Case Law Details
Balaji Polypack Vs Commissioner of Commercial Taxes (Allahabad High Court)
Under U.P. Value Added Tax Act, 2008 The burden to prove the material which was recovered by the various mobile squads was upon the Department and burden could not have been shifted upon the assessee to prove the same. Further, the assessee has denied the transaction having been made by him.
Counsel for the assessee during argument had invited the attention of the Court to the transaction of Invoice No. 355 which according to department was to the tune of Rs.9,701/- while the transaction recorded in the books of accounts of the assessee was to the tune of Rs.45,352/-. This fact discloses that Department was not able to prove the material which was seized by the various mobile squads. This Court finds that burden could not have been shifted by the Department upon the assessee and only on the ground that the documents were forwarded by the mobile squad to the assessing authority which had remained unproved by the Department, the tax liability could not have been imposed upon the assessee. Moreover, the finding recorded by the Tribunal to the extent that First Information Report should have been lodged by the assessee does not appeal to the Court, as it was duty of the Department to discharge its burden by proving the documents which have been seized by its mobile squads.
Now coming to the question of Section 16 of the Act of 2008, this Court finds that the word used in Section 16 is that where a fact is in the knowledge of the assessee, then during assessment the burden of proving shall lie upon assessee. In the present case, it was the material which was recovered by the various mobile squads which was denied by the assessee and thus was not in his knowledge. Thus Section 16 of the Act of 2008 is not attracted and the argument raised from the revenue side fails.
In view of said fact, this Court finds that the order passed by the Tribunal dated 17.01.2022 is unsustainable in the eyes of law and the same is hereby set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
Heard Sri Rahul Agarwal, learned counsel for the revisionist and Sri A.C. Tripathi, learned Standing Counsel for the State.
This revision under Section 58 of U.P. Value Added Tax Act, 2008 (hereinafter called as ‘Act of 2008’) has been filed assailing the judgment of the Commercial Tax Tribunal, Kanpur Bench-II, Kanpur dated 17.0 1.2022. The dispute relates to Assessment Year 20 16-17.
The books of accounts of the revisionist-assessee was rejected by the assessing authority and undisclosed purchase was assessed at Rs.2,30,00,000/- and undisclosed sale was assessed at Rs.2,50,00,000/- and a tax demand of Rs.23,99,993/- was raised. Against the assessment order, a first appeal was preferred by the assessee before the Additional Commissioner Grade-II (Appeal)-IIIrd, Commercial Tax, Kanpur. The first appellate authority vide judgment dated 05.02.202 1 has reduced the quantum of sale and purchase to the tune of Rs.69 lacs and Rs.75 lacs and the quantum of tax was reduced by Rs. 16,80,000/-.
Aggrieved by the decision of the first appellate authority, the assessee as well as the State preferred second appeals before the Commercial Tax Tribunal which were registered as Appeal No. 21 of 2021 filed by the assessee and Appeal No. 53 of 2021 filed by the Department. Both the appeals were heard together and decided by a common order dated 17.01.2022.
The present revision was admitted on 24.05.2022 on the following question of law:-
“(i) Whether the order of the Tribunal below, having affirmed the rejection of the books of accounts of the revisionist and assessment of turnover on best judgment basis on the strength of invoices which were never proved by the Department as pertaining to the revisionist in terms of the law laid down in Commissioner Sales Tax vs. Fakir Chand Hazari Mal 1981 UPTC 565, C.S.T. Vs. Om Prakash Agarwal 2004 UPTC 560, Gupta Enterprises Vs. C.S.T. 2004 STR 690 and Amrit Vanaspati Co. Ltd. Vs. C.C.T., is legally sustainable?”
