2024 (9) TMI 58 - HC - VAT and Sales Tax

Taxability - tax-free transactions entered into by the appellant - disallowance of entire purchase/ sale transaction and levying tax at a higher rate on the same - failure to take into consideration and take proper cognizance of the various documentary evidences placed - failure in not considering, adjudicating and dealing with the arguments and submissions made by the appellant - failure to take cognizance of the fact that even on merits of the appellant's case no amount of tax and interest is required to be paid by the appellant in the facts and the circumstances of the case - non-deletion of penalty levied by the adjudicating authority. HELD THAT - The appellant has referred to ledger accounts of supplier of the goods from the books of accounts which are supported by purchase invoices. However, on perusal of the ledger account, it appears that payment is made by the appellant by passing journal entries in name of the persons to whom goods have been sold. Thus, there is no banking transaction involved in transaction of purchase and sales by the appellant. It is true that such an issue has never been considered by any of the authority however on perusal of ledger account, it is clear that there is no banking transaction reflected in the ledger account which shows that appellant had not entered into a genuine purchase and sale transaction and merely by passing journal entries it appears that the appellant has obtained the purchase invoices and issued the sale invoices or transfer invoices to its branch at Rajasthan to show transactions of Agro commodity which are exempted from VAT. It also appears that the appellant has shown that search was carried out for four years from 2008-2009 to 2011-2012 however no details are available with regard to the subsequent years of purchases and sales as the same are not placed on record or even pleaded before any of the authority so as to distinguish the facts of the year under consideration. Thus, on perusal of the impugned order of the Tribunal and the order passed by the First Appellate authority there are concurrent findings of fact and we find no perversity in either of the orders which are based upon the evidence placed on record and therefore, it is opined that no question of law much-less any substantial question of law arises from the impugned orders. Appeal dismissed.

Summary

Issues Involved:
1. Taxability of transactions treated as tax-free by the appellant.
2. Consideration of documentary evidence and submissions by the Tribunal.
3. Legitimacy of penalty levied by the adjudicating authority.

Detailed Analysis:

1. Taxability of Transactions:
The primary issue was whether the Gujarat Value Added Tax Tribunal was correct in treating the tax-free transactions of the appellant as taxable and disallowing the entire purchase/sale transaction, thereby levying a higher tax rate. The appellant's late father, a registered dealer, was engaged in the business of tax-free goods like wheat and cotton seed cake. The Tribunal found that the appellant's transactions were not genuine. The Tribunal relied on evidence showing that the dealers from Rajasthan, from whom the appellant claimed to have purchased the goods, either had their registration canceled or filed nil returns, indicating no transactions with the appellant. Consequently, the Tribunal upheld the assessment order treating the transactions as taxable sales of tobacco at a 15% tax rate.

2. Consideration of Documentary Evidence and Submissions:
The appellant argued that the Tribunal failed to consider various documentary evidences such as purchase registers, stock registers, sales registers, and invoices. The Tribunal, however, noted that the appellant did not provide sufficient evidence to support the claimed transactions. The Tribunal highlighted that the appellant's ledger accounts showed transactions made through journal entries without any banking transactions, suggesting that the transactions were not genuine. The Tribunal also considered the statement of the appellant's late father and other witnesses, which indicated involvement in the sale of taxable commodities like gutka, contradicting the appellant's claims of dealing only in tax-free goods.

3. Legitimacy of Penalty:
The Tribunal upheld the penalty imposed by the adjudicating authority, concluding that the appellant was involved in tax evasion. The Tribunal found that the appellant failed to produce credible evidence to substantiate the tax-free transactions and misled the authorities during the investigation. The concurrent findings of fact by the Tribunal and the First Appellate Authority were based on substantial evidence, leading to the conclusion that the appellant engaged in taxable transactions and evaded taxes.

Conclusion:
The High Court dismissed the appeal, affirming the Tribunal's order. The Court found no perversity in the Tribunal's findings and determined that no substantial question of law arose from the impugned orders. The appeal was deemed devoid of merit and was accordingly dismissed.