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Judgment
Ms. Harsha Devani, J.—In this appeal u/s 78 of the Gujarat Value Added Tax Act, 2005 (the Act), the appellant has challenged judgment and order dated August 25, 2009, made by the Gujarat Value Added Tax Tribunal ("the Tribunal") in Second Appeal No. 1490 of 2004, proposing the following four questions :
(i) Whether, in the facts and circumstances of the case, the Tribunal was right in law in rejecting the claim of the appellant u/s 6A of the Central Sales Tax Act to the effect that the appellant had carried out consignment transaction with its agent at Maharashtra ? (ii) Whether, in the facts and circumstances of the case, the Tribunal was right in law in confirming the order passed by the assessing officer, holding that the appellant has not countered some specific instances mentioned in the assessment order for rejecting genuine transactions and has deemed fit proper to remain silent on it without taking into consideration the evidence on record ?
(iii) Whether, in the facts and circumstances of the case, the Tribunal was right in law in dismissing the appeal of the appellant by drawing adverse inference against the appellant contrary to the facts and evidence on record to hold that the appellant has not been able to show that the findings of the lower authorities are contrary to the facts on record and the appellant remained totally silent on specific observations made by the authorities below, without referring as to which are such specific observation ?
(iv) Whether, in the facts and circumstances of the case, the Tribunal has erred in law in ignoring the relevant factors and materials on record and by taking into consideration irrelevant materials and factors resulting into perverse order ?
Vide order dated September 24, 2010, this court had issued notice for final disposal pursuant to which Ms. Maithili Mehta, learned Assistant Government Pleader appears on behalf of the respondents.
Having regard to the submissions advanced by the learned advocates for the parties, ADMIT.
The following substantial question of law arises for determination :
Whether, in the facts and circumstances of the case, the Gujarat Value Added Tax Tribunal has erred in law in taking into consideration irrelevant material and ignoring the relevant material on record ?
The facts of the case stated briefly are that the appellant is a dealer registered under the Gujarat Sales Tax Act, 1969 as well as the Central Sales Tax Act from August 8, 2002. The appellant is engaged in the business of buying, selling and manufacturing of soyabean, palmolein and other edible oils. A show-cause notice dated March 8, 2004 came to be issued by the Sales Tax Officer in form No. 36 for production of evidence in respect of various claims made in the return of income filed by the appellant. After production of evidence in respect of the claim made u/s 6A of the Central Sales Tax Act before the Sales Tax Officer, vide letter dated March 16, 2004, the Assistant Commissioner of Sales Tax called upon the appellant to show cause as to why the assessment should not be made u/s 41(1) of the Act for the period from April 1, 2003 to December 31, 2003. In reply to the said show-cause notice, the assessee furnished various details. Vide order dated April 30, 2004 made u/s 41(1) of the Act, the assessing officer rejected the claims made by the appellant and raised a demand to the tune of Rs. 5,22,77,452. Being aggrieved, the assessee carried the matter in appeal before the Deputy Commissioner (Appeals) (hereinafter referred to as, "the appellate authority"), who vide order dated November 26, 2004 dismissed the appeal. The assessee preferred second appeal before the Tribunal, but did not succeed.
Assailing the impugned order of the Tribunal, Mr. B.D. Karia, learned advocate appearing on behalf of the appellant, submitted that the Tribunal has brushed aside almost all the evidences produced by the appellant which formed part of the paper book without giving any cogent reasons for dismissing the appeal. It was submitted that despite the fact that the entire assessment had been made on the basis of presumptions and assumptions, the Tribunal has disregarded the same and held that the assessee had not been able to show that the findings of the assessing officer and appellate authority have no basis. It was submitted that the impugned order of the Tribunal is perverse inasmuch as no reasons have been given by the Tribunal for discarding the evidence produced on record by the appellant. Inviting attention to the assessment order, it was pointed out that the findings recorded by the assessing officer are based upon assumptions and presumptions. It was further pointed out that the assessing officer has placed reliance upon material which has been gathered behind the back of the appellant and without furnishing the same to the appellant and without affording any opportunity to the appellant to deal with the same. Thus, the assessment order which is based upon material which was not supplied to the appellant suffers from the vice of breach of the principles of natural justice. It was submitted that neither has the appellate authority nor has the Tribunal, appreciated the evidence on record in proper perspective. It was submitted that in the circumstances, the impugned order of the Tribunal is required to be quashed and set aside and the matter is required to be remanded for the purpose of looking into the evidence produced by the appellant as well as to provide copies of the material gathered by the assessing officer behind his back to the appellant so as to give the appellant an opportunity to deal with the same.
On the other hand, Ms. Maithili Mehta, learned Assistant Government Pleader, opposed the appeal. It was submitted that various irregularities have been discovered by the assessing officer and that the material available with the assessing officer clearly indicates that the assessee had made direct sales to the vendors and that the consignee agent was merely a front to obviate the need to pay taxes. It was submitted that the assessing officer has placed reliance upon reliable material and in the circumstances, there is no warrant for any interference at the hands of this court.
Inviting attention to the assessment order, it was pointed out that upon verification, it was found that the transport company was not to be found at the given address and that even the consignee agent was not to be found at the address given by the assessee. The assessee had not produced any evidence as regards the place of storage and godowns of the consignee agent. It was, accordingly, submitted that in the circumstances, the finding of the assessing officer that the sales had been directly made to the parties and not through the consignment agent, deserves to be confirmed.
