2021 (4) TMI 744 - HC - VAT and Sales Tax

Admission of Documents Allowed in Tax Appeal; Assessing Officer to Verify Genuineness

The High Court held that the Appellate Authority can admit documents if they were available on record, overturning the Tribunal's decision to reject ... Price variation clause - validity of production of credit notes issued towards the price variation - Appellate Deputy Commissioner refused to accept those documents on the ground that the assessee/dealer did not produce the same either before the Investigating Officer or before the Assessing Officer - HELD THAT:- The legal issue as to whether the Appellate Deputy Commissioner can accept documents filed by the assessee is no longer res integra and has been decided in several cases in favour of the assessee, holding that the First Appellate Authority or the Tribunal has requisite power to find out whether any register, record, account book or document produced before it was genuine, so as to find out whether the assessee was entitled to certain concession or benefit - It is beneficial to refer to the decisions of the Division Bench of this Court in the cases of The Deputy Commissioner (C.T.), Coimbatore Division, Coimbatore-2 Vs. New Ajantha Wines [1978 (10) TMI 135 - MADRAS HIGH COURT], State of Tamil Nadu Vs. Shah Moolchand Kasthurchand and another [2009 (10) TMI 826 - MADRAS HIGH COURT] which was decided in favour of the assessee/dealer. In the light of the above decision, it has to be necessarily held that the First Appellate Authority as well as the Tribunal can receive documents subject to the genuinity being proved. In the order passed by the First Appellate Authority, dated 13.12.2021, it is stated that the materials produced by the assessee/dealer before the First Appellate Authority cannot be considered as genuine. However, this finding does not stem out of any enquiry or investigation done with regard to the veracity of documents and what the First Appellate Authority states to be not genuine is the conduct of the assessee/dealer, i.e., the assessee/dealer did not produce the documents either before the Investigating Officer or before the Assessing Officer. The Assessing Officer would be well justified in considering the genuinity of the documents produced by the assessee/dealer - matter is remanded to the Assessing Officer and the assessee/dealer shall produce all the documents/credit notes in original before the Assessing Officer - appeal allowed by way of remand. Issues:1. Interpretation of Section 63 of the Tamil Nadu Value Added Tax Act, 2006 regarding the admission of fresh materials in the appellate forum.2. Justifiability of the rejection of reasons for failure to furnish objections before the Assessing Officer.3. Legality of construing subsections (2) & (3) of Section 63 as imposing a total bar on production of documents.Issue 1: Interpretation of Section 63 of the TNVAT Act:The petitioner, a dealer, challenged an order by the Sales Tax Appellate Tribunal regarding the acceptance of fresh materials in the appellate forum. The Tribunal had rejected the petitioner's credit notes as they were not submitted earlier to the Investigating Officer or Assessing Officer. The High Court analyzed past judgments and held that the Appellate Authority has the power to assess the genuineness of documents produced by the assessee. The Court referred to various decisions to support the view that the Appellate Authority can admit documents if they were already available on record. The Tribunal's failure to consider this aspect led the High Court to set aside the Tribunal's finding on this issue.Issue 2: Rejection of Reasons for Failure to Furnish Objections:The Assessing Officer revised the assessment due to the dealer's failure to submit objections after an inspection of their business premises. The dealer later produced credit notes during the appeal, which were rejected for not being submitted earlier. The Appellate Authority deemed these documents not genuine based on the dealer's failure to produce them earlier. However, the High Court found that this finding did not address the genuineness of the credit notes themselves. The Court ruled that the Assessing Officer should assess the genuineness of the documents produced by the dealer.Issue 3: Construing Subsections (2) & (3) of Section 63:The Court emphasized that Section 63 of the TNVAT Act does not impose a complete ban on admitting documents at the appellate stage. Citing past judgments, the Court clarified that the Appellate Authority has the jurisdiction to admit documents if they were part of the initial records. The Court highlighted that the Tribunal overlooked the Explanation to Section 63, which allows for the consideration of accounts built from initial records. Consequently, the High Court allowed the tax case revision, answered the substantial questions of law in favor of the dealer, and remanded the matter to the Assessing Officer for reassessment based on the genuine documents to be produced.This detailed analysis of the judgment addresses the interpretation of Section 63 of the TNVAT Act, the rejection of reasons for failure to furnish objections, and the legality of construing subsections (2) & (3) of Section 63. The High Court's decision provides clarity on the powers of the Appellate Authority, the genuineness of documents, and the procedural aspects of assessment under the Act.