M/S Bulaki Lal And Sons vs. The Commissioner Of Commercial Tax U.P. Lko.

Court No. - 1 Case :- SALES/TRADE TAX REVISION No. - 296 of 2015 Revisionist :- M/S Bulaki Lal And Sons Opposite Party :- The Commissioner Of Commercial Tax U.P. Lko. Counsel for Revisionist :- Suyash Agarwal,Nitin Kumar Keshaerwani Counsel for Opposite Party :- C.S.C. Hon'ble Piyush Agrawal,J. Heard Shri Rakesh Ranjan Agrawal, learned Senior Counsel, assisted by Shri Mandeep Nath, holding brief of Shri Suyash Agarwal, learned counsel for the revisionist and Shri A.C. Tripathi, learned Standing Counsel for the opposite party. The present revision has been filed against the judgement & order dated 21.05.2015 passed by the Commercial Tax Tribunal, Division-I, Allahabad in Second Appeal No. 117 of 2014 for the assessment year 2009-10, in which following questions of law have been framed:- "(i) Whether on the facts and circumstances of the case the tribunal was correct to uphold the rejection of compounding application submitted as per notification no. 1533 dated 30.05.2008 especially when the assessing authority has not recorded finding that the information given in the compounding application was neither false nor incorrect or bogus? (ii) Whether the Tribunal was correct to sustain the rejection of compounding application especially when the regular assessment made u/s 32 of the Act the turnover fixed by the assessing officer was Rs. 39 lacs which was below Rs. 50 lacs for entitlement of the compounding scheme? (iii) Whether the SIB was competent to make a survey of the petty dealers having turnover below 2 crores, contrary to the commissioner's circular dated 15.06.2010, which led the rejection of the compounding application for A.Y. 2009-10? (iv) Whether the Tribunal was correct to sustain the rejection of compounding application without recording the finding about the merits of the survey report dated 13.01.2010 made by SIB?" Learned Senior Counsel submits that a notification bearing no. KA.NI - 2-251/XI-9(2)/08-UP Ordi. - 37 -2008-Order - (5) - 2008 dated 04.02.2008 was issued for compounding for the dealers whose annual turnover does not exceed Rs. 50 lacs as well as preceding year with certain conditions. In terms of the said notification, tax @ 1% was to be paid by the dealer. Thereafter, another notification, bearing no. Ka.Ni-2-1533/11- 9(2)/08/UP.Ord.-5-2008-Order-(23)-2008 dated 30.05.2008 was issued in which only rate of tax was reduced from 1% to 0.5% and the remaining conditions were same. He further submits that clause (7) provides that if any particular or information

given in the application is found to be false, incorrect or bogus, the assessing authority may, after giving the dealer a reasonable opportunity of hearing, reject the application. The applicant moved an application on 25.04.2009, but the same was not decided till 07.12.2011 and in the meantime, on 13.01.2010, a survey was conducted at the business premises of the applicant, i.e., godown. At the time of survey, it was found that the dealer has sold the goods Rs. 615/-, but no invoice was issued. Further allegation has been made that no books of account has been shown; whereas, the survey report specifically shows that all sales were made from the shop and the survey was conducted at the godown. Hence, no inference can be drawn. He further submits that as per notification dated 30.05.2008, there was not a whisper about any false, incorrect or bogus information being furnished and found by the authorities. He, therefore, prays for allowing the revision. Per contra, learned Standing Counsel supports the order passed by the authorities below and refers that under the garb of compounding application, the applicant is involved in tax evasion. He refers that at the time of survey, sale of Rs. 615/- was made, but no invoice was issued. He further refers that at the time of survey, only stock of Rs. 4 lacs was found, but as per the books of account Rs. 12,14,882/- was recorded in the books of account. This shows that the applicant was engaged in tax evasion. He prays for dismissal of the revision. After hearing learned counsel for the parties, the Court has perused the record. Admittedly, the applicant is a registered dealer and is engaged in the business of purchase and sale of gas, stove, cooker, etc. and parts thereof. In view of the notification dated 30.05.2008, the applicant made an application on 25.04.2009, which was kept pending upto 07.12.2011. The said notification refers that once an application for compounding is moved, the dealer cannot opt out from the same. The further condition is that the turnover in the present and previous years should not exceed Rs. 50 lacs. Further, the benefit of input tax credit will not be granted to such dealer and the dealer will not issue any tax invoice. Further, the tax has to be paid by the dealer from its own pocket and will not be entitled to realize any amount of tax in any form from its buyers. Further, a rider has been put that in the event the dealer is found that any particular or information given in the application for compounding are found to be false, incorrect or bogus, then the application will be rejected.

During the pendency of the application dated 25.04.2009, a survey was conducted on 13.01.2010 and at the time of survey, sale of Rs. 615/- was made, but no invoice was stated to be issued. No books of account was found at the time of survey and specific reply was submitted that no sale were being undertaken from the godown, but the sales were being made only from the shop, where the books of account were kept. It is not the case of the Department that simultaneous survey was carried out at the godwon and the shop, where the books of account were kept. Further, it has been observed that at the time of survey, stock of Rs. 4 lacs was found; whereas, in the books of account, the same has been shown to be Rs. 12,14,882/-. In other words, in the books of account, stock was found more than the same found at the time of survey. This Court on various occasions has held that if the stock mentioned in the books of account was more than the stock found at the time of survey, no adverse inference can be drawn. Reference may be made to CST Vs. M/s Faqir Chand Hazari Mal reported in 1981 UPTC 656. Further, survey was, admittedly, conducted at the godown where the statement was made that no sales were made from the godown. The books of account were maintained at the shop and the surveying authorities, in their wi om, chose not to survey the shop where the books of account were stated to be maintained. Further, once the sale and purchase were not being undertaken from the godown, but only used for storing the goods and if the books of account were not found at the time of survey, no adverse inference can be drawn on that count. It was not a case of the Department that at the time of survey dated 13.01.2010, at the shop or subsequent thereafter, the books of account were not shown and hence, the same cannot be taken as a ground for rejection of compounding application. The solitary ground for rejection of compounding application, for non-issuance of sale made during the day of Rs. 615/-. On perusal of the conditions referred to in the notification dated 30.05.2008, rejection can be made if any particular or information furnished by the dealer is found false, incorrect or bogus. No such reference or material has been ground on record to suggest that the dealer had made false, incorrect or bogus information. In view of the aforesaid facts & circumstances of the case, the orders passed by the authorities below cannot be sustained in the eyes of law. Therefore, the orders passed by the Tribunal as well as the assessing authority are set aside.

The compounding application dated 25.04.2009 is allowed. The assessing authority shall pass the order accordingly. The revision is allowed with a cost of Rs. 5,000/- to be deposited by the Revenue within a period of two months from the date of production of a certified copy of this order. An affidavit of deposit of cost shall be filed by the respondent before the Registrar General of this Court within three months thereafter, failing which the matter shall be listed in the Chamber. Order Date :- 29.4.2022 Amit Mishra MISHRA Date: 2022.05.04 18:04:15 IST Reason: Location: High Court of Judicature at Allahabad