Julka Sons v. The Commissioner, Sales Tax

1. These are the two appeals filed by the Assessee under Section 81 ofthe Delhi Value Added Tax Act, 2004 ('DVAT Act') directed against the common order dated 6'^ April, 2015 passed by the Appellate Tribunal, Value Added Tax ('AT') dismissing the appeals ofthe Appellants herein.

2. The background facts are that the Appellant is apartnership firm dealing ST.APPL. 33/2015 &ST.APPL. 34/2015 Page 1of[6] 2017:DHC:8547-DB with the sales and purchase of sanitary goods since 1980. It is registered with the Delhi Sales Tax Department.

3. On 19^*^ January, 2012, a survey was conducted by the Enforcement Branch, Department of Trade & Taxes. A 'shortage in stock' worth Rs. 14,36,955/- and cash of Rs. 4,93,220/- totalling to Rs. 19,30,175/- was reported. This was based on the stock inventory rate noted verbally in the statement of the partner, Mr. Gaurav Julka. It is stated that the figure of closing stock given in the trading account prepared on the spot on an estimated basis i.e., on the basis of the previous year's GP Rate of 10.85% was noted..

4. On the basis of the said 'shortage in stocks' and cash, the Value Added Tax Officer ('VATO') issued a notice to the Appellant under Section 59(2) of the DVAT Act.

5. Thereafter, on 2"^* July, 2012, the VATO issued notices of default for interests under Section 32 and penalty under Section 33 of the DVAT Act was issued creating a demand ofRs. 2,59,368 and penalty for a sum of Rs. 2,41,272.

6. Aggrieved by the aforementioned orders, the Appellants filed objections before the Objection Hearing Authority ('OHA'). The OHA vide order dated 26^'' November, 2012 disposed ofthe objections holding inter alia as under: i) That the dealer has further revised the trading account by which a ST.APPL. 33/2015 &ST.APPL. 34/2015 ^"8^ 2of[6] job work equivalent to Rs. 5,28,518/- has been added which he had taken into the DVAT 16 (the first three quarter returns already lying with the department), but failed to recall on the day ofsurvey and the same being exempted from tax has no relevance in the trading stock and hence, rejected the revision oftrading account &the reason of alleged shortage in stock by the said job work amount; ii) That some ofthe goods worth Rs. 2,68,469/- at sample display was alleged not to have been counted at the time of physical survey^ of goods and perhaps this issue cannot be settled at the objection hearing level as this alleged omission has not been supported by any document; iii) The objector has also been found with the cash shortage by Rs. 4,93,220/- and itwas explained that the dealer was having Rs. 5.00 lac in cash as personal fund for the medical expenses and exigencies of Shri B.K. Julka, the Sr. Partner of the appellant firm. The explanation is untenable in lack of any convincing proof & support (copy of the order dtd. 26.11.2012 ofthe Ld. OHA are attached at Annexure-VI hereto);

7. The Appellant then filed two appeals before the AT which were dismissed by the impugned order wherein itwas held as under:

8. It is submitted by Mr P.K. Sharma, learned counsel for the Appellant that the findings of the AT in para 9 of the impugned order that the Appellant had failed to produce documentary evidence to contradict the finding of the Survey Team was erroneous. He pointed out that the Appellant had submitted books of accounts, purchase bills etc in proof of the left out stocks; copies of bills in support of the job work charges; medical record of Mr. Balkrishan Julka that included the cash of Rs. 5 lakhs (alleged shortage in cash) for his medical exigency. He always broughtwith him somecash on • a daily basis while coming to the shop. He submitted that even otherwise, such heavy cash was not kept in the shop and was always taken by Mr. Balkrishan Julka to his residence for safe keeoing every evening. Further, receipt of cash against,sale in the shop and the cash of Rs. 5 lacs was deposited with the Appellant's bank account on January, 2012. It is submitted that going only by the recorded statement of one of the partners and ignoring the documentary evidence was not justified. The shortage of Rs. 4,93,220/- found by the Enforcement Team in the business premises did not prove that the Appellant had suppressed its sales. Levying tax on the said amount was purely a guess work. Reliance is placed on the decision of Sholamal Zalim Singh v. Commissioner of Sales Tax U.P.1974 Vol. 36 STC 94 to urge that taking back cash at the end of the day from the business premises to the residence for safety purposes cannot result in a sales tax liability.

9. The Court finds that this is virtually the third tier of appeal after the ST.APPL. 33/2015 ST.APPL. 34/2015 Page 4 of[6] u assessment order. The Court finds that in the memo ofappeal, the Appellant has not set out precisely which document, according to it, which was already on record before the authorities below was not considered by it and, if considered, would have altered the decision in the appeal before the AT.

10. Mr Sharma refeiTed to the orders in the assessment proceedings and in particular the proceedings recorded on 18^^ June, 2012 to the effect that the Advocate appearing for the Appellant "has submitted some supporting documents/written submission supported by job work charges, copy of ledger account along with copy of labour/ job work charges / cash memo and invoices pertaining to sample bills of goods meant for display on the panel board ofthe showroom."

11. The above noting by no means indicates that all the relevant documents which would substantiate the plea of the Appellant about the shortage of closing stocks were produced before the VATO. It is one thing to say that documents were produced and another to indicate precisely which of the documents produced explained the shortage ofstock.

12. Learned counsel for the Appellant sought some more time for the above purpose. Considering that nowhere in the memo of appeal is itaverred that such documents despite being produced were overlooked by the OHA and the AT, the Court is not inclined to grant any more indulgence to the Appellant. Further, if indeed there were any such documents, they should have been described in the memo of appeal and copies thereof enclosed. That has not been done. A broadsweeping statement that all the relevant documents were ST.APPL. 33/2015 & ST.APPL. 34/2015 Page 5 of[6] produced does not advance the case ofthe Appellant.

13. The following factual findings ofthe AT in its impugned order remain uncontroverted: "9. We are of the considered view that the explanations tendered by the appellant regarding non-counting ofstock are only after thoughts to escape the tax liability. In respect of stock variation due to rate difference where the appellant could produce the documentary evidence to support his contention the same has been accepted by the Ld OtIA. Appellant could not support his submissions regarding leaving ofthe certain stock as well as the job work claim and the same was disallowed by the Ld OIIA. Even at the appellate stage appellant has not produced any documentary evidence to counter and contradict the.findings of the survey team regarding stock and the contentions raised without any supportive evidence are nothing but an afterthought. We are also incline agree with the revenue that the contention that an amount of Rs. 51akh was kept or treatment of the partner but was not known to the other partner who made the statement at the time of survey and;could not explain the same, is unacceptable. In view ofthese facts and circumstances ofthe case, we are of the considered view that the appellant has failed to explain the variation found in stock and cash and we do not find any ground to interfere with the orders of the Ld OHA which accordingly are upheld and the appeals are dismissed. Ordered accordingly."

14. The Court, accordingly, finds that the impugned order of the AT does not suffer from any legal infirmity and does not give rise to any substantial question of law. The appeals are accordingly dismissed, but in the circumstances, no orders as to costs.