Rajasthan High Court - Jaipur
M/S Bhatia Agency vs The Commercial Taxes Officer K on 26 November, 2013
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR O R D E R S.B. SALES TAX REVISION NO. 48/2006 M/s Bhatia Agency Vs. The Commercial Taxes Officer DATE OF ORDER : 26/11/2013 P R E S E N T HON'BLE MR. JUSTICE J.K. RANKA Mr. Alkesh Sharma, for the petitioner Mr. R.B. Mathur, for the respondent _____ BY THE COURT
This instant revision petition is directed against the order of Rajasthan Tax Board (for short Tax Board) dated 15.12.2005 passed in Appeal No.1354/2003/Kota.
2. The said appeal was admitted by this Court on 5.5.2006 on following questions of law:-
(i) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in opining that receiving 82 old Rajasthan Sales Tax paid television sets in exchange of new Rajasthan Sales Tax paid Akai television sets receiving only differential amount as per scheme were the purchases made by the petitioner from the customers?
(ii) Whether under the facts and circumstances of the present case the Hon'ble Rajasthan Tax Board is correct in holding that the transaction of exchange of the old television sets with the new television sets and only charging differential amount as per the schme, is a transaction of sale?
(iii) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in ignoring the judgment of this Hon'ble Court in the case of Assistant Commercial Taxes Officer Vs. M/s Ganganagar Bottle Supply Company wherein this Hon'ble Court have held that if the goods have already suffered tax on the initial sale the same are not liable to be taxed again even if they were purchased from casual traders or hawkers?
(iv) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in upholding the levy of tax, penalty and interest which was imposed by the assessing authority while passing the assessment order dated 30.3.1999 Annexure/1 by merging the demand which was so created by the Assistant Commercial Taxes Officer, Ward 3, Circle A, Kota while passing the order dated 1.8.1997 under section 65 of the Rajasthan Sales Tax Act and which was so upheld by the Deputy Commissioner (Appeals) vide order dated 10.6.2003?
(v) Whether under the facts and circumstances of the present case whether the view taken by the Deputy Commissioner (Appeals) in the Rajasthan Tax Board that though in the assessment order was passed ex-parte on 30.3.1999 on the basis of the figures submitted by the petitioner in ST 5A yet creation of additional demand by merging the order of the Assistant Commercial Taxes Officer dated 1.8.1997 passed only under section 65 of the Rajasthan Sales Tax Act, 1994 is correct or that the respondent Commercial Taxes Officer could have merged the order dated 30.3.1999 only after issuing the notice under section 29(7) of the Rajasthan Sales Tax Act?
(vi) Whether under the facts and circumstances of the present case the Hon'ble Rajasthan Tax Board is correct in upholding the levy of tax of Rs. 74,500 on estimated amount of Rs. 7,45,000 when in fact all the 82 television sets were purchases by the customers from registered dealers of Rajasthan?
(vii) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in upholding the levy of penalty of Rs.1,49,000 which was imposed in a routine manner without alleging any mens area on the part of the petitioner when in fact, all the transactions relating to exchange of the old television sets were duly entered in the books of accounts of the petitioner?
(viii) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in upholding the levy of interest of Rs.44,700 which was levied by the assessing authority while passing the impugned assessment order dated 30.9.1999 i.e. for a period anterior to the passing of the said assessment order?
(ix) Whether under the facts and circumstances of the present case the Rajasthan Tax Board is correct in opining that no documentary evidence was produced by the petitioner in respect of initial purchases of 82 Rajasthan Sales Tax paid television sets when in fact, the entire purchase vouchers of the customers have been produced/presented for verification before both the lower authorities?
