IMFBANS SINGHS & SONS v. THE COMMISSIONER VALUE ADDED TAX

1. These are eight appeals by the Petitioner Assessee under Section 81 ofthe Delhi Value Added Tax Act,2004('DVAT Act')against an order dated 29^'' August 2014 passed by the Appellate Tribunal for Value Added Tax ('Tribunal') for the assessments made for the four quarters of Assessment Year('AY')2008-09. While four ofthe appeals deal with the issue ofthe quantum oftax,four deal with the issue ofpenalty.

2. The facts leading to the filing ofthese appeals are that the Appellant is a registered dealer under the DVAT Act. It is stated that he undertook both local sales as well as inter-state sales during all the four quarters ofthe AY in question. He furnished three C-Fonns for sales in the value of Rs. 40,09,508 by way ofinter-state sales and six TI-Forms for Rs.41,05,603 for the sales made by way ofexports for the AYin question. It appears that the dealer was unable to furnish C-Forms for sales in the value ofRs. 1,20,900 which he claimed were inter-state sales. A default assessment order was passed on 1^'^ February 2011 by the Value Added Tax Officer('VATO') under Section 9(2)ofthe Central Sales Tax Act, 1956(GST Act)directing the Appellant to pay tax in the sum ofRs.12,695 after accepting the above C and H Forms in respect ofinter-state sales and export sales respectively. The tax amount computed was to the extent of sales made by the dealer for which he was unable to furnish C-Forms. It is not in dispute that the ST.Appl.l\os. 90,91,92,93,94,95,96&97of2014 Page4of13 Appellant has remitted the above amountoftax as demanded.

3. Thereafter on December 2011/13^^'February 2012 the VAFO issued a notice to the Appellant stating that he had filed an incomplete return or incorrect return or a return which did not comply with the requirernenis of the DVAT Act. Similar notices were issued in respect of each of the four quarters of the AY in question. The notices inter alia stated that when enquiries were made with certain transporters viz.,Inland Movers(P)Ltd., Kolkata, Vijay Lakshmi Transport Company, Delhi and Assam Bombay Cargo Carriers,New Delhi it appeared thatthe goods receipts('GRs')which were furnished by the Appellant were unable to be verified. It was accordingly stated by the VATO thatin the absence ofsuch verification,the entire central sales against the C-foiins and FI-Fonns were liable to be rejected and were to be treated as local sales which would be taxable at 12.5%. The differential tax amount was computed for each ofthe quarters along with interest on tax deficiency at 15%.Penalty under Section 33 read with Section 86(10)ofthe DVAT Act was also imposed.

4. Aggrieved by the above notices,the Appellant filed objections before the Objection liearing Authority ('OFIA'). By a common order dated 17^'' December 2012 for all the four quarters of AY 2008-09,the GHA rejected the objections and confirmed the demand oftax,interest and penalty.

5. The Appellant then filed appeals before the Tribunal which has, by the impugned order dated 29*^^ August 2014,dismissed the appeals after taking note of the fact that the reopening happened as a result of information Sr.Appl.IS'os. 90,91,92,93,94,95,96&97of2014 Page5of13 u gathered by the'Audit Team'.

6. In the present appeals, one of the points urged is that the Respondents could not have brought the same transaction to tax both under the DVAT Act as well as the CST Act. It is further submitted that no notice of reassessment under Section 32 of the DVAT Act was issued. During the course of the hearing a point has been raised that the initial assessment which was completed under Section 9(2) of the CST Act had attained finality since it was were never sought to be revised by the authority superior to the VATO.On the strength ofthejudgment ofthis Court in Nav Bharat Enterprises Ltd. v. Sales Tax Officer [1987]66 STC 252 it is contended that till such time the assessments under CST Act are not set aside, it is not possible to subject the same transaction to VAT.Reliance is also placed on the decision in Sri Krishna Das v. Town Area Committee, Chirgaon[1990]183ITR 401 and R.JJ.Enterprises v. Sales Tax & Others [1992]85STC251.

7. However,the issue concerning the initial assessment under Section 9(2) ofthe CST Act was notraised in the memo ofappeal and was also not urged at the time this Court framed the following questions in the present appeal by its order dated 13th July 2015: "(i) Whether a transaction can be taxed twice, once under the Delhi VAT Act as intra-State sale in the State of Delhi and again as interstate sale under the CST Act?

(ii) Whether re-assessment can be made without issuing notice of assessment under Section 32 of the Delhi VAT Act?" ST.Appl. Nos.90,91,92,93,94,95,96&97of2014 Page6ofIS lA^

8. During the hearing ofthe case on 27'^ November 2015 it was contended by Mr. Vinod Srivastava, learned counsel for the Appellants, that the impugned order ofthe Tribunal had en-oneously proceeded on the basis that audit action under Section 58 (4) of the DVAT Act was in fact taken in accordance with law. The thrust of the submission was that evidence had been gathered behind the Appellant without any opportunity to the Appellant to counter such evidence. Further,that evidence fomied the basis for reopening an assessment which already attained finality under Section 9 (2)ofthe CST Act.