Learned counsel for the revisionist submitted that Tribunal was not justified in partly allowing the appeal and reducing the quantum of purchase and sale from Rs.69 lacs and Rs.75 lacs to Rs.25 lacs and Rs.23 lacs and the benefit should have been given to the assessee in entirety. He further submitted that Tribunal was not correct to record finding that the assessee should have lodged the First Information Report against those persons to whom it has been alleged that certain sale and purchase has been made by the assessee, while there has been a specific denial by the assessee on the allegations made by the Department. He further contended that the burden was upon the revenue which failed to discharge the same and it has not proved the alleged material which has been received by mobile squad in regard to certain transaction which has been completely denied by the assessee. Reliance has been placed upon judgment of co-ordinate Bench of this Court in case of Commissioner Sales Tax vs. Fakir Chand Hazari Mal 1981 UPTC 565.
On the other side, Sri A.C. Tripathi, learned Standing Counsel defended the order of the State and submitted that first appellate authority had categorically found that documents which have been received from various mobile squads were sent to the assessing officer who upon notice to the assessee found that certain transaction were outside the books of accounts of the assessee. He further contended that there was no denial to the said fact by the assessee and in the order of first appellate authority, it has come that accountant of the assessee was new and was not well versed with the matter and due to his mistake, discrepancy has occured and certain transactions have not been entered into book of accounts. Sri Tripathi then contended that the first appellate authority on the basis of the affidavit filed by the assessee had reduced the quantum of purchase and undisclosed sale.
Sri Tripathi then contended that Section 16 of the Act of 2008 provides for burden of proof. According to him, in assessment proceedings where any fact is specially within the knowledge of the assessee, the burden of proving that fact shall lie upon him. According to State counsel, it was the burden of the assessee and not of the Department which was to be discharged by assessee in the present case. The assessee has failed to discharge the burden and authorities had rightly imposed the tax liability upon him.
I have heard respective counsel and perused the material on record.
It is a case where various mobile squads had sent certain material to the assessing officer who during the assessment proceedings had issued notice to the assessee to verify the said sale and purchase. There has been denial on the part of the assessee to the said transaction which has been alleged by the assessing authority. The assessing authority found that the assessee has not entered the transaction in his books of accounts and thus held that undisclosed purchase at Rs.2,30,00,000/- was made by the assessee while there was undisclosed sale to the tune of Rs.2,50,00,000/-.
Both the first appellate authority as well as the Tribunal had reduced the quantum of purchase and sale. Neither, the first appellate authority nor the Tribunal has dealt to the question as to how the the quantum was reduced by them and no finding has been recorded either by the first appellate authority or the Tribunal.
The burden to prove the material which was recovered by the various mobile squads was upon the Department and burden could not have been shifted upon the assessee to prove the same. Further, the assessee has denied the transaction having been made by him.
Counsel for the assessee during argument had invited the attention of the Court to the transaction of Invoice No. 355 which according to department was to the tune of Rs.9,701/- while the transaction recorded in the books of accounts of the assessee was to the tune of Rs.45,352/-. This fact discloses that Department was not able to prove the material which was seized by the various mobile squads. This Court finds that burden could not have been shifted by the Department upon the assessee and only on the ground that the documents were forwarded by the mobile squad to the assessing authority which had remained unproved by the Department, the tax liability could not have been imposed upon the assessee. Moreover, the finding recorded by the Tribunal to the extent that First Information Report should have been lodged by the assessee does not appeal to the Court, as it was duty of the Department to discharge its burden by proving the documents which have been seized by its mobile squads.
Now coming to the question of Section 16 of the Act of 2008, this Court finds that the word used in Section 16 is that where a fact is in the knowledge of the assessee, then during assessment the burden of proving shall lie upon assessee. In the present case, it was the material which was recovered by the various mobile squads which was denied by the assessee and thus was not in his knowledge. Thus Section 16 of the Act of 2008 is not attracted and the argument raised from the revenue side fails.
In view of said fact, this Court finds that the order passed by the Tribunal dated 17.01.2022 is unsustainable in the eyes of law and the same is hereby set aside.
Assessee is entitled to the relief claimed and no tax liability can be fastened upon the assessee by the material which was seized by the mobile squad which remained unproved during the assessment proceedings nor at the first appellate stage.
Considering the facts and circumstances of the case, the revisions stands allowed. The question of law as framed above stands answered in favour of the assessee and against the Department.
