Gujarat High Court
Sonata Ceramics Pvt Ltd vs State Of Gujarat....Opponent(S) on 2 May, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/237/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 237 of 2014
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SONATA CERAMICS PVT LTD....Appellant(s)
Versus
STATE OF GUJARAT....Opponent(s)
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Appearance:
MR HARDIK P MODH, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 02/05/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI) The assessee has challenged the judgment of the Gujarat Value Added Tax Tribunal (`the Tribunal' for short) dated 6th January 2014 raising the following questions for our consideration:
"i. Whether the learned Tribunal is right in upholding demand of tax and penalty on the premise that the appellants had sold out the goods without recording the same in books of accounts?
ii. Whether the Tribunal is