Fair opportunity in VAT reassessment required before treating claimed inter-State sales as intra-State taxable turnover.

A revisional VAT order treating claimed inter-State sales of aerated water and fruit drinks as intra-State taxable turnover was unsustainable because the dealer was not given a fair opportunity to produce primary records. The court noted that the absence of a break-up in the profit and loss account alone did not justify drawing an adverse inference or levying VAT on the entire turnover. Although the dealer bore the burden under Section 16 of the Andhra Pradesh Value Added Tax Act to prove non-taxable or lower-taxed turnover, that burden had to be tested on the basis of documentary evidence. The order was set aside and the matter remanded for fresh consideration.

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Issues: Whether the revisional order levying VAT by treating part of the turnover, including claimed inter-State sales of aerated water and fruit drinks, as taxable intra-State sales under the Andhra Pradesh Value Added Tax Act was sustainable in the absence of an opportunity to produce supporting documentary evidence.

Analysis: The petitioner had been called upon to furnish sale details, but the revisional authority did not specifically require production of books of account, sales invoices, or other primary records before drawing an adverse inference. Mere absence of a break-up in the profit and loss account did not, by itself, justify treating inter-State sales as intra-State sales and levying VAT on the entire turnover. Although the burden lay on the dealer under Section 16 of the Andhra Pradesh Value Added Tax Act to establish that the turnover included non-taxable or lower-taxed sales, that burden had to be tested after affording a fair opportunity to produce documentary evidence.

Conclusion: The revisional order was unsustainable and was set aside. The matter was remanded to the revisional authority to examine the documentary evidence to be produced by the petitioner and to pass a fresh order in accordance with law.

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