3. The brief facts emerging on the face of record are that survey operation was carried out in the business premises of the petitioner on 23.9.1996. It was noticed by the assessing officer that the petitioner was going on with a scheme under which in lieu of old television sets, the petitioner was providing new Akai television sets. During the course of survey, it was noticed by the assessing officer that during the course of said scheme, petitioner exchanged 82 television sets and on these 82 sets, differential amount was charged from the customers. It was also noticed that the petitioner had received an amount of Rs. 7,45000/- by way of credit notes. During the course of hearing, the petitioner was required to provide the purchase vouchers of the 82 old coloured TV sets which the assessee claimed were received in exchange, for providing new TV sets or any other evidence so as to prove that the tax was paid on such old TV sets. However, no evidence was led by the assessee with regard to the said factum. Even, it was noticed by the assessing officer that during the course of survey, neither bill books nor cash book or other record were found nor were produced later on. Accordingly, the assessing officer was of the view that the assessee had not paid purchase tax though it had issued sale vouchers with reference to the 82 TV sets. Accordingly, the assessing officer was of the view that the petitioner had knowingly hidden this fact from the department and it was only because of survey that this came to light otherwise there was every possibility of the transaction having escaped attention. Ultimately, dis-satisfied with the claim of the assessee/petitioner, the assessing officer charged an amount of Rs.74,500/- by way of purchase tax on the value of credit notes amounting to Rs.7,45,000/-. It was also held by the assessing officer under Section 65 of the Sales Tax Act that the assessee had concealed the factum of purchase tax and even the transaction and accordingly levied penalty under Section 65 of the Act to the tune of Rs.1,49,000/-.
4. Dis-satisfied with the levy of purchase tax so also penalty, an appeal was preferred by the petitioner before the Dy. Commissioner (Appeals), who was also satisfied that the findings arrived at by the assessing officer were correct and sustained not only the levy on the purchase tax, but also imposition of penalty.
5. Dis-satisfied with the said order, further appeal came to be filed by the assessee-petitioner before the Tax Board. The Tax Board after analysing the orders came to the conclusion that the orders passed by the lower authorities i.e. assessing officer as well as Dy. Commissioner (Appeals) were just and proper in reaching to the conclusion. It was observed by the Tax Board that even later on before the appellate authorities, no evidence was led about tax having been paid on the alleged 82 TV sets(old), which were said to have been exchanged by the assessee with the customers. Ultimately, the appeal was dismissed.
6. Hence, this revision petition.
7. Shri Alkesh Sharma, learned counsel for the petitioner submitted that the petitioner is distributor of M/s Baron International Ltd. and as per their directives, a scheme was launched, in exchange of old TV sets with new one and to boost the turn over of the petitioner. This scheme was in vogue from 17th July, 1996 to 31st August, 1996. He further submitted that it is not a sale or purchase rather it is an exchange or barter and it does not come within the definition of Section 2(38) of the 'sale' defined under the Rajasthan Sales Tax Act, 1994. He further submitted that there was no consideration and only differential amount was taken and by no stretch of imagination, it can be said that it is a sale or purchase. It is further submitted that there was no necessity of proving that old TV sets were tax paid as whenever the original purchaser purchased those TV, it was certainly tax paid. He further explained that if any person purchases TV from market, the dealer charges/levies sales tax and without levy of sale tax no one can sell TV sets or other item whenever sales tax is leviable. He further submitted that sales tax is certainly chargeable on the television sets sold earlier by the other dealer, which were exchanged with the petitioner and once tax has been paid and it is a taxable commodity, which ultimately came to be exchanged, thus, no question of levy of tax arises. He further submitted that all these arguments, which were relevant, have been brushed aside by the lower authorities.
8. In so far as levy of penalty is concerned, he submitted that it is not a case of concealment and the assessing officer has not been able to prove that there was deliberate intention as there was no liability of tax at all. He alternatively submitted that merely because the assessee was unable to prove that the original purchaser had paid tax, penalty in law cannot be imposed. He accordingly submitted that there was no occasion of levy of penalty and sustenance of penalty by the appellate authorities.
9. Learned counsel for the petitioner in support of his contentions has relied upon decisions in Vishweshwaradass Gokuldass Vs. The Government of Madras reported in (1962 (13) STC 113), Sales Tax Commissioner, U.P. Vs. Ram Kumar Agarwal reported in (1967 (19) STC 400), Hindustan Steel Ltd. Vs. The State of Orissa reported in (1970 (25) STC 211), M/s Raghunath Prasad Ramesh Chand Vs. Commissioner of Sales Tax reported in (1985 U.P.T.C. 326), M/s Hardwari Lal Kunj Bihari Lal, Shahjahanpur Vs. Commissioner of Sales Tax reported in (1989 U.P.T.C. 1029), Asstt. Commercial Taxes Officer Vs. M/s Ganganagar Bottle Supply Co. Sriganganagar reported in (1991 (9) RTJS 213), Asstt. Commercial Taxes Officer Vs. Kumawat Udhyog reported in (1995(97) STC 238), Vijaya Aluminium Industries Vs. State of Andhra Pradesh reported in (1996 (103) STC 508), M. Jaihind vs. State of Kerala reported in (1998 (111) STC 374), Sree Krishna Electricals Vs. State of Tamil Nadu & Anr. reported in (2009 (23) VST 249 (SC)), and C.T.O. (AE), Jodhpur Vs. M/s Marudhara Motors, Jodhpur, reported in (2009 (23) Tax Up-Date 249).