This court has perused the record of the case as available with the court and has considered the submissions advanced by the learned advocates for the parties.
A perusal of the assessment order clearly indicates that the assessing officer has proceeded on assumptions and presumptions and with a predetermined mind. The assessing officer while framing assessment has placed strong reliance upon material which he had gathered behind the back of the appellant. However, neither was the said material furnished to the appellant nor was he called upon to explain anything in the context of the material collected by the assessing officer, nor was he afforded any opportunity of hearing in respect of the same. On a plain reading of the assessment order, it is apparent that such material which has been gathered behind the back of the appellant forms the basis for the assessing officer coming to the conclusion that the sales were made directly to the parties and not through consignee agents. For instance, according to the assessing officer, upon verification, it was found that Chandni Road Lines through which the goods in question had been transported by the appellant was not found at the address stated in the bills produced by the appellant; that the F forms obtained by Jai Bhavani Enterprise had been obtained unauthorisedly and steps had been taken by the Sales Tax Department at Maharashtra for cancellation of the same; and that Jai Bhavani Enterprise was not found at the address stated by the appellant, etc. All this was material collected by the assessing officer, which was not put to the appellant so as to give him a chance to explain the same.
A perusal of the order made by the appellate authority shows that the appellate authority has without considering the submissions advanced on behalf of the appellant, more or less, reiterated the findings recorded by the assessing officer and has in fact recorded contradictory findings. On the one hand, the appellate authority has recorded that upon verification, it was found that the place of business as well as residence of the commission agent, namely, Jai Bhavani Enterprise, were not found as informed by the Sales Tax Officer, Audit Branch, Mumbai vide letter dated December 11, 2003, whereas on the other hand, the appellate authority records that Jai Bhavani Enterprise had paid taxes only to the tune of Rs. 18,142. Thus, whereas on the one hand, it is the case of the Department that Jai Bhavani is not to be found at the address stated and as such is non-existent or bogus, on the other hand, it is also stated that the tax paid by Jai Bhavani is less, which are contradictory to each other. In the entire order, the appellate authority has nowhere dealt with the contentions raised on behalf of the appellant nor has it taken the trouble to consider the evidence placed on record by the appellant.
As can be seen from the impugned order of the Tribunal, the Tribunal, to say the least, has made a short shrift of the matter. The first three paragraphs of the impugned order are, more or less, formal in nature. Paragraphs 4, 5, 6 and 7 record the submissions made on behalf of the appellant. In paragraph 8 of its order, the Tribunal has recorded that it has perused the order of the appellate officer as well as the assessing officer wherein reasons have been given for disallowing consignment sales to (1) Jai Bhavani Enterprise, and (2) Jai Trading Corporation and why transport evidence was rejected. In the subsequent paragraphs, the Tribunal has recorded as follows :
The assessment order is more clear on many points. Some specific instances are mentioned therein for rejecting the genuineness of transactions. The appellant has not countered such specific instances and has deemed it proper to remain silent on it for the reasons best known to him. Findings about non-existence of the transport Co. are much more eloquent. The appellant has deemed it fit to remain silent on it.
Thus, the appellant has not been able to show that the findings of the assessing and the appellate officer have no basis at all and are contrary to the facts on record. Total silence of the appellant on specific observations is intriguing which goes against his case.
Thus, looking to the facts and circumstances that are on record, there is no reason to interfere with the impugned order.
Thus, the Tribunal has merely recorded that certain specific instances have been mentioned in the assessment order for rejecting the genuineness of transactions and that the appellant has not countered such specific instances and has deemed it proper to remain silent on it for the reasons best known to him. That, findings of non-existence of the transport company are more eloquent. The Tribunal, while recording the aforesaid findings has lost sight of the fact that it is the categorical case of the assessee that material has been gathered behind the back of the assessee and that the assessee had not been afforded any opportunity to deal with the same. The Tribunal has vaguely referred to some specific instances without enumerating the same. However, on a perusal of the assessment order, it is apparent that the instances referred to by the assessing officer are based upon the material gathered behind the back of the assessee. In the circumstances, when such material was never put to the assessee, there was no question of the assessee having countered the same. Thus, the findings recorded by the Tribunal clearly suffer from non-application of mind. When the assessee has raised specific contentions before the Tribunal, the Tribunal is required to apply its mind to the said contentions and after appreciating the evidence on record, record its findings in respect thereof. In the present case, the Tribunal has abdicated its duties of appreciating the evidence on record and recording its findings and has merely brushed aside the submissions made by the assessee without even a reference thereto. The impugned order of the Tribunal therefore stands vitiated and cannot be sustained.
In the light of the aforesaid discussion, the question is answered in the affirmative. The Tribunal has erred in law in taking into consideration irrelevant material and ignoring the relevant material on record. The appeal is allowed to the following extent. The impugned order dated August 25, 2009 made by the Tribunal in Second Appeal No. 1490 of 2004 is hereby quashed and set aside. The appeal is restored to the file of the Tribunal for deciding the same afresh after giving a reasonable opportunity of hearing to the parties. In case the Tribunal so deems fit, it shall also be open to the Tribunal to further remand the matter either to the appellate authority or to the assessing officer. There shall be no order as to costs.