M/S Sethi Flour Mills PVT. LTD. vs. The Commissioner Commercial Taxes
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1 Court No. - 28 Case :- SALES/TRADE TAX REVISION No. - 96 of 2019 Applicant :- M/S Sethi Flour Mills Pvt. Ltd. Opposite Party :- The Commissioner Commercial Taxes Counsel for Applicant :- Shubham Agrawal Counsel for Opposite Party :- C.S.C. Hon'ble Rohit Ranjan Agarwal,J.
Heard Shri Shubham Agrawal, learned counsel for revisionist and Shri Bipin Kumar Pandey, learned Standing Counsel for opposite party.
Petitioner has filed the present revision under Section 58 of the U.P. Value Added Tax Act, 2008 on following question of law: “(1) Whether the Tribunal was justified in allowing the appeal filed by the department and setting aside the order passed by the first Appellate Authority in a cursory manner and by disbelieving the disclosed purchases made by the applicant from the registered dealers only on the basis that the alleged sellers have not disclosed the sales in their returns, by overlooking the evidences like banking transactions, 9R returns and Invoices having been filed by the applicant, and losing sight of the fact that the applicant has no control over the sellers in filing their returns?”
Case of revisionist is that he is a registered dealer and is running a Flour Mill, and is manufacturing and selling Atta, Maida, Suji for which he purchase wheat as raw material from within and outside the State of U.P. The dispute relates to the assessment year 2015-16, items manufactured by the revisionist are exempt from tax. The wheat purchased from outside the State exempt from tax, while wheat purchased as raw raw material within State is taxable @ 4%. The survey was made by the department on 23.05.2015. It is further contended that wheat was lying in large bins in the factory and was not weighed at the time of survey and on the basis of estimation only it was recorded that wheat in process was 2800 quintals, while as per Account books, wheat in process was found to be 2831.39 quintals. Thus, there was a difference of 31.39 quintals on the the basis of estimation, a show cause notice was issued by the assessing authority on 31.01.2015, to which reply was submitted on 05.02.2015, further the purchase of wheat made from registered dealer is covered by Form 9R and gate pass of the Mandi Samiti. Further the allegation that the purchase of wheat
2 made from five dealers who are duly registered under the Act, but they have not shown the sale in their return, while the revisionist has produced the tax invoice, 9R and gate passes.
The assessing authority by order dated 17.03.2018 passed an assessment order by which it has imposed tax on purchase made by applicant from four registered dealers and has enhanced the disclosed turnover of purchases made by the applicant treating it to be purchase from unregistered dealer, while passing the assessment order, the assessing authority in regard to the 5th dealer, i.e, M/s. Maa Vaisnav Trading Company (MVTC) had admitted that it was a registered dealer and no interference can be made from the purchases made by it.
Against the aforesaid order, revisionist filed first appeal before the Additional Commissioner. The said appeal was allowed by order dated 07.07.2018, which accepted the Account books of the disclosed turnover against the said order. Department filed a second appeal before the Commercial Tax Tribunal, Gorakhpur Bench, Gorakhpur. On two grounds, firstly, that the S.I.B. conducted survey on 23.05.2015 and during survey, no regular Account books were found, nor dealer was present for verification of the stock and during survey 15 quintals of Atta and 31 quintals of wheat were found less. It was further averred in the appeal that the dealer had produced the gate pass of the vehicle which was of one hand-writing which proves that the same was from the unregistered dealers. The second ground taken was that the purchases made from M/s. Maa Vaisnav Trading Company in the month of April, May and June though declared by the purchasing dealer was not declared in the return of the selling dealer.
The tribunal in a very cursory manner only considered the second ground of department and allowed
the appeal of department, solely on the ground that the selling dealer has not disclosed his sale for the month of April, May and June, and treated the said purchase by the revisionist to be purchase from an unregistered dealer.
Sri Shubham Agarwal, learned counsel for revisionist has placed reliance upon a judgment of Delhi High Court in case of On Quest Merchandising India Pvt. Ltd. v. Government of NCT of Delhi and others, 2018 (56) GSTR 177 (Delhi).
Per contra, Shri Bipin Kumar Pandey, learned Standing counsel very fairly submits that Tribunal should
3 have decided both the grounds taken by the department in the appeal and further he accepted the fact that the tribunal should have recorded specific finding before setting aside the order of the first appellate court.
Considering the rival submissions of the parties and perusing the records of the case, I find that the order passed by Tribunal dated 08.02.2019 is unsustainable as it has not recorded any finding to the affect the ground taken by the department regarding the survey made on 23.05.2015 and, further, the findings recorded by the Tribunal to the extent that as the selling dealer has not disclosed the sale for the month of April, May and June 2015 in his return, the purchases so made by the revisionist shall be held to be from the unregistered dealer. As the tribunal is the last fact finding court, it should have recorded specific finding for arriving at such conclusion.
Further the judgment in case of On Quest Merchandising India Pvt. Ltd. (supra) has rightly held as under:
“54. The result of such reading down would be that the Department is precluded from invoking Section 9 (2) (g) of the DVAT to deny ITC to a purchasing dealer who has bona fide entered into a purchase transaction with a registered selling dealer who has issued a tax invoice reflecting the TIN number. In the event that the selling dealer has failed to deposit the tax collected by him from the purchasing dealer, the remedy for the Department would be to proceed against the defaulting selling dealer to recover such tax and not deny the purchasing dealer the ITC. Where, however, the Department is able to come across material to show that the purchasing dealer and the selling dealer acted in collusion then the Department can proceed under Section 40A of the DVAT Act.”
In view of the above, the order passed by Tribunal dated 08.02.2019 is set aside and the matter is remanded back with the direction to the tribunal to decide the case afresh on merits considering the law laid down in case of On Quest Merchandising India Pvt. Ltd. (supra) revision stands partly allowed. Order Date :- 1.4.2019 A.N. Mishra
Reproduced from the public record of the Allahabad High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.