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2019 (12) TMI 1168 - HC - VAT and Sales TaxLevy of tax as well as penalty - sale of third Doubling machine taking place - alleged suppressed turnover - HELD THAT - The learned Authorities below have erred in imposing the tax on the alleged suppressed taxable turnover of the third machine on the basis of a Proforma Invoice claimed to have been raised by the Assessee on the Purchasing Dealer M/s.Anand Cotspin Limited. The said Slip No.4 produced in the course of survey does not refer to any final Invoice, but the fact remains that the Assessee has produced the said explanation before the Assessing Authority as well as Statement of Account of said purchasing dealer independently before the Income Tax Authority of the Purchasing Dealer M/s.Anand Cotspin Limited under section 133(6) of the Income Tax Act giving the third sale under the Invoice No.3 dated 29.06.1996. Merely because the Proforma Invoice shown in the Slip No.4 could not be produced by the Assessee before the Assessing Authority and the same, in our opinion, could not be treated as suppressed sale taxable turnover in the hands of the Assessee. The Assessee had entered into a series of sale of Doubling machines to the same Company viz., M/s.Anand Cotspin Limited and two Invoices were duly recorded for in the assessment period in question for the year 1995-96 and the third sale took place under Invoice No.3 dated 29.06.1996. The Proforma Invoice included in the Slip No.4 was neither serially numbered nor any date has been mentioned and therefore, merely on the basis of mention of the Proforma Invoice in the said statement, the Assessing Authority could not have imposed tax on the same as suppressed sale - merely on the alleged failure to produce the said Proforma Invoice as indicated in Slip No.4, the authorities below cold not have arrived at the conclusion of a suppressed taxable turnover in the hands of the Assessee during the year 1995-96. The third machinery was admittedly sold by the Assessee in the next year 1996-97 under Invoice No.3 dated 29.06.1996 which has been accounted for in the next year and there is no dispute on that issue. All the three authorities below have erred concurrently in holding that the Assessee had suppressed a turnover to the extent of ₹ 6,44,118/- on the basis of the alleged Proforma Invoice not produced by the Assessee - Petition allowed - decided in favor of petitioner.
Issues Involved:
1. Imposition of tax on alleged suppressed turnover. 2. Validity of proforma invoice as evidence of sale. 3. Assessment of tax and penalty based on proforma invoice. 4. Evaluation of evidence and explanation provided by the assessee. Issue-wise Detailed Analysis: 1. Imposition of Tax on Alleged Suppressed Turnover: The Assessee, M/s. Sreevaree Textile Machinery Private Limited, challenged the concurrent orders by three authorities under the Central Sales Tax Act, 1956, which upheld the imposition of tax on an alleged suppressed turnover of ?6,44,118 for the Academic Year 1995-96. The authorities treated a proforma invoice as evidence of suppressed taxable turnover, leading to the imposition of tax and penalty. 2. Validity of Proforma Invoice as Evidence of Sale: The core issue revolved around whether a proforma invoice could be considered as evidence of an actual sale. The Assessee argued that the proforma invoice was issued to facilitate payment arrangements and did not constitute a final sale. The final sale invoice (Invoice No.3) was issued in the subsequent year (1996-97) for ?5,21,277, reflecting adjustments for accessories not taken by the purchaser and differences in excise duty. 3. Assessment of Tax and Penalty Based on Proforma Invoice: The authorities imposed tax and penalty, asserting that the proforma invoice indicated a suppressed sale. The Assessing Authority, First Appellate Authority, and the Sales Tax Appellate Tribunal all upheld this view, citing the absence of the proforma invoice and discrepancies in the Assessee's explanations. They concluded that the Assessee had deliberately evaded the turnover for 1995-96, justifying the imposition of tax and penalty. 4. Evaluation of Evidence and Explanation Provided by the Assessee: The Assessee provided detailed explanations and supporting documents, including statements to the Income Tax Authority, showing that the final sale occurred in 1996-97. The High Court found that the authorities failed to appreciate this evidence and erroneously treated the proforma invoice as suppressed turnover. The Court noted that the proforma invoice did not result in a taxable sale and that the burden of proving a taxable sale lay with the Revenue. Judgment: The High Court concluded that the authorities erred in imposing tax on the alleged suppressed turnover based on the proforma invoice. The Court emphasized that no actual sale during 1995-96 was established by the Revenue, and the proforma invoice alone could not be treated as evidence of a taxable sale. The Court allowed the writ petition, quashing the orders of the authorities and directing the refund of any tax and penalty recovered from the Assessee, with interest at 9% per annum from the date of payment till the date of refund. No order as to costs was made.
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