HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA AND HONOURABLE SRI JUSTICE M.SATYANARAYANA MURTHY TAX REVISION CASE Nos. 114, 115, 116, 138,147, 160, 161, 162, 166, 167, 172, 174 198, 199, 200, 201, 211, 228, 239, AND 261 OF 2001
TRC.No.114 of 2001:
DATED 17th APRIL, 2014.
Between M/s. Sri Balaji Mineral Industries Cuddapah, rep. by its Partner, P. Saraswathi ….Petitioner And State of Andhra Pradesh, Represented by the State Representative before the Sales Tax Appellate Tribunal, Hyderabad.
….Respondent.
HONOURABLE SRI JUSTICE ASHUTOSH MOHUNTA AND HONOURABLE SRI JUSTICE M.SATYANARAYANA MURTHY TAX REVISION CASE Nos. 114, 115, 116, 138,147, 160, 161, 162, 166, 167, 172, 174 198, 199, 200, 201, 211, 228, 239, AND 261 OF 2001 *****
COMMON ORDER: ( per AM.J.)
All these Tax Revision cases can be disposed by this common order.
These Tax Revision Cases are filed being aggrieved by the common order dated 4.5.2000 passed in T.A.Nos. 475 of 1997 and batch by the Sales Tax Appellate Tribunal, Andhra Pradesh, at Hyderabad, whereby the appeals (except T.A. No. 596 of 1997) filed by the petitioners-assessees against the re-assessment orders of the revisional authority-Deputy Commissioner of Commercial Taxes, Chittoor Division were dismissed.
Briefly stated, the facts of the case are that the petitioners herein are the assessees on the rolls of the respective Deputy Commercial Tax Officer for the years 1991-1992 and 1992-93. After the petitioners were assessed under the AP General Sales Tax Act and Central Sales Tax Act based on their regular books of accounts produced by them for the said financial years, the officials of the Central Excise Department inspected the business premises and seized certain incriminating documents containing the details of sales of business conducted by them. Basing on the information obtained from the documents seized from the petitioners-assessees, the Revisional Authority issued notices to all the petitioners-assessees to produce the books of accounts maintained by them in order to verify whether the sales of turnovers contained in the seized incriminating material available with the officials of the Central Excise Department were already assessed. As the petitioners-assessees failed to produce the books of accounts after issuing show notices to all the petitioners-assessees proposing to re-assess them, the Deputy Commissioner passed re-assessment orders under Section 14(1) of the APGST Act confirming the proposals made in the show cause notice. Aggrieved by these re-assessment orders, the petitioners-assessees preferred appeals, which were dismissed. Hence these Tax Revision Cases.
In these revision cases, the learned Counsel for the petitioners-assessees while reiterating the submissions made before the Tribunal submitted that the re-assessment order passed by the revisional authority suffers from principles of natural justice and even the lower appellate Tribunal failed to take note of the same. He submitted that the revisional authority had not furnished the complete details of all such invoices which constitute the turnovers estimated and assessed to tax. The learned Counsel further submitted that in the absence of tangible and corroborative evidence to establish turnovers towards sales made by the petitioners-assessees, the authorities cannot draw adverse inferences regarding suppression of sales based on the alleged seized records. It is his contention that charge of suppression of sales cannot be sustained on the basis of only sale invoices which constituted the alleged turnovers. In support of his submission, he placed reliance on the decision of the Apex Court in Oatt Sugar Mills Vs. Union of India {(1978) ELT 112).
Perused the record.
Obviously , the petitioners were assessed by the respective Deputy Commercial Tax Officers based on the regular books of accounts for the taxable years 1991-92, 1992-93 and 1993-94 both under the APGST Act and CST Act. Later when the officers of the Vigilance & Enforcement Department inspected the business premises of the petitioners, they (petitioners) stated that the books of accounts of the firms were seized by the Central Excise Department and that they are not available with them. It is on record that the Central Excise and Customs Department inspected the business premises of the petitioners on 28.11.1992 and noticed certain irregularities and seized certain records. Based on the records received from the District Vigilance & Enforcement Department and Central Excise and Customs Department, it was noticed that the petitioners were assessed on the gross turnovers reported and recorded in the books of accounts, but there was variation in between the turnovers reported at the time of final assessment and the turnovers arrived at as per the invoices raised by the assessees during the taxable years. Thereby the authorities concluded that the petitioners suppressed the sales turnover and evaded the sales tax legally payable to the State Government by way of maintaining two separate sale invoices, one for the purpose of sales tax and the other for the purpose of real transactions. Noticing that they did not properly collect the Central Excise Duty, it was proposed to levy basic Excise Duty and Special Excise Duty on the net value of the invoices considering the excise duty already paid. In regard thereto, a notice was issued by the revisional authority-Deputy Commissioner of Commercial Taxes, Chittoor Division, however, the petitioners-assessees did not chose to produce their books of accounts. Thereafter, a show-cause notice was issued, to which also, the petitioners- assessees did not choose to file their objections within the stipulated time. In terms of the proceedings of the Commissioner of Customs and Central Excise vide proceedings dated 29.11.1995 dropping further action relating to levy of basic excise duty and special excise duty, the revisional authority finally assessed the petitioners under the APGST Act.
Thus the authorities having come to know that the petitioners-assessees have knowingly and deliberately did not disclose the actual and factual turnovers to the Department at the time of final assessment and that they produced different accounts for the purpose of assessment, initiated impugned proceedings. In regard thereto, initially the Deputy Commissioner of Commercial Taxes, Chittoor Division, issued notice dated 13.7.1995 to the petitioners-assessees asking them to cause production of accounts and the petitioners-assessees having received the said notice, did not choose to produce the books of accounts. In the said notice, the petitioners were asked to verify and establish whether the turnovers revealed from the seized incriminating material were already assessed or not. Thereafter, the revisional authority based on the records received from the District Vigilance & Enforcement Department as well as the Central Excise and Customs Department, issued show cause notice dated 23.1.1996 inviting objections, if any, from the petitioners-assessees for levy of the tax under the APGST and CST Acts based on the actual turnovers revealed from the incriminating material seized from the petitioners-assessees. The petitioners-assessees did not chose to file any objections to the said show cause notice. It is the case of the petitioners that they were not in possession of the account books. It is a fundamental requirement of the principles of natural justice that if any person is likely to be affected by the use of any material collected by the Revenue, those are to be brought to his notice, and disclosed to him. The requirement of natural justice is to disclose by way of confrontation of the materials collected and proposed to be used against a dealer. From the material on record, it is palpable that the petitioners neither took any steps to obtain certified copies of the incriminating material based on which the authorities have initiated proceedings nor did they choose to file any corroborative material to defend their case before the revisional authority. The petitioners did not move their little finger to collect necessary information from the seized records by way of approaching the authorities, except contending that the seized records are not in their possession. Further, from the inspection made by the official respondents, it came to light that the petitioners were maintaining two different sale invoices and no explanation is forthcoming from the petitioners-assessees as to what made them to maintain two different sale invoices. No valid and cogent material is placed by the petitioners before the revisional authority in support of their case. In that view of the matter, the revisional authority concluded that the petitioners-assessees failed to show that all the transactions covered by the disputed addition of turnovers have already been assessed in the earlier assessment orders made by the respective assessing authorities.
Adverting to the second contention, we are unable to say that there was no material before the revisional authority to conclude the re-assessment of the petitioners firms. Placing reliance on the decision of the Apex Court in Oatt Sugar Mills (Supra), the petitioner contended that notice without any tangible evidence regarding evasion of duty but based on only sale invoices, is vitiated by error of law. The said decision is clearly distinguishable on facts and therefore is in no way helpful to substantiate the contention of the petitioners. It is to be seen in the case on hand that the Vigilance & Enforcement authorities as well as Central Excise authorities have seized some incriminating material from the business premises of the petitioners-assessees which revealed that the petitioners firms were maintaining two separate sale invoices, one for the purpose of sales tax and the other for the purpose of real transactions and thereby knowingly and deliberately did not disclose the actual turnover to the Department at the time of final assessment. It is also known that they produced different accounts for the purpose of assessment. Based on the actual turnover details depicted from the seized incriminating material from the premises of the petitioners-firms, the revisional authority has issued notice inviting explanation as to whether the alleged factual turnovers were already assessed or not. The petitioners did not submit any explanation nor did they take appropriate steps to obtain necessary information from the seized material in order to submit suitable explanation to the said show cause notice. Thereafter, show cause notice, as stated supra, was issued proposing to confirm the levy of tax determined in the notice. The petitioners kept quiet and did not move in the matter. It is to be seen that it is not the case of the petitioners that despite cogent and substantial material made available, the revisional authority proceeded to initiate proceedings based on sale invoices only. The fundamental concept to be borne in mind is that since the bills of invoice were raised by the petitioners-firms as against the consignees, that by itself was sufficient to bring the transaction in the net of taxation. Those bills no doubt reflect the charges claimed by the firms in respect of the goods supplied and affixed in the course of working of the business. For every sale made by a dealer, there ought to be a corresponding entry in the books of account as well, and obviously in the case on hand, based on the records seized by the Vigilance & Enforcement as well as Central Excise authorities, impugned proceedings were initiated. Faced with the difficulty of imparting a reasonable or at least plausible explanation for the pattern of business conducted by the petitioners, the learned counsel for the petitioners has concentrated on the argument that the assessees were not in possession of the books of accounts.
We have our own reservations in accepting the principle too broadly for exercising the power under section 22, that some material on record seized must form the basis. In the present case, the reopening was occasioned by the inspection of business premises of the petitioners. Some of the documents pertaining to the disputed transaction were found with the dealer. From them, the authorities decided that there were some turnovers which were not assessed. This naturally evoked reasonable doubt in the mind of the assessing authority and made them to probe further into the matter. As a result of such probe it was found that the final assessments submitted by the petitioners were found to be fictitious .This is how the proceedings for reopening the assessment were initiated. It is obvious that the seized material de hors the assessment on record was taken into account for the purpose of initiating the reassessment as well as for the purpose of recording the conclusion that the petitioners failed to disclose the correct turnover. It is not a case of reassessment made on change of opinion or otherwise. Certain turnovers made by the petitioners can be said to have been escaped from assessment. In that view of the matter the submission of the petitioners in regard thereto cannot be sustained having regard to the peculiar facts and circumstances of the case on hand.
Further, it is to be seen that as per the proceedings of the Commissioner of Customs and Central Excise, dated 29.11.1995, the revisional authority dropped further action on the notices issued to the petitioners proposing to addition of excise duty and special excise duty and thereby the petitioners were finally assessed under the APGST Act. In view thereof, it can be said that the petitioners could not have any further grievance so as to make out a case.
Against decision in T.A.No. 596 of 1997, TRC No. 172 of 2001 is filed, wherein the revisional authority had added a turnover of Rs.18,97,990/- towards the basic excise duty and special excise duty to the turnovers of Rs.2,17,47,970/- that were recorded in the alleged incriminating documents. The Tribunal dealt the matter in separate paragraph to the extent indicated below:
“……. It is not clear whether the said excise duty is related to the transactions of sales of asbestos fiber made in Andhra Pradesh or the transactions of sales of dolomite and tailings made in Andhra Pradesh or whether such turnovers are added towards the sales of asbestos fiber made in the course of inter-state trade and commerce. In the absence of the necessary information either in the revisional orders or in the form of memo of the learned AR, it is not possible for us to examine whether this collections of Rs.18,97,990/- is related to any sales referred herein above…….”
Holding so, the Tribunal set aside the re-assessment orders of the revisional authority to the extent of Rs.18,97,990/-
and remanded the appeal to the assessing authority having jurisdiction over the petitioner/appellant, and further, dismissed the appeal in so far as disputed turnover of Rs.1,20,13,800/-.. While remanding the matter, the Tribunal directed to enquire whether the disputed turnover of Rs.18,97,990/- is related to local sales of the asbestos fiber or not and made it clear that if it is not related to local sales of asbestos fiber, he need not delete this turnover from the net tax determined by the revisional authority; whereas, if it is related to the local sales of asbestos fiber, he was directed to allow the exemption to the extent of disputed turnover that is relatable to local sales of asbestos fiber only. Inasmuch as liberty is kept open to the petitioner in this TRC, there is no serious dispute in regard thereto and therefore we need not proceed to discuss in detail in regard thereto any further. In respect of the disputed turnover is concerned, the learned Counsel raised similar contentions as was raised in the concomitant appeals and therefore the reasoning given by us in the foregoing paragraphs would be applicable to this TRC also.
For the foregoing discussion and in the result, the Tax Revision Cases are liable to be dismissed and are accordingly dismissed. Miscellaneous petitions if any pending consideration shall stand closed. There shall be no order as to costs.
JUSTICE ASHUTOSH MOHUNTA JUSTICE M. SATYANARAYANA MURTHY DATED 17th APRIL, 2014.
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