IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 28.08.2015
SWASTIK INDUSTRIAL POWERLINE LTD
COMMISSIONER TRADE & TAXES DELHI
Advocates who appeared in this case:
For the Appellant
:Mr. Rajesh Mahna with Mr. Ramanand Roy,
For the Respondent
:Mr. Peeyoosh Kalra, Additional Standing
Counsel with Mr. G. Jain, Advocate.
HON'BLE DR. JUSTICE S.MURALIDHAR
HON'BLE MR. JUSTICE VIBHU BAKHRU
VIBHU BAKHRU, J
This is an appeal preferred by the Assessee under Section 81 of the Delhi Value Added Tax Act, 2004 (hereafter 'DVAT Act') impugning a common order dated 19th March, 2013 passed by the Appellate Tribunal, Value Added Tax, Delhi (hereafter 'the Tribunal') in Appeal Nos. 877- 878/ATVAT/09-10 emanating from proceedings relating to the assessment year 1983-84. This Court admitted the present appeal on 1 st November, 2013 and framed the following questions of law for consideration:-
"Whether the order of the Appellate Tribunal, Value Added Tax, Delhi holding that ST-I Forms should be ignored, is perverse and does not deal with several factual aspects relevant for consideration."
The Appellant/Assessee is aggrieved on account of being denied deduction in respect of sales made by the Appellant to registered dealers against ST-1 Forms. The Assessing Authority (hereafter 'AA') had found that the relevant account (ST-2 account) filed by certain dealers ( hereafter referred to as 'purchasing dealers') who were stated to have purchased goods from the Appellant against the ST-1 Forms, had reflected the ST-1 Forms to have been issued to persons other than the Appellant. Both in the initial round of assessment as well as in the remand proceedings, the AA was of the view that the Appellant could not substantiate its claim with regard to the movement of goods sold and thus, concluded that the appellant had colluded with the purchasing dealers to arrange the ST-1 forms and consequently disallowed the exemption claimed by the Appellant in respect of the sales made against ST-1 forms. According to the Assessee, it had discharged its burden of proof for claiming deduction from its taxable turnover and the AA has wrongly disallowed the same.
Briefly stated, the relevant facts for addressing the issue involved in the present appeal are as under:-
3.1 The Appellant is engaged in the business of manufacture and sale of copper wire. During the period relevant to the assessment year 1983-84, the Appellant had claimed that a part of its sales turnover included sales made to registered dealers against the declaration issued by the said dealers in ST-1 Form and accordingly, such sales were liable to be deducted from the taxable turnover. The Assessee filed ST-1 Forms - 90 in number - in support of its claim. The AA took up 63 ST-1 Forms for cross-verification with the accounts furnished by the purchasing dealers (i.e. ST-2 Account). The AA obtained verification reports in respect of ST-1 Forms where a single transaction exceeded Rs.1 lac. On verification, it was found that 9 ST-1 Forms did not reconcile with the ST-2 Accounts furnished by the purchasing dealers.
3.2 The Appellant was confronted with the discrepancies and a show- cause notice was issued as to why deductions claimed against the ST-1 Forms should not be disallowed and penal proceedings initiated. The Assessee produced the books of accounts as well as the photocopies of the ledger accounts pertaining to the purchasing dealers. The Assessee claimed that the sales had been made in good faith to purchasing dealers who were duly registered with the concerned department and thus, the Assessee could not be held responsible for any discrepancy or any delinquency on the part of the purchasing dealers.
3.3 The AA passed an Assessment Order dated 18th March, 1988 rejecting the Assessee's contention. The AA held that the Assessee could not substantiate its claim with reference to the movement of goods and concluded that the sales had, in fact, been made to unregistered dealer(s)/customer(s) and the declarations in ST-1 Forms had been arranged from the purchasing dealers in collusion.
3.4 The Assessee preferred an appeal before the Deputy Commissioner (Appeals) vide Appeal No.185/88-89. The Deputy Commissioner (Appeals) disposed of the appeals by an order dated 31 st March, 1989 and remanded the matter back to the AA. The Appellate Order dated 31st March, 1989 is not on record, however, the assessment order framed subsequently indicates that the matter was remanded back with the direction to re-examine the ST- 1 Forms received by the Assessee.
3.5 Pursuant to the remand, the AA called upon the Assessee to prove the genuineness of the sales amounting to Rs. 13,40,735/- against 7 ST-1 Forms which remained unverified because the concerned purchasing dealers had shown the said forms to be issued to persons other than the Assessee. The Assessee was also asked to produce documentary proof of the transfer of property in goods and to produce the concerned purchasing dealers with their Books of Accounts. The AA also issued notices to the concerned purchasing dealers, however, none of those dealers were found to be in existence at the material time. The Assessee reiterated it's stand that it had received payments through bank drafts and cheques but could not produce the purchasing dealers or their books of accounts. The AA, further, passed an Assessment Order dated 28th March, 1993 (hereafter referred to as 'remand assessment order') disallowing deduction of sales of Rs.13,40,735/- from the taxable turnover of the Assessee. The particulars of the said disallowances are as under:-
S. ST-1 Form issued Amt. As per As per ST-2 Form issued No No. to:- ST-1 Form a/c to: -
M/s Metal &
(Wards - 42)
M/s R. K.
Total Sales as
The Assessee appealed against the remand assessment order before
the First Appellate Authority (hereafter 'FAA'), which was rejected by an order dated 24th September, 2004; the FAA holding that the Assessee had failed to prove the genuineness of the sales in question and upheld the remand assessment order.
3.7 Being dissatisfied with the order dated 24th September, 2004 of the FAA, the Assessee sought a review of the said order by filing a review petition. The Assessee contended that it had placed the deposit slips, bank statements, ledger accounts and duly receipted invoices on record to show the genuineness of the sales transactions in question. It was once again contended that the Assessee...