclared during transportation.
2. Validity of exemption claimed by the assessee for "Yarn Ropes."
3. Consideration of additional evidence by the Tax Board without prior submission to the AO.

Analysis:

Issue 1: Interpretation of tax liability on misdeclared goods
The case involved a dispute regarding the tax liability on goods misdeclared during transportation. The respondent, a manufacturer of "Ban," was found transporting "Yarn Ropes" instead of the declared goods. The Assessing Officer (AO) determined that "Yarn Ropes" were taxable at 4% under Entry 157 of Schedule-IV of the VAT Act. The respondent initially attended but did not engage further with the AO's proceedings. The AO issued a show cause notice, leading to the imposition of VAT at 4% with additional interest and penalty. The Deputy Commissioner (Appeals) upheld the AO's decision, which was later challenged before the Tax Board.

Issue 2: Validity of exemption claimed by the assessee
The respondent contended that the goods intercepted were exempt under Entry No.48 of Schedule-I, which includes products like "Muddhas made of sarkanda, moonj, ban and its rope." The Tax Board, after considering the process of manufacturing "Yarn Ropes" and various certificates obtained by the respondent, concluded that the goods were exempt from taxation. The respondent argued that they were already paying tax at 4% on other items and provided certificates from government bodies supporting their claim.

Issue 3: Consideration of additional evidence by the Tax Board
The Tax Board relied on certificates obtained post-assessment, which were not before the AO or the Deputy Commissioner (Appeals). The certificates included endorsements from Zila Udyog Kendra, MSME-Development Institute, Weavers' Service Centre, and other government offices. The court observed that the Tax Board should have sought comments from the AO before considering this additional evidence. As a result, the court set aside the Tax Board's decision and remanded the matter to the AO for fresh consideration based on all available evidence.

In conclusion, the court allowed the petitions, remanding the matter to the Assessing Officer for a fresh decision considering all relevant evidence, emphasizing a fair and unbiased assessment without influence from previous observations.