2018 (5) TMI 3 - HC - VAT and Sales Tax

Court upholds remand decision on trade discount deductions, emphasizes burden of proof

The High Court affirmed the Tribunal's decision to remand assessment proceedings to the assessing authority for verification of trade discount deductions ... Remand of assessment proceedings - allowance of Trade Discount - Held that: - no question of law arises for our consideration out of the order of the said learned Tribunal dated 31.01.2017 and learned Tribunal was justified in remanding the case back to the assessee authority for proper leading of the evidence and proving of the fact of giving the Trade Discount by the assessee during the relevant period, so as to claim the same as a deduction from the taxable turnover - petition dismissed. Issues:1. Interpretation of trade discount for deduction from taxable turnover under Karnataka Value Added Tax Act, 2003.2. Requirement of producing books of accounts as evidence for claiming trade discount.3. Burden of proof on the assessee to establish relevant facts for deduction from taxable turnover.Analysis:1. The revision petition was filed by the assessee, M/s S.B. Agencies, challenging the order of the Karnataka Appellate Tribunal remanding the assessment proceedings for the period April-2006 to March-2007 to the assessing authority. The Tribunal emphasized the need for transactions allowing discount to be proved based on records, with the final sale price after deducting the trade discount reflected in the accounts as per rule 3(2)(c) of the rules. The Tribunal's decision was based on the requirement to adjudicate the sale/purchase price considering the tax invoice, account reflecting trade discount, and actual price paid. The Tribunal found the authorities' conclusion unsustainable due to lack of access to books of accounts, necessitating a remand for verification.2. The petitioner's counsel argued that the relevant facts and evidence were already on record, citing the Supreme Court judgment in the Southern Motors case, which supported the deduction of Trade Discount from taxable turnover. Conversely, the revenue's counsel supported the Tribunal's decision, contending that the absence of relevant books of account and insufficient proof of Trade Discount warranted the remand. The High Court opined that no legal question arose from the Tribunal's order, affirming the justification for remand to establish facts and prove the Trade Discount for deduction from taxable turnover, as required by the Supreme Court judgment.3. The High Court highlighted the burden on the assessee to substantiate their claim for deduction from taxable turnover by providing necessary evidence to the assessing authority. Dismissing the appeal, the Court supported the Tribunal's directive for the assessee to present books of accounts and relevant evidence to support the Trade Discount claim. The Court rejected the argument that the Tribunal should have independently verified the available evidence, affirming the necessity for the assessee to establish the facts before the assessing authority. Ultimately, the Court found the revision petition devoid of merit and dismissed it without costs.