2021 (12) TMI 670 - SC - VAT and Sales Tax

Supreme Court Reinstates Decree in Recovery Suit

M/s STAR PAPER MILLS LIMITED Versus M/s BEHARILAL MADANLAL JAIPURIA LTD. & ORS.

M/s STAR PAPER MILLS LIMITED Versus M/s BEHARILAL MADANLAL JAIPURIA LTD. & ORS. - TMI Issues Involved:1. Validity of the alleged bills and transactions.2. Proof of registration as a dealer with the Sales Tax Authorities in Delhi.3. Admissibility of account books and documents.4. Onus of proof regarding the genuineness of transactions.5. Allegations of fraud, duress, and fictitious transactions.Detailed Analysis:1. Validity of the Alleged Bills and Transactions:The appellant filed a suit for recovery of Rs. 96,41,765.31, claiming that the respondent, a wholesale dealer, had defaulted on payments for goods worth Rs. 72,27,079/- supplied between November 1985 and January 1986. The respondents denied the transactions, alleging that the bills were based on fictitious and fraudulent transactions. The Division Bench of the High Court dismissed the suit, finding that the appellant failed to prove the transactions. However, the Supreme Court noted that the invoices, debit notes, and ST-1 Forms were stamped and signed by the respondents, indicating the receipt of goods.2. Proof of Registration as a Dealer with the Sales Tax Authorities in Delhi:The Division Bench dismissed the suit partly on the ground that the appellant failed to prove its registration as a dealer in Delhi. The Supreme Court found this reasoning erroneous, as the appellant provided a registration certificate as a reseller dealer in Delhi, which was not disputed by the respondents in their written statement. The appellant's invoices bore the registration number, further supporting their claim.3. Admissibility of Account Books and Documents:The respondents argued that the appellant did not produce account books, only extracts, which are not admissible in evidence. The Supreme Court held that the invoices, debit notes, and ST-1 Forms were maintained in the regular course of business and were stamped and signed by the respondents. The appellant's witness confirmed the authenticity of these documents, and the respondents admitted their signatures on these documents during cross-examination.4. Onus of Proof Regarding the Genuineness of Transactions:The Division Bench held that the appellant failed to prove the genuineness of the transactions. The Supreme Court clarified that since the respondents alleged the transactions were fictitious and fraudulent, the onus of proof was on them. The respondents failed to discharge this burden, as they did not produce their account books, claiming they were damaged during reconstruction. The Supreme Court found this defense unconvincing and noted that the respondents did not provide any evidence of fraud or duress apart from self-serving statements.5. Allegations of Fraud, Duress, and Fictitious Transactions:The respondents claimed that the transactions were tainted with fraud and that they signed documents under duress. The Supreme Court rejected these allegations, noting that the respondents did not make any complaints during the period the transactions took place. The large number of documents signed over three months made the claim of duress implausible. The court found that the respondents' denial of receipt of goods was baseless and aimed at defeating the appellant's legitimate claim.Conclusion:The Supreme Court set aside the Division Bench's order, reinstating the Single Bench's decree in favor of the appellant. The suit was decreed for recovery of Rs. 96,41,765.31 with future interest on the principal sum of Rs. 71,82,266/- at 9% p.a. from the date of filing of the suit till realization. The appeal was allowed, emphasizing that the respondents failed to prove their allegations of fraud and fictitious transactions, and the appellant's documents were duly authenticated and admissible.