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TAXAP/2517/2009 8/ 8 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 2517 of 2009
=========================================
MASTER
ENTERPRISE - Appellant(s)
Versus
ASSISTANT
COMMISSIONER OF COMMERCIAL TAXES & 1 - Opponent(s)
=========================================
Appearance :
MR
NC SHUKLA for
Appellant(s) : 1,
None for Opponent(s) : 1,
NOTICE SERVED for
Opponent(s) : 1.2.1,1.2.2
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CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 18/03/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE H.N.DEVANI)
In
this appeal under section 78 of the Gujarat Value Added Tax Act,
2003 (the Act), the appellant-assessee has proposed the following
questions stated to arise out of the impugned order dated 1st
May 2009 made by the Gujarat Value Added Tax Tribunal (the
Tribunal):
[1] Whether
on facts and in the circumstances of the case, the order of the
Honourable Gujarat Value Added Tribunal is proper and legal in as far
as it has remanded the matter to the learned first appellate
authority to decide the question of limitation instead of deciding
the same by itself as the facts were on record?
[2]
Whether on facts and in the circumstances of the case, the order of
the Honourable Gujarat Value Added Tribunal is proper and legal in as
far as it has not followed its own decision in the cases of
Maheshkumar & Co. – 2007 GSTB 180 and Harsh Cars 2004 GSTB
565 ?
[3]
Whether on facts and in the circumstances of the case, the order of
the Honourable Gujarat Value Added Tribunal is proper and legal in as
far as it has not considered the issue regarding non-application of
mind by the learned assessing authority and taking decision under the
influence of pre-audit authority?
[4]
Whether on facts and in the circumstances of the case, the order of
the Honourable Gujarat Value Added Tribunal is proper and legal in as
far as it has not decided the issue regarding burden of proof and has
remanded the matter to the learned first appellate authority to grant
department second innings?
[5]
Whether on facts and in the circumstances of the case, the order of
the Honourable Gujarat Value Added Tribunal is proper and legal in as
far as it has not appreciated various judicial pronouncements
regarding burden of proof and loss to the bonafide purchaser?
[6]
Whether on facts and in the circumstances of the case, the order of
the Honourable Gujarat Value Added Tribunal is proper and legal in as
far as it has not applied the principle that order is to be judged on
its own and not on the basis of reasoning supplied thereafter?
The
appellant is a registered dealer under the Gujarat Sales Tax Act,
1969 and is engaged in the business of re-selling castor oil,
grocery and kirana items. Vide order dated 30th March,
2007 the appellant was assessed for the period 1997-98. The
assessee’s claim for a sum of Rs.5,31,414/- by way of set off, came
to be rejected by the Assessing Officer under Rule 44 of the Gujarat
Sales Tax Rules, 1970 (the Rules). The assessee carried the matter
in appeal before Deputy Commissioner of Commercial Tax (Appeals),
(hereinafter referred to as the first appellate authority) who vide
order dated 31st May 2008, did not consider the
contention regarding limitation raised by the appellant and rejected
the appeal on the ground that the appellant was not entitled to set
off under Rule 44. The appellant carried the matter in second appeal
before the Tribunal. The Tribunal vide the impugned order allowed
the appeal and set aside the order passed by the first appellate
authority. On the aspect of limitation, the Tribunal after observing
that the Assessing Officer should have inquired, did not record any
finding. The Tribunal, however, remanded the matter to the first
appellate authority for fresh consideration and decision on merits
in light of the discussion in the judgment, after giving opportunity
of hearing to the appellant. Being aggrieved, the appellant has
preferred the present appeal.
Mr.
N. C. Shukla, learned advocate for the appellant has vehemently
assailed the impugned order of the Tribunal. It is submitted that
the Tribunal was required to consider the two principal contentions
raised before it, namely, the contention regarding delay in
finalizing the assessment as well as regarding disallowance of set
off of a sum of Rs.5,31,414/-. It is submitted that the question of
limitation was raised before the first appellate authority, however,
the first appellate authority had not chosen to decide the said
issue. That the Tribunal instead of deciding the issue of limitation
on merits had remanded the matter to the first appellate authority.
It is submitted that when the first appellate authority had not
thought it fit to go into the question of limitation, the Tribunal
was not justified in remanding the matter to the said authority for
verifying the record and to decide as to whether the assessment had
been finalized within a reasonable time or not.
On
merits of the case, the learned advocate has submitted that the
appellant had claimed set off under Rule 44 of the Rules which was
in accordance with the provisions of law. The only issue was that
the appellant had not produced any proof regarding the payment of
tax by the vendors. It is submitted that despite the fact that the
Tribunal had accepted the contention that it is not the duty of the
purchaser to produce proof regarding payment of tax by the vendor,
it had remanded the matter to the first appellate authority. It is,
accordingly, submitted that in the circumstances, the impugned order
of the Tribunal suffers from the vice of non-application of mind and
as such, substantial questions, as proposed, arise out of the
impugned order of the Tribunal.
