2019 (8) TMI 171 - HC - VAT and Sales Tax

Sale of scooters - privity contract or not - non-issuance of Form III-A - taxability at the point of sale - HELD THAT - The fact that the assessee itself issued sale letters on Forms 20-21 under the Act completely disproves the case set up by the assessee that it had sold the goods to M/s Jyoti Automobiles at Meerut - In fact, the sale letters which are issued by the assessee itself, prove that it had sold the goods to the consumers as, otherwise, the consumers would have no occasion to obtain the sale letters from the assessee. A clear case of collusion necessarily existed between the assessee and M/s Jyoti Automobiles as otherwise there could have been no circumstances in which Form III-A would have been issued by M/s Jyoti Automobiles. Clearly those forms were issued by M/s Jyoti Automobiles and accepted by the assessee only to avoid the tax liability which would have otherwise arisen against the assessee. Inasmuch as, in the present case, it is clear that there was collusion between the two dealers, the Tribunal has not erred in rejecting the appeal filed by the assessee. Revision dismissed.

Summary

Issues involved:
Challenge to order of Trade Tax Tribunal dismissing appeal against rejection of claim for sales of motor vehicle against Form III-A; Questions of law regarding justification of Tribunal's order, denial of benefit due to lack of material on record, entitlement to benefit of Form III-A.

Analysis:
1. The revision was filed against the Trade Tax Tribunal's order dismissing the appeal against the rejection of the claim for sales of a motor vehicle against Form III-A. The assessee contended that they sold scooters to a registered dealer, M/s Jyoti Automobiles, based on the promise of issuing Form III-A. The Tribunal found that the assessee issued sale letters to customers, indicating a device to avoid tax liability, suggesting collusion between the parties. The Tribunal's decision was based on the finding that the assessee issued sale letters, disproving the claim of selling to M/s Jyoti Automobiles.

2. The assessee argued that they relied on M/s Jyoti Automobiles' promise to issue Form III-A and cited a previous court decision to support their position. However, the Tribunal found collusion between the parties, as evidenced by the issuance of Form III-A to avoid tax liability. The Tribunal distinguished the previous court decision, emphasizing the presence of collusion in the current case.

3. The Tribunal's decision was supported by the fact that there was a clear collusion between the assessee and M/s Jyoti Automobiles, as indicated by the issuance of Form III-A to evade tax liability. The Tribunal held that no benefit of Form III-A could be granted due to the collusive nature of the transactions. Additionally, the revenue informed that the assessment order against the purchasing dealer had been set aside by its first appellate authority.

4. Consequently, the questions of law raised by the assessee were answered against them, and in favor of the revenue, based on the finding of collusion between the parties. The Tribunal's decision to reject the appeal was upheld, and the revision was dismissed. The judgment highlighted the importance of genuine transactions and the consequences of collusion in tax-related matters.