2019 (5) TMI 933 - HC - VAT and Sales Tax

Revision of assessment order passed by the assessing authority - inter-state sales - Levy of tax under Andhra Pradesh VAT Act - burden to prove the sales effected - no recorded evidence was furnished to support the statement of turnover break-up details - HELD THAT - While it is no doubt true that the burden is on the petitioner, under Section 16 of the A.P. VAT Act, to show that the turnover, disclosed in the show cause notice, includes inter-State sales, exempt sales etc., on which VAT cannot be levied, the fact remains that, in present case, the revisional authority had, in his endorsement dated 07.02.2018, not even called upon the petitioner to furnish the books of accounts, sales invoices etc. The impugned order of the revisional authority is set aside - The petitioner shall furnish documentary evidence in support of their plea that inter-State sales of aerated water and fruit drinks have also been included by the revisional authority in the VAT turnover, and VAT at 14.5% was levied on goods liable to VAT at 5%. Petition allowed by way of remand

Summary

Issues:
Challenge to revisional order under the A.P. VAT Act - Burden of proof on the dealer - Discrepancies in turnover details - Treatment of inter-State sales as intra-State sales - Lack of supporting evidence - Failure to call for books of accounts and sales invoices - Setting aside the order of the revisional authority - Requirement for documentary evidence - Fresh revisional order within three months.

Analysis:
The High Court addressed a Writ Petition challenging a revisional order passed by the Deputy Commissioner under the A.P. VAT Act. The petitioner contested the levy of tax amounting to ?1,59,49,504 on a turnover of ?10,99,96,577 for a specific tax period as arbitrary and illegal. The revisional authority had called for detailed sales information, including a comparative statement with the annual audit report, but observed discrepancies in turnover details, specifically related to aerated water sales causing a tax shortfall. The authority raised concerns about the lack of supporting evidence such as sales ledger and bills to justify the turnover break-up provided by the petitioner.

The burden of proving that sales were not taxable fell on the dealer as per Section 16 of the A.P. VAT Act. The revisional authority upheld the tax levy citing insufficient evidence supporting the turnover details provided by the petitioner. The petitioner argued that only intra-State sales of aerated water and fruit drinks were taxable under the Act, while inter-State sales were wrongly included. However, the authority did not allow the petitioner to present books of accounts and invoices to substantiate their claims before confirming the tax imposition.

In response to the petitioner's submissions, the court emphasized the importance of providing a breakdown of sales in the Profit and Loss account to distinguish between inter-State and intra-State transactions for tax purposes. Despite the burden of proof resting on the petitioner, the revisional authority failed to request the submission of books of accounts and sales invoices, leading to a lack of proper examination of the evidence supporting the turnover details.

Consequently, the High Court set aside the revisional authority's order and directed the petitioner to furnish documentary evidence supporting their claim that certain sales were incorrectly subjected to VAT at a higher rate. The court mandated the revisional authority to review the evidence presented by the petitioner and issue a fresh order within three months, ensuring compliance with the law. The Writ Petition was disposed of without costs, with pending miscellaneous petitions closed accordingly.