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TMI Blog2011 (4) TMI 1228X X X X Extracts X X X X X X X X Extracts X X X X ..... etition filed under section 8 of the West Bengal Taxation Tribunal Act, 1987, the petitioners, (i) Maple Exports Private Limited, a company registered under the Companies Act, 1956 and having office at 13, Elgin Road, 2A and 2B, 2nd Floor, Kolkata 700 020 (in short, "the petitioner-company") and (ii) Sri Anil Sharma, authorized signatory of petitioner No. 1 working for gain at 13, Elgin Road, 2A and 2B, 2nd Floor, Kolkata 700 020, have challenged the order dated January 28, 2010 on the ground that respondent No. 1 disallowed the input-tax credit on some untenable ground and levied tax on purchase made from unregistered dealers for the purpose of manufacturing different types of leather goods without considering the provision of the statute and rules framed thereunder. Interest was levied without properly appreciating the provision of the VAT Act. The petitioner-company is a manufacturer of different kinds of leather goods and exporter of those goods. Sri B. Bhattacharyya, learned advocate appearing for the petitionercompany, narrates the genesis of the problem. It is submitted that initial assessment in respect of this petitioner-company in relation to the year in quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the respondents are taking contrary stands at different point of time and the allegation that the petitioner had admitted at the time of hearing on January 12, 2010 is strongly denied by the learned advocate. It is further stressed that it is obligatory on the part of the assessing authority to disclose the books of accounts and documents produced by an assessee and examined by the assessing officer while passing the assessment order in a specified column but that has not been done and, therefore, despite production of all the required documents and registers, respondents are submitting that certain documents were not produced for examination. It is strongly urged by the learned advocate that the petitioner-company is an exporter of leather goods manufactured by it and is under regulation of the export laws specially the Government of India Regulation, the company has to maintain production register and there is no reason as to why such production register would not be produced before the respondent-authorities. The learned advocate refers to provisions of section 22 of the VAT Act and provisions of rule 19 and rule 20 of the West Bengal Value Added Tax Rules, 2005 (in short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and value of goods purchased or manufactured or sold or used in execution of works contract or held in stock in accordance with the accepted principles of accounting. It is contended that stock register is not a mandatory register as per the accepted principles of accounting. Moreover, there has not been any prescription on the part of the respondent-authorities as to how the petitioner was required to maintain its stock register and production register which were produced before him. The assessee, as per submission of learned advocate, is required only to maintain records wherefrom his sales and purchases could be ascertained and for a manufacturer the assessee has to maintain records as regards the manufactured item. The learned advocate produces statements showing total quantity of leather purchased and total quantity of leather consumed along with statements disclosing the stock position on daily basis in respect of leather which is the major item. He also produces statement showing production of leather bags and wallets, work in progress statement showing therein the consumption of raw materials, etc. It is, therefore, submitted that there is no reason to withhold furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. It is explained that returns were filed on the basis of invoices raised taking into consideration the exchange rate prevailing at that time. Foreign currency rate changes from time to time which affects the turnover of an assessee. In this case, turnover as per return was less than the turnover disclosed in the final accounts. It is due to the fact that the value of the foreign currency went up when the payment was received as a result of which turnover of sales was higher than the figure shown in the returns. Despite clarification given, there was no reason to hold this amount as "unregistered local sale not disclosed by the dealer" and unfortunately, it is mentioned by the learned advocate, that this amount was taxed at 12.5 per cent and that too without ascertaining the veracity of the submission made by the petitionercompany. The learned advocate next draws our attention to the purchase tax levied under section 17 of the VAT Act. Turnover of purchase was bifurcated in respect of leathers and others. Turnover of purchase in respect of leathers stood at Rs. 52,17,526 and in respect of others it is Rs. 13,60,479 and these are all directly connected with the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or (e) use as containers or packing materials for use in the packing of goods, so manufactured as referred to in clause (d) above; or (f) use in the execution of works contract; or (g) use as capital goods required, for the purpose of manufacture or resale of taxable goods or for execution of works contract, as the case may be, and purchases of such goods are capitalized in the books of account of such manufacturer, works contractor or reseller, as the case may be; or (h) use as (raw materials