2017 (4) TMI 256 - HC - VAT and Sales Tax

High Court upholds tax assessment, seller's declaration misuse claim accepted, lack of evidence, Assessing Officer's failure cited.

Assistant Commercial Taxes Officer, Circle-VII, Kishangarh Versus M/s. India Marbles

The High Court upheld the decisions of the lower authorities in a tax assessment case where the respondent-assessee claimed misuse of a declaration form ... Declaration Form ST-17 - the Assessing Officer came to the conclusion on perusal of the declaration Form ST-17 that the assessee purchased “Marble Kareji” of ₹ 26,18,400/- from one M/s. Anupam Marble Pvt. Ltd., Kishangarh and the assessee nowhere disclosed the said purchases - It was contended on behalf of the respondent-assessee that the said declaration Form ST-17 was stolen by someone and the same was misused by M/s. Anupam Marble Pvt. Ltd., Kishangarh - levy of tax, interest and penalty - Held that: - The Income Tax Officer as aforesaid was satisfied that the assessee did not make any purchases from M/s. Anupam Marble Pvt. Ltd and it is a finding of fact that M/s. Anupam Marble Pvt. Ltd had misused the declaration Form ST-17 and shown Bogus sales for generating cash in its books of account - Admittedly, the assessee informed the Assessing Officer and filed an FIR simultaneously about misuse of declaration Form ST-17 and it is only thereafter on the information that the Assessing Officer started investigation. The Assessing Officer did not chose to verify from M/s. Anupam Marble Pvt. Ltd about the factum of purchases i.e. sale by M/s. Anupam Marble Pvt. Ltd to the assessee which ought to have been done but that having not been done, the Assessing Officer failed to justify his stand. Merely blaming the assessee may not be sufficient & it was for the Assessing Officer to verify from M/s. Anupam Marble Pvt. Ltd about such abnormal transactions. Petition dismissed - decided against petitioner-Revenue. Issues:1. Assessment of tax liability based on misuse of declaration Form ST-17 by the respondent-assessee.2. Validity of the findings of the Dy. Commissioner (A) and Tax Board regarding the explanation offered by the respondent-assessee.3. Interpretation of Section 23(10) of the RST Act regarding the responsibility of the dealer in case of loss or misuse of declaration forms.Analysis:1. The case involved a petition against an order passed by the Rajasthan Tax Board related to the assessment year 2005-06. The respondent-assessee had obtained a declaration Form ST-17 but failed to disclose purchases of goods worth a significant amount. The Assessing Officer charged tax, interest, and penalty based on the undisclosed purchases, alleging connivance between the assessee and the seller, M/s. Anupam Marble Pvt. Ltd. The respondent claimed the form was stolen and misused by the seller, but the Assessing Officer did not accept this explanation.2. The matter was appealed before the Dy. Commissioner (A) who found in favor of the respondent-assessee, considering the explanation provided and the findings of the Income Tax Officer regarding the misuse of declaration forms by M/s. Anupam Marble Pvt. Ltd. The Tax Board also upheld this decision, leading to a challenge by the revenue. The revenue argued that the respondent failed to explain the issuance of the declaration Form ST-17 and that the benefits conferred by the form should be accounted for, emphasizing the mandatory requirement to keep the form safe under Section 23(10) of the RST Act.3. The High Court analyzed the facts and legal provisions closely. It noted that the respondent had promptly informed the Assessing Officer about the misuse of the declaration form and had filed an FIR. The Court highlighted the responsibilities outlined in Section 23(10) regarding the safe custody of declaration forms and the dealer's duty to report any loss or theft. The Court found that the findings of the lower authorities were well-reasoned, emphasizing the lack of evidence to support the revenue's claims and the failure of the Assessing Officer to verify transactions with the seller. Ultimately, the Court dismissed the petition, concluding that no legal question arose, and there was no basis to interfere with the lower authorities' decisions.