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TMI Blog2014 (9) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact inter-State sales, notwithstanding colour of RD sales having been given to such sales by the appellant. Even when reappraisal of the facts available on the paper book is made, result is no different. On August 1, 2000, a demand of 39,017 was raised vide debit note by M/s. Anuj Jain and Sons, (HUF) Delhi on M/s. Samsung Electronics India Ltd., Noida on account of service charges for arranging transfer of first four licences in the table as above. When the information given in the tabular form as above, is evaluated in this context, it transpires that value of these four licences was 1,30,35,637. Commission of M/s. Anuj Jain and Sons, Delhi in the shape of service charges turns out to be 0.30 per cent. It is, thus, clear that the service provider charged service charges for transfer of first four DEPB licences. So far as other two licences sold to M/s. Laxmi Enterprises, Delhi, are concerned, no particulars of service provider were supplied by the appellant. appellant had not shown any sale having been made by it to those parties from whom it had received these payments. Conversely, no payment had been received from the dealers to whom the sales of licences were alleged to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, whereas actual transactions were different and distinct from these purported sales and in fact had nowhere been depicted in such documents. Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of the facts. The appellant-company located at Faridabad (Haryana) is engaged in manufacturing of electric motors. It was registered under the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the State Act") during the relevant years. During the course of its exports, it had got Duty Entitlement Pass Book Licences (in short, "DEPB licences"). These DEPB licences were freely tradeable and sale of such licences was treated as sales of goods in terms of the decision of the Supreme Court of India in Yasha Overseas v. Commissioner of Sales Tax [2008] 17 VST 182 (SC). During the year 2000-01, gross turnover of the appellant had included turnover from the sale of DEPB licences to the tune of ₹ 6,04,59,157. This part of total turnover was claimed to have been earned from sales made to a registered dealer of Faridabad. Said registered dealer had made declaration in form S.T.-15 qua these sales. As sales turnover of DEPB licences was entitled to be allowed as admissible deduction from the total turnover, such deduction was allowed in original assessment order of June 25, 2004 of the Deputy Excise and Taxation Commissioner, Faridabad (East)-cum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade inter-State sales of DEPB licences, the Assessing Authority had wrongly raised demand against the appellant. It is claimed further that the appellant was unnecessarily dragged into this controversy whereas no proceedings were initiated by the authorities against M/s. Sai Enterprises. It is thus asserted that sale of DEPB licences to M/s. Sai Enterprises was a local sale and proceedings against the appellant terming the sales as inter-State sales are totally misdirected. The contention of the appellant further is that the reassessment proceedings are without jurisdiction, illegal and contrary to law when there is no evidence either to show that the licences were sold to entities outside the State of Haryana. It is urged that transfer letters duly verified by a bank to sell these licences were made available by the appellant in the name of registered dealers in the State of Haryana and, thus, neither adverse inference could be drawn nor could bank drafts/banker's cheques received from other entities outside the State of Haryana used to raise an adverse inference against the appellant. It was urged that once requisite declaration in ST-15 forms had been given by the purchasin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tle input of curd, loses its existence and identity. Milk loses its identity and character and is turned into curd. Such is the sweep and potency of fraud. Merely because fraudulent transactions were punctuated by statutory declarations in form S. T.-15 made by the vendees, such fraudulent transactions would not be accepted as genuine. Reason is simple. When claim of the appellant of the sales to be registered dealer sales held within the State of Haryana, is defeated being fraudulent backing of such transactions with declaration in form S.T.-15 has to give way. The Tribunal had rightly noted this aspect of S.T.