9. Per contra, Shri R.B. Mathur, learned counsel for the Revenue submitted that by amendment of 1982, definition of sale was enlarged. He further submitted that even in case of exchange/Barter, tax liability was there. He further submitted that if the claim of petitioner is accepted then in every case of exchange/barter, no tax would be payable and every one will claim that it is tax paid. He further submitted that if the theory of the petitioner is accepted then possibly almost in all cases like this, the claim from the dealer would be not only in the present case, but also in other cases. He further submitted that exchange offers are there but due taxes have to be paid. He submitted that not only during the course of survey, but even later on adequate opportunity was granted but neither any evidence about the tax having been paid on such purchase of exchange/barter was given nor even the books were produced even at subsequent stage. He further submitted that there was clear cut intention of the petitioner to hide this transaction and only because of survey, it came to light otherwise, the transaction would not have come to light. He further submitted that it is a clear cut finding of fact by the Tax Board about the entire transaction. He further submitted that all the authorities have repeatedly held against the assessee. He further submitted that section 11 of the Act clearly proves about the levy of purchase tax and further that the tax was correctly levied.
10. In so far as penalty is concerned, it is submitted that the entire transaction was not recorded in the books of accounts nor the books were produced even later on and there was no intention of payment of purchase tax rather the assessee having failed, came out with the unique explanation of exchange/barter just to avoid the purchase tax liability. He further submitted that though the assessee had received credit notes to the extent of Rs. 7,45,000/-, even the credit notes were not disclosed in the books of accounts. He further submitted that it is a clear cut case of imposition of penalty and penalty also deserves to be sustained.
11. Learned counsel for the Revenue in support of his contentions has relied upon the decision in Union of India & Ors. Vs. Dharmendra Textiles Processors & Ors. reported in (2008 (306) ITR 277 (SC)).
12. I have heard the learned counsel for the parties and have perused the impugned order, so also the judgments relied upon by the parties.
13. In effect two questions emerge for consideration (1) taxability of 82 television sets, which were received by the petitioner from the consumers and in exchange thereof new Akai TV sets were given; and (2) whether penalty under Section 65 of the Act could be imposed on the above.
14. Before adverting to the issue, it would be appropriate to quote Section 2(38), which deals with definition of sale, Section 11 which relates to levy of purchase tax and Section 65 of the Rajasthan Sales Tax Act, 1994.
2(38) Sale with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another for cash, deferred payment or other valuable consideration and includes:-
(i) a transfer, otherwise than in pursuance of a contract, of property in goods for cash, deferred payment or other valuable consideration;
(ii)a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;
(iii)any delivery of goods on hire- purchase or other system of payment by instalments;
(iV)a transfer of the right to use goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;
(V)a supply of goods by an unincorporated association or body of person to a member thereof for cash, deferred payment or other valuable consideration; and (Vi)a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply is for cash, deferred payment or other valuable consideration; and such transfer, delivery or supply shall be deemed to be a sale and the word purchase or buy shall be construed accordingly;
Explanation I. Notwithstanding anything contained in this Act, where any goods are sold in packing, the packing material in such case shall be deemed to have been sold with the goods, unless otherwise proved by the dealer.
Explanation II.
A sale or purchase shall be deemed to take place inside the State-
(a)in a case falling under sub-clause(ii), if the goods are in the State at the time of their use, application or incorporation in the execution of a works contract, not with standing that the agreement for the works contract has been wholly or in part entered into outside the State or that the goods have been wholly or in part moved from outside the State; and
(b)in a case falling under sub- clause(iv), if the goods are used by the lessee within the State, whether or not for a specified period, notwithstanding that the agreement for the lease has been made outside that State or that the goods have been moved from outside the State or the goods have been delivered to the lessee outside the State.
Explanation III.
Where there is a single contract of sale or purchase in respect of goods stored or ascertained in the State as well as at places outside the State, the goods stored or ascertained in the State shall be deemed sold separately in or form the State.
