2014 (5) TMI 572 - HC - VAT and Sales Tax

Whether deletion of estimation made for loss of Form XX and not intimated as per Rule 37(2) of the TNGST Rules and thus unaccounted for by the dealer is legally sustainable - Taxable Turnover Suppression of turnover - Loss of form XX No evidence - No sufficient ground for Revenue - Held that - Tribunal in its order had pointed out that, even though the assessee is personally responsible for the loss of such forms, there was no loss of Revenue to Government - Further, there were no good reasons shown by the Department to invoke the best of judgment assessment in determining the taxable turnover - The Tribunal had further held that there was no clinching evidence, except the circumstantial evidence, for estimating the taxable turnover - Assessee had shown sufficient reasons for the loss of the leaves of Form XX - It had been shown that there was a change of Managing Agents and as a consequence many records and books had been misplaced and were untraceable - It is also found that there was no evidence to show that the assessee had misused the missing leaves for the sale of tea. Relying upon Tata Iron and Steel Co., Ltd., Vs. Assistant Commissioner (CT) Central Assessment, Circle V, Chennai and others 2003 (11) TMI 566 - MADRAS HIGH COURT - This Court had found there were no materials to show that the forms, not produced or furnished by the assessee, had been used for the movement of the goods in question - Further, it was not open to the AO to conclude that the goods had been moved and sold by assessee, without accounting for the same Thus, assessee was not be held to have misused the missing leaves for the sale of tea and that he had suppressed the turnover to result in best of judgment assessment - Therefore, Revenue has not shown sufficient grounds to interfere with the order of Tribunal - Revision stands dismissed Decided against Revenue.

Summary

Issues:
1. Whether the deletion of estimation made for loss of Form XX and not intimated as per Rule 37(2) of the TNGST Rules and thus unaccounted for by the dealer is legally sustainable?

Analysis:
1. The case involves a dispute where the Revenue challenged the order of the Tamil Nadu Sales Tax Appellate Tribunal concerning the estimation of tea sales by a registered dealer. The dealer had tea plantations and a factory in Kerala, with sales in Tamil Nadu supported by necessary forms under the Kerala General Sales Tax Act.
2. The Assessing Authority proposed an estimation for unaccounted tea sales based on missing Form XX declarations, leading to a turnover estimation of Rs. 3,00,000. Penalty under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act was also proposed for non-payment of due taxes.
3. The dealer objected, citing compliance with Form-26 requirements for stock transfers between states and detailing the circumstances of missing Form XX leaves. The dealer requested deletion of the proposed turnover estimation.
4. The Assessing Officer invoked Rule 37(2) requiring reporting of lost forms within a week. As the dealer failed to report the loss promptly and did not submit the necessary register for verification, the objections were overruled, and the turnover estimation was upheld.
5. The Appellate Assistant Commissioner affirmed the Assessing Officer's decision, emphasizing the dealer's failure to report the missing forms and account for local purchases. The Commissioner reasoned that the missing forms were saleable and should have been reported promptly.
6. The Sales Tax Appellate Tribunal overturned the previous decisions, noting no misuse of the missing forms and no revenue loss to the government. The Tribunal emphasized the lack of evidence linking the missing forms to tea sales, leading to the allowance of the dealer's appeal.
7. The Tribunal's decision was based on the absence of substantial evidence linking the missing forms to tea sales, and the dealer's explanation for the loss due to management changes. The Tribunal found no grounds for best judgment assessment and dismissed the Revenue's appeal.
8. The High Court upheld the Tribunal's decision, highlighting the lack of evidence of misuse of missing forms for tea sales. The Court referenced a previous case to support the dealer's position and concluded that the Revenue failed to provide sufficient grounds for interference, dismissing the Tax Case Revision.