9. In light of the above submissions, one of the questions that arose was whether any notice at all had been issued to the Assessee in the course ofthe audit proceedings prior to issuance of the notice for reassessment and penalty under Sections 32 and 33 ofthe DVAT Act. Mr. Gautam Narayan, learned counsel for the Respondent, referred to the fact that a notice ha.d indeed been issued to the Appellant through its Proprietor on 8th September 2011, which was however disputed by Mr. Srivastava. The Court then passed the following order on 2?"^ November2015: "1. Mr Gautam Narayan, learned counsel for the Respondent,states that he would like to examine the records and produce before the Court the relevant documents including copy of the notice pmportedly issued to the Assessee 8th September, 2011. Copies of the said notice, the statement made by the Assessee in writing in response thereto and any other relevant document be filed by the Respondent as a compilation, with an advance copy to counsel for the Appellant,before the next date ofhearing. ST.Appl Nos.90,91,92,93,94,95,96& 97of2014 Page 7of13

2. List on 11th December,2015."

10. Since then Mr.Narayan,learned counsel for the Respondent,has filed a compilation of documents. The first document in this compilation is a copy ofa notice dated 8^"^ September 2011 sent to the Assessee under Rule 46 of the DVAT Rules. This in fact is a notice for audit under Section 58 of the DVAT Act. The notice is in Form DVAT-37. Inter alia, it requires the Assessee to appear before the VATO on 19^"^ September 2011 for recording his statement, produce his book ofaccounts and evidence being relied upon by him.Itrequires him to produce a host ofdocuments including the"record of interstate sales and transfer of goods along with statutoiy declaration form, supporting documents regarding export sales...", "GR/RRs, Form-4 and Form-7 and copy of returns and balance sheet with audit report." A second document in this compilation is a notice dated 19^^ October 2011 issued by the VATO to the Assessee noting that the Assessee had appeared and sought time from the VATO till 23'^'' September 2011 for filing the documents and given the Assessee a final opportunity of submitting the requisite documents by 3L^ October 2011. Further the compilation also contains copies ofthe notices dated 20^^ October 2011 issued to the thi*ee transporters mentioned hereinbefore. The compilation also contains certain letters, one of them is by Vijay Lakshmi Transport company dated 25^'^ October 2011 to the VATO enclosing the abstracts ofthe booking register relating to two ofthe GRs.

11. Importantly,this compilation contains a copy ofa hand written statement dated 8"^ November 2011 of the sole Proprietor of the Assessee, Mr. ST.AppI. Nos.90,91,92,93,94,95,96& 97of2014 Page8of13 Harbinder Pal Singh. This runs into four pages and each ofthe pages bears his signature with the rubber stamp ofthe proprietary concern.Inter alia,in para 5 he refers to the fact that the audit of the business affairs of the concern was conducted by the VAT Audit Branch "vide notice dated 8"^ September 2011, date of first appearance as 19'^ September 2011". The compilation also contains further show cause notice issued on 16'"^ November 2011 to the other two transporters i.e. Inland Movers(?)Ltd., Kolkata and Assam Bombay Cargo Caniers,New Delhi.It also has the audit report signed both by the VATO as well as the Assistant VATO analysing the statements made by the Assessee as well as the responses received from the transporters.

12. Learned counsel for the Appellant submitted that when they inspected the file of the Department, they did not find in it many of the documents which have been produced in the compilation. That apart, the statement dated 8^'^ November 2011 given by the sole proprietor ofthe Appellant was doubted and it was suggested that it was possibly obtained under coercion. Significantly, Mr. Srivastava, learned counsel for"the Assessee did not at that stage dispute thatthe letter was in the handwriting ofMr.Harbinder Pal Singh and that it was signed by him on each page. He maintained that the notice purportedly issued by the VATO to the Appellant on 8 November 2011 did not show that such a notice had in fact been either dispatched or delivered/seiwed on the Appellant. When the attention ofIVIr. Srivastava was drawn to the para 5 of the handwritten statement of Mr. Harbinder Pal Singh, he volunteered that it was unlikely that Mr. Llarbinder Pal Singh could have voluntarily written that paragraph. ST.Appl Nos.90,91,92,93,94,95,96& 97of2014 Page9of13 2^3

13. In light ofthe documents that have been emerged during the course of the present hearing and which the Appellant claims not to have received earlier, and since these documents have a vital bearing on the validity ofthe assessments initially made and the reassessment made subsequently, the Court considered it appropriate to remand the matter to the VATO for a de novo re-assessment proceeding after giving the Appellant a proper opportunity to explain the materials now placed oh record.