As
can be seen from the impugned order of the Tribunal, the appellant
had challenged the assessment proceedings on two grounds. Firstly,
on the ground that the assessment had been finalized after nine
years, which accordingly to the appellant could not be said to have
been made within a reasonable period, and secondly, on the ground
that the set off under Rule 44 of the Rules could not have been
disallowed on the ground that the appellant purchaser could not
produce evidence regarding payment of tax in the treasury by the
vendors.
The
Tribunal has observed that for the assessment year 1.4.1997 to
31.3.1998, no limitation had been prescribed for the purpose of
finalization of assessment. However, with effect from 1st
April 1998, the period of limitation has been prescribed under
section 42 of the Act. The Tribunal was of the view that considering
the period of limitation prescribed under section 42 of the Act, a
reasonable period for finalization of assessment for the year
1997-98 could be said to be on or before 31st March 2003,
whereas in the present case, the assessment was finalized after nine
years. The Tribunal, however, observed that there was no material on
record to indicate as to why the assessment had been delayed. The
Tribunal noted that the question of limitation had not been raised
before the Assessing Officer; however, it expressed the view that
limitation being a question of law could be raised at any point of
time. In the background of the aforesaid facts, the Tribunal was of
the view that the first appellate authority could verify the record
and find out as to whether the delay had been occasioned due to any
default on the part of the assessee and then, to decide as to
whether the assessment had been finalized within a reasonable period
of time.
As
regards the second contention, based upon its earlier decision, the
Tribunal was of the view that once the dealer had produced Form
No.40, no further proof of payment of tax in the treasury could be
insisted upon from the dealer; that it was for the Department to
inquire whether tax was paid in the treasury or not. That on
inquiry, if there is material on record to indicate non-payment of
tax in the treasury; the Department could reject the claim. The
Tribunal, therefore, thought it fit to remand the matter to the
first appellate authority to inquire as to whether the vendor had
paid tax in the treasury or not.
The
record of the case indicates that neither the Assessing Officer nor
the first appellate authority have recorded any findings of fact as
regards whether the assessment had been finalized within a
reasonable time as well as, as regards whether the vendor had paid
tax in the treasury as declared in Form No.40 against which the
goods were purchased by the appellant. For the period 1.4.1997 to
31.3.1998 no limitation had been prescribed for the purpose of
finalization of assessment. Hence, the Tribunal was justified in
holding that in absence of any statutory period of limitation, the
assessment should have been finalized within a reasonable period of
time. As to what is a reasonable period would depend on the facts
and circumstances of each case. In the circumstances, the Tribunal
thought it fit to remand the matter for the purpose of ascertaining
whether the appellant assessee was in any manner responsible for the
delay caused in finalization of the assessment. If in absence of any
material on record so as to indicate the cause of delay in
finalization of the assessment no fault can be found in the approach
adopted by the Tribunal in remanding the matter for ascertaining the
facts regarding the actual cause of delay.
As
regards remanding the matter for the purpose of verifying as to
whether the vendor had in fact paid the tax in the treasury, the
Tribunal had placed reliance on an earlier decision of the Tribunal
whereby it was held that once Form No.40 is produced by the dealer,
no further proof about payment of tax should be insisted from the
dealer. It was for the Department to inquire whether the tax is
paid in the treasury or not. On inquiry, if there is material on
record about non-payment of tax in the treasury, the Department can
reject the claim. The Tribunal, therefore, remanded the matter to
the first appellate authority to make inquiry as to whether tax had
been paid in the treasury or not and accordingly, accept or reject
the claim depending on whether or not the tax is paid in the
treasury. In absence of any material on record to indicate as to
whether or not the tax had been paid in the treasury, no infirmity
can be found in the order of the Tribunal in remanding the matter
for the purpose of enabling the concerned officer to inquire and
verify as to whether tax is paid in the treasury or not and decide
the matter accordingly.
In
the aforesaid circumstances, no infirmity can be found in the
impugned order of the Tribunal in remanding the matter for the
purpose of making inquiry on facts in relation to the two issues
involved, so as to warrant any intervention. No question of law,
much less any substantial question of law can be stated to arise out
of the impugned order of the Tribunal. The appeal is, accordingly,
dismissed with no order as to costs.
While
dismissing the appeal, it is clarified that this Court has not
entered into the merits of the case. However, the first appellate
authority shall in the first instance determine the question of
limitation. It would be open to the first appellate authority if it
so deems fit, in the facts and circumstances of the case, to refer
the matter to the Assessing Officer. The appellate authority shall
consider the matter de novo taking into consideration all the
contentions raised on behalf of the appellant.
[D.A.MEHTA,
J.]
[HARSHA
DEVANI, J.]
parmar*
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