2023 (4) TMI 68 - HC - VAT and Sales Tax

Owner of goods - sale in Delhi or not - failure to furnish information regarding the receipts of the goods found at its godown - whether the Tribunal has erred in upholding the order of the Appellate Authority on the ground that the appellant had not produced necessary information in his possession in respect of the goods stored at the godown? - order of default assessment passed - rebuttal of presumption. HELD THAT - The plain reading of Sub-section (9) of the Section 3 of the DVAT Act indicates that if a person who transports or holds goods in custody fails to furnish any information in respect of the goods in his possession, on being required to do so by the Commissioner, it would be presumed that he is the owner of the goods - Undisputedly, the presumption under Section 3(9) is a rebuttable presumption. Further, the said presumption would arise only if a person who is in custody of the goods fails to produce the information in his possession in respect of the goods. It is the appellant s case that it had, in fact, produced relevant documents to show the ownership of the goods in question and therefore, no such presumption could be drawn - Admittedly, there is no dispute that at the time of inspection of the godown, the appellant s Manager had not produced the relevant documents. However, the record indicates that the appellant had produced the relevant documents at a subsequent stage prior to the order of default assessment. There appears to be no real dispute that the appellant had done so. The appellant has produced photocopies of the documents that were filed before the VATO Enforcement at the time of the default assessment or prior, thereto. These were also produced before the Appellate Tribunal. It is material to note that Section 3(9) of the DVAT Act does not specifically provide a time-frame for submission of documents. It merely contemplates a presumption as to the ownership of the goods if the person in custody of goods fails to furnish any information in possession in respect of the goods on being required to do so by the Commissioner - It is also not disputed that the appellant s godown and its office were located at different places and the respondents do not dispute that it was permissible for the appellant to keep the documents at its office instead of at the godown. It would be open for a person found in custody of goods to produce the relevant information in its possession in respect of the goods within a reasonable time on being required to do so by the Commissioner. The question as to what is a reasonable period of time for providing information is necessarily required to be determined in the facts of each case. In the given facts of the present case, the question is required to be answered in the affirmative; that is, in favour of the appellant and against the Revenue. The appellant s appeal is restored to the Appellate Tribunal. The Appellate Tribunal shall consider the documents as produced by the appellant and take an informed decision on the appellant s appeal - Appeal disposed off.

Summary

Issues Involved:
The judgment involves the issue of confirming the levy of tax and penalty under Section 86(14) of the Delhi Value Added Tax Act, 2004 based on the ownership of goods found in the appellant's godown as per Section 3(9) of the DVAT Act.

Controversy Regarding Goods Ownership:
The controversy in this case revolves around whether the goods discovered in the appellant's godown should be considered as owned by the appellant as per Section 3(9) of the DVAT Act. The Tribunal upheld the levy of tax and penalty based on the appellant's failure to provide information regarding the goods found in the godown.

Question of Law:
The primary question for consideration was whether the Tribunal erred in upholding the order based on the appellant's failure to produce necessary information regarding the goods stored at the godown, leading to the presumption of ownership under Section 3(9) of the DVAT Act.

Factual Background:
The appellant, engaged in transportation business, was found with goods in a godown during an inspection by VATO. Despite subsequent document submission, default assessment was made, imposing tax and penalties under the DVAT Act. The appellant's objections were rejected by the OHA, leading to an appeal before the Appellate Tribunal.

Default Assessment and Penalties:
The VATO conducted a default assessment and imposed tax and penalties under various sections of the DVAT Act due to the goods being transported without proper documentation and failure to furnish all records regarding detained goods.

Appeal and Tribunal Decision:
The appellant appealed before the Tribunal, arguing that documents were produced post-inspection, and the presumption of ownership should not apply. The Tribunal upheld the penalty under Section 86(14) but rejected the penalty under Section 86(19) as the goods were not considered as being carried by a transport.

Reasoning and Conclusion:
The High Court analyzed Section 3(9) of the DVAT Act, emphasizing the rebuttable nature of the presumption of ownership. It noted that the appellant had produced relevant documents post-inspection, which should have been considered to rebut the presumption. The Court highlighted the lack of examination of ownership documents by the Authorities and set aside the order, restoring the appeal to the Appellate Tribunal for a fresh decision based on the documents provided by the appellant.