and capital goods) required for the purpose of manufacture of any goods to be sold in the course of export under section 5 of the Central Sales Tax Act, 1956, and containers or packing materials for use in the packing of goods so manufactured; or (i) making zero-rated sales other than those referred to in clause (h) above: Provided that if purchases are used partially for the purposes specified in this sub-section, the input-tax credit or input-tax rebate shall be allowed to the extent they are used for the purposes specified in this sub-section." It is, therefore, submitted that if a dealer purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents wherefrom it could be quantified as to how much of the raw materials, on which inputtax credit had been claimed, was used in the process of manufacturing of various items and export of those items thereafter. The ratio of consumption of leather per unit with number of finished item produced could not be precisely ascertained from the records produced by the petitioner. Therefore, the levy of input-tax credit was rightly rejected. It is also pointed out by the learned State Representative that the petitioner-company failed to reconcile the difference in between the return figure and final figure as per final accounts. It was, therefore, concluded by the assessing authority that the unreconciled difference of Rs. 51,04,222.58 represents unrecorded sales made to unregistered dealers. Levy of purchase tax was also properly made since such levy was made in terms of the provisions prevailed at the material point of time. Therefore, there is no reason to interfere with the orders of the assessing authority. We have heard the rival submissions and perused all the records as were made available to us during the course of hearing. Claim of input-tax credit as preferred by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ". . . there was no instruction mentioned about the measurement of leather size in those orders. As a result of which, the ratio of consumption of leather per unit with number of finished item produced could not be precisely ascertained". But it has been admitted that foreign buyers in their orders placed, indicated specific design, colours and packing mode with merchandise identification code. We fail to understand how the absence of size of leather used in the manufacturing of individual items could prejudice the respondents. Since the foreign buyers have indicated the specific design of individual item, it is immaterial as to the quantity of leather used for preparing an individual item. Even then, the petitionercompany submitted statements showing consumption of leather on day to day basis and production of finished goods on day to day basis. No discrepancy could, however, be detected. The petitioner-company's entire export sale was allowed on examination of export invoice, packing list, shipping bill, bill of lading, etc., and to quote the assessing officer, "upon checking no abrupt anomaly is found". It prima facie appears that entire sales represent sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay tax under section 10 or section 14 or sub-section (3) of section 27C, and registered under section 24 shall, in addition to the tax payable under any other provisions of this Act, be liable to pay tax on all his purchases in West Bengal from any person, whether a dealer or not, after deducting therefrom-- (a) and (b) . . . (c) purchases of goods which are shown to the satisfaction of the Commissioner to have been made from a registered dealer in West Bengal; (d) . . . (2) The burden of proving that any purchase effected by a dealer is not liable to tax under sub-section (1) shall lie on such dealer." If the pre-amended provision of section 12 is compared with amended provision of section 12, it will appear that there is a lot of difference in between these two provisions. Section 12 is the charging section and hence we have to take into consideration provision of that section as it prevailed at the material point of time while determining the liability of a dealer to pay tax on its purchase. Therefore, we are of the opinion that the petitionercompany was liable to pay purchase tax in respect of purchases made from unregistered dealers even though those were used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate from a dealer (emphasis1 supplied) when such goods are purchased for "use as raw materials and consumable stores required for the purpose of manufacture of taxable goods intended for sale in the State or in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956". Purchases from unregistered dealers have not been treated differently. It, therefore, appears that the petitioner-company is entitled to the benefit of input-tax credit on the tax payable as purchase tax in respect of purchase of goods used in the business from unregistered dealers. The petitioner-company has also challenged levy of interest under section 33 of the VAT Act. An amount of Rs. 3,48,274 has been levied as interest in respect of tax payable under section 16 and an amount of Rs. 2,44,300 on tax payable under section 17. Tax payable under section 16 of the VAT Act was determined at Rs. 6,45,542 of which Rs. 6,38,027 represented levy of tax at 12.5 per cent on Rs. 51,04,220. This amount is the difference in between the sales as per balance sheet and sales as per return. This discrepancy is claimed to be due to the exchange rate difference. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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