2022 (12) TMI 1182 - HC - VAT and Sales Tax

Refund of Excess ITR certified by the Auditor - Input Tax Rebate (ITR) - in the VAT Tax report, 75 mismatches were found - unverified ITR - Impugned order passed without application of mind without granting any justification - non issuance of show cause notice by Assessing Officer - Best judgment assessment under section20(5) of the VAT Act - non provision of report in Form 75-76 to Appellate containing details of turnover of Selling Dealers is denial of natural justice or not - failure by the Appellate Authorities to call remand report from the Assessing Officer regarding correct status and credentials of the selling dealers and merely confirming the rejection of ITR based on mismatch as per Form 75 is a correct procedure as per law - non- provision of reasons of reduction of ITR in the proceedings in assessment - increase in pecuniary liability. HELD THAT - Section 20 (1) of the M.P. VAT Act says that the assessment of every registered dealer shall be made separately every year. Sub-Section (4) of Section 20 provides that Commissioner shall serve on a registered dealer who is not eligible for assessment in the prescribed form, to appear in person or by an agent or to produce evidence or to produce accounts, registers, cash memoranda or other documents. Sub Section (b) provides that the Commissioner after hearing the registered dealer or his agent examined the evidence produced with requirement of section (2) and (3) of Clause (a), he may require shall assess or reassess to the tax. Therefore, proceedings under Section 20 (4) in respect of assess and re-assess is up to. All the authorities/ Tribunal has rightly held that under proviso (6) (a) of Section 14 of the M.P. VAT Act if a registered dealer (Selling dealer) has furnished a return of a period, the tax in respect of purchase made from the registered dealer, the selling dealer ordinarily deem to have been paid for the purpose subsection unless it is found otherwise. VAT Tax report has disclosed that certain entries are not matching with the return of the selling dealer, therefore, the appellant was called upon under Section 20(5). Then under Section 15, the burden of proving that any sale or purchase effected by a dealer is not liable to tax under Section 9 or Section 10 as the case may be, or that he is eligible for an input tax rebate under Section 14 shall be on the dealer, therefore, the burden was on the appellant to satisfy that the Input Tax Rebate for which he claimed the rebate was duly paid by the selling dealer before the sale of the goods. The authorities have recorded the satisfaction that those selling dealers did not show these sales to the appellant in their VAT Tax Return. So far as the contention of the learned counsel of the appellant is that no details of the disputed sale were given to the appellant by the Assessment Officer is concerned all the purchases were in the knowledge of the appellant on which he claimed input tax rebate and appellant was called to produce all the details of sale and purchase for that relevant year and after examining all the record, the authorities have recorded its satisfaction that, the appellant is not liable to be given a rebate of Rs.15,44,226/-. The concurrent findings of the three authorities are not liable to interfered as we do not find any substantial questions of law involved in this appeal. Appeal dismissed.

Summary

Issues:
1. Interpretation of Section 20(4) and 20(5) of the M.P. VAT Act, 2002.
2. Burden of proof on the appellant for claiming Input Tax Rebate.
3. Compliance with principles of natural justice in assessment proceedings.
4. Rejection of Input Tax Rebate and procedural fairness.
5. Evaluation of mismatched entries in VAT returns.

Analysis:

1. The appellant, engaged in the business of manufacturing sweets and namkeen, filed VAT returns claiming an Input Tax Rebate. Discrepancies in form 75 led to assessment under Section 20(4) of the M.P. VAT Act. The appellant's claim of Rs.15,44,226/- was rejected due to mismatched sales figures, prompting appeals at various levels.

2. The appellant contended that proper hearing and notice under Section 20(5) were not provided before rejecting the rebate. The burden of proof under Section 15 required the appellant to establish entitlement to the rebate, which was not satisfactorily done, leading to rejection.

3. The Government Advocate argued that the appellant had multiple opportunities to present evidence and failed to discharge the burden of proof. The assessment proceedings followed due process, including issuing notices and allowing the appellant to present his case.

4. The Court analyzed the provisions of Section 20(4) and 20(5) to determine the validity of the assessment proceedings. It concluded that the appellant was given a fair opportunity to defend his claim, and the rejection of the rebate was based on substantial evidence of mismatched sales data.

5. The Court upheld the rejection of the Input Tax Rebate, emphasizing that the appellant failed to prove the legitimacy of the claimed rebate. The burden of proof rested on the appellant, and the authorities' decision was deemed reasonable based on the evidence presented. The appeal was dismissed, as no substantial legal questions were found to warrant interference with the lower authorities' decisions.