Explanation IV.
Where the work under a wroks contract is spread over in many States including the State of Rajasthan, the part of the work done within this State shall be deemed to be the sale made in the State, irrespective of the place of agreement for works or the point of movement of goods involved in the execution of that works contract.
11. Levy of purchase tax.-
(1)Every dealer who in the course of his business purchases any goods other than exempted goods, in the circumstances in which no tax under section 4 and 12 is payable on the sale price of such goods, shall be liable to pay tax on purchase price of such goods, at the same rate at which it would have been leviable on the sale price of such goods under sections 4 and 12.
(2)Where any dealer has purchased any goods, otherwise than under the provisions of section 10, without paying any tax or after paying tax at concessional or reduced rate of tax on the strength of any declaration furnished by him under the Act, the purchase price of such goods shall be included in his taxable turnover and such dealer shall be liable to pay tax with interest at the same rate which would have been leviable on the sale price of such goods under sections 4 and 12, except in a case where such dealer satisfies the assessing authority that the said goods have been utilised for the purpose mentioned in the declaration form.
(3)Where tax is leviable under sub-section (1) at the time of purchase of any goods, no tax under section 4 shall be leviable at the time of sale of such goods.
(4)The dealer shall be entitled to claim set-off of the tax paid by him under sub-section (2) on the purchase price of the goods, against the tax payable by him on the sale of such goods.
65. Penalty for avoidance or evasion of tax:- Where any dealer, whether or not registered, has concealed any particulars from any return furnished by him or has deliberately furnished inaccurate particulars therein or has concealed any transaction of sale or purchase from his accounts, registers and documents required to be maintained under this Act or has avoided or evaded tax in any other manner, the assessing authority may direct that such dealer shall pay by way of penalty, in addition to the tax payable by him under law, a sum equal to double the amount of tax avoided or evaded.
15. On perusal of the above, it makes it clear that in so far as sale is concerned, it mentions that every transfer of property in goods by one person to another for consideration would mean sale so also in view of the extended definition. The transaction, which we are considering in the instant case, in my view, is certainly sale as the assessee was a dealer of Akai TV, has provided new TV sets in lieu of the old TV sets. Therefore, even exchange/barter, in my view, will fall within the definition of sale/purchase as defined under the Act.
16. In so far as Section 11 is concerned, it is clear that had the assessee purchased goods, which were exempted or had the assessee proved that the initial purchaser, who had come with the old TV set for replacement/exchange by a new TV set had proved that it was a tax paid item, then possibly the contention of the assessee may have had some substance. It has been observed that the assessing officer repeatedly required the assessee to provide basis and evidence as to whether the initial purchaser had paid tax, but it is already on record that despite of repeated time having been allowed, no evidence was placed. The counsel may be correct to some extent that TV sets or similarly situated commodity cannot be sold unless tax is paid, but then a judicial notice can be taken to the fact that goods are being sold without proper bills and vouchers and taxes are not being paid. A person, who purchases television set normally keeps a bill of its purchase in the eventuality of claiming of warranty or otherwise. Therefore, the burden lay on the assessee to prove that the items which were exchanged were tax paid, which in my view has not been discharged by the assessee. Even it is an admitted position that the books were not found during the course of survey nor even produced later on, which fact is very important to be noticed. Equally important is the fact that even the assessee was not able to prove that whether proper entries were there in so far as the credit notes of Rs.7,45,000/- are concerned. Since the books of accounts were not produced, therefore, the assessing officer rightly took adverse view. Even the Tax Board has come to a conclusion that neither books were produced before the assessing officer nor before the appellate authority, therefore, the contention of learned counsel for the assessee is not proper and deserves rejection.
17. Learned counsel for the petitioner relied upon judgment of this Court in the case of C.T.O(AE) vs. M/s Marudhara Motors (supra) and on perusal of the same, it is noticed that it was a case of discharge of manufacturer's warranty obligation and replacing of only such parts during the period of warranty, therefore, there was no transfer of property in goods i.e. spare parts from the dealer to the manufacturer. It has been rightly held that there are two transactions viz. One between customer and dealer and another between dealer and manufacturer and both are independent and are not linked to each other. First it sans consideration against goods and second one is sans transfer of property in goods. The credit notes given by manufacturer to dealer in discharge of its warranty obligations to customers has rightly been held not taxable under the Sales Tax Act. However, the facts are entirely distinguishable inasmuch as in the present case, there is no case of warranty obligation discharged by the assessee. It is rather exchange of old TV sets by new TV sets and the assessee has charged money from the customers though at a reduced price in lieu of exchange of old TV sets. Thus, it is inapplicable on the facts of the instant case.