-15 forms in words, which are to the following effect: "10. . . . Once this conclusion is reached, disallowance of deduction in respect of claim of sales of DEPB made to M/s. Krishna Enterprises notwithstanding furnishing of the statutory declaration in form S.T.15, becomes a foregone conclusion because when the claim of the sale itself has been defeated, there is no question of the claim of deduction on furnishing of the declaration in respect of the said sale succeeding." The plea of the appellant that there is no supporting evidence, to disbelieve and reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. It is, thus, clear that the service provider charged service charges for transfer of first four DEPB licences. So far as other two licences sold to M/s. Laxmi Enterprises, Delhi, are concerned, no particulars of service provider were supplied by the appellant. It is relevant to mention here that the appellant had been revealing less and concealing more throughout the proceedings conducted by the taxation authorities. Relevant portion of order dated March 28, 2007 of the Joint Commissioner (Appeals), Faridabad, for reference is appended as below: "During the appellate proceedings, this authority asked the appellant to produce the formal correspondences for inquiry quotation and presentation, purchase order, acceptance order along with terms and conditions sheet by the mode of ordinary registered post, e-mail/fax, couriered/by hand made by the appellant, being seller, and the alleged purchase, i.e., M/s. Krishna Enterprises regarding sale-purchase of the goods in question, but the appellant failed to produce the same for the reasons well-known to him." Despite this order of the first appellate authority, the appellant could not prove its bona fides either before it or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm through the banking channels: Sr. No. Sender Amount (Rs.) Agency Dated 1. M/s. Samsung Electronics India 1,46,32,500 Deutch Bank 1.8.2000 2. M/s. Laxmi Enterprises 44,61,042 ABN Amro 2.8.2000 In the assessment year 2000-01, the following payments were received by the appellant-firm: 1. M/s. Honda Siel 1,13,43,682 Bank of America 12.10.2001 It is abundantly clear that the appellant had not shown any sale having been made by it to those parties from whom it had received these payments. Conversely, no payment had been received from the dealers to whom the sales of licences were alleged to have been made by the appellant. On perusal of the paper book, it becomes apparent that these sales were made by the appellant in fact directly to M/s. Samsung Electronics India Ltd., Noida and M/s. Laxmi Enterprises, Delhi in assessment year 200001 and to M/s. Honda Siel Cars India Limited, Noida in the assessment year 2001-02 and the purchasers shown in the original assessment order, viz., M/s. Krishna Enterprises for the assessment year 2000-01 and M/s. Sai Industries for the assessment year 2001-02 in fact were only names of traders which names were used as camouflage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer had noticed in the assessment order of October 3, 2005 (annexure A3) that proprietor of M/s. Krishna Enterprises was a man of little means and was not of sound financial position. In terms of business, it is highly improbable that the appellant could leave the goods of the value of more than ₹ 1.75 crores in its charge without getting even a single penny. (vi) It was also noticed that M/s. Sai Industries, Faridabad, was not even in a position to purchase the licences nor it had any resources to make the payment. (vii) Debit notes and ST-15 forms projected by the appellant to which much hype has further been given by the appellant, were in fact fictitious documents created by the appellant in a bid to keep the inter-State sales transacted by it to be out of tax-net and had projected these documents to vouch for registered dealer sales which in fact had never been transacted and were non-existent. When tested on the touchstone of this provision, it becomes evident that M/s. Sai Enterprises for the assessment year 2001-02 was only introduced as a smokescreen whereas in fact the sale was inter-State transaction and it was a case of fraud committed on the Revenue. (viii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi, whereas M/s. Sai Industries, Faridabad (for the year 2001-02) had made such subsequent sales to M/s. Honda Siel Cars India Limited, Noida, has emerged from the appellant completely as an after-thought. It is a conceded fact that this stand is conspicuous by its absence in the assessment proceedings initially conducted against the appellant. It is apparent that when the appellant found itself in a very tight situation, this plea emerged from it in distress but it could not sustain the same. Rather, overwhelming documentary evidence even coming from the banking channels, as has already been discussed in details, militates against the claim of the appellant that these sales were genuinely made to registered dealers of Faridabad, notwithstanding the fact that no transaction of transfer (on consideration of sale) could be proved to have come to the appellant from these registered dealers of Faridabad much less through banking channels. The appellant cannot hide its misdeeds because no action has been taken by the authorities against M/s. Krishna Enterprises and M/s. Sai Industries local dealers, as yet. No benefit can be derived by the appellant from this aspect when material and ..... 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