2020 (2) TMI 178 - HC - VAT and Sales Tax

Restoration of assessment order - rejection of book-version and determining taxable turnover of imported goods - rejection of book version of the revisionist on the basis of survey conducted at the premises of another dealer - opportunity of cross-examination not provided - U.P. Trade Tax Act, 1948 - whether the Tribunal has rightly up held the order of imposition of tax which was based on the survey made of the premises of M/s Gomti Interiors wherein certain loose papers were found which were estimates prepared by the revisionist while dispatching the goods to the purchaser? HELD THAT - While rejecting the books of account, it has no where stated by any of the taxing authority below that it was in the course of business that estimates were sent alongwith the goods to the purchaser and bill was submitted only subsequently which included only the goods actually supplied to the purchaser excluding the goods which were returned by the purchaser. The Revenue has not disputed this fact before any of the authorities below - Second aspect which needs consideration is as to whether in supplying the goods the revisionist was engaged in purchases from outside the State for which declaration and Form is required to be obtained from the respondent. It is admitted case that the revisionist had not obtained any goods from outside the State and also that no goods were purchased from the unregistered dealers, was exempted from tax. In the light of provisions of contained in Section 3A of the Act, 1948, the revisionist had infact declared goods purchased by him from the registered dealers and the First Appellate Authority has also considered the fact that in subsequent years also no tax has been imposed on the revisionist. The Tribunal has failed to discharge its duty while accepting the plea of the Revenue. The finding of fact recorded by the first Appellate Authority that there was no material with the Revenue to conclude that the goods were either imported from outside the State or purchased from unregistered dealers, cannot be set aside lightly on the basis of apprehension expressed by the Revenue and therefore in the peculiar facts of the case the questions are decided in favour of assessee and against the Revenue. Revision allowed.

Summary

Issues involved:
Challenge to order of Commercial Tax Tribunal dismissing second appeal - Questions of law regarding rejection of book version, determination of taxable turnover, rejection of book version based on survey at another dealer's premises without cross-examination.

Analysis:
1. Rejection of Book Version and Taxable Turnover:
The revisionist challenged the Tribunal's order based on questions of law related to rejection of book version and determination of taxable turnover. The revisionist contended that all purchases were made from within the state, no forms for import of goods were used, and hence, there was no liability of tax on sales. The Assessing Authority had imposed tax based on discrepancies in bills and suspicions of under-invoicing. The First Appellate Authority accepted the revisionist's explanation and allowed the appeal, emphasizing that no tax had been levied for subsequent years. The Tribunal, however, upheld the assessment order, citing discrepancies in bills and suspicions of tax evasion. Ultimately, the High Court set aside the Tribunal's order, reinstating the First Appellate Authority's decision, as there was no concrete evidence of tax evasion or purchases from unregistered dealers.

2. Rejection of Book Version based on Survey:
Another issue raised was the rejection of the revisionist's book version based on a survey conducted at another dealer's premises without providing an opportunity for cross-examination. The revisionist argued that estimates were sent along with goods, bills were prepared based on actual goods supplied, and no evidence of purchases from outside the state existed. The High Court emphasized that the Tribunal failed to consider the factual aspects before accepting the Revenue's stand. The Tribunal's decision was overturned, highlighting that tax liability cannot be imposed solely on apprehensions without concrete evidence. The High Court ruled in favor of the revisionist, setting aside the Tribunal's order and restoring the First Appellate Authority's decision.

In conclusion, the High Court allowed the revision, emphasizing the importance of factual considerations and concrete evidence in tax assessments. The judgment highlighted the need for proper evaluation of evidence before imposing tax liabilities and rejected decisions based solely on suspicions or apprehensions.