18. This Court in the case of A.C.T.O. vs. M/s M/s Ganganagar Bottle Supply Co. (supra) had an occasion to consider the issue about empty bottles having been purchased by the non-petitioner (assessee) from hawkers and casual traders and it was proved by the assessee that these very bottles came in the rotation i.e. from the assessee to the consumers and from consumers to hawkers and casual traders, who thereafter sold them to M/s Ganganagar Sugar Factory. Therefore, in these facts and circumstances, this Court came to the conclusion that it was proved that tax was paid once, whereas in the present case, the assessee has been unable to prove whether any tax was paid for the reasons given hereinbefore.
19. The other judgments relied upon by the counsel for the petitioner are on different footings and thus distinguishable or not relevant. Therefore, in my view the assessing officer was justified in coming to the conclusion that the sales tax was correctly levied on the credit notes and upheld by the Dy. Commissioner (Appeals) as well as Tax Board upheld the same and resultantly question No.1 is answered in favour of the Revenue and against the assessee.
20. On the question of imposition of penalty, counsel for the assessee/petitioner has vehemently submitted that the transaction did not involve any sales tax liability and once the assessee was able to prove that no sales tax was leviable then question of penalty does not arise. He submitted that the assessee was under the bonafide belief that such an exchange does not result into sale or purchase tax liability and therefore penalty at least is not leviable. He has referred to The judgment in the case of M/s Shree Krishna Electricals vs. State of Tamil Nadu (supra) and submitted that in the aforesaid case Hon'ble Supreme Court was considering the case where claim was rejected and dealer was assessed to sales tax but penalty was directed to be deleted as it was found that the items were incorporated in the account books though they were not included in the turnover. He has further relied upon and referred to judgment of this Court in the case of Asstt. Commercial Taxes Officer vs. Kumawat Udhyog (supra) and submitted that the aforesaid case was a case where the transaction was recorded in the books of accounts, but the same was not included in the return on bonafide belief, this Court observed that if the entries were existing in the books of accounts and the action was bonafide, therefore, no penalty was leviable.
21 Shri R.B. Mathur, learned counsel for the Revenue relied upon judgment in the case of Union of India vs. Dharmendra Textiles Processors (supra) and submitted that it is a case, where not only the transaction was hidden from the department but also it is a case, where the transaction was not at all recorded in the books of accounts. He further submitted that despite of adequate opportunity having been granted by the authorities repeatedly the books were not produced and once books were not produced even before the appellate authorities apprehension of the department was correct that assessee wanted willfully to hide the very transaction itself. It is only as a result of the survey that things came to light and even thereafter neither the assessee declared the transaction in the return furnished by it nor did he produce the relevant books of accounts, therefore, he submitted that the department has been able to satisfy the requirements as contained in Section 65 and all the three authorities have consistently and concurrently held that there was deliberate attempt on part of the assessee not to show the transaction in question or to pay tax or even intention to pay the tax. Accordingly, he justified the order of imposition of the penalty.
22. I have considered the arguments, here is a case where neither sale/purchase was recorded in the books of accounts nor even shown in the return of income, neither even the credit notes were entered in the books of accounts, nor were shown in the return of sales tax. Had there been the intention of the assesse at least to show in the books of accounts possibly then the assessee could have had a good case, but it is a finding of fact by all the three authorities that the assessee for the reasons best known to him did not produce the books of accounts even at the appellate stage. Therefore, in my view as well, all the authorities have correctly come to the conclusion that the penalty is leviable. The judgments relied upon by the counsel for the appellant have already been adverted to supra, where at least the entries were recorded in the books of accounts, but here is a case where no where the transaction stands reflected. Accordingly, in my view, the order imposing penalty is also proper in the facts and circumstances of the case. Accordingly, this issue is also decided in favour of the department and against the assessee.
24. Resultantly, the revision petition stands dismissed. Both the questions are answered against the assessee and in favour of the Revenue. No order as to cost.
[J.K. RANKA],J.
BKS/-
All corrections made in the judgment/order have been incorporated in the judgment/order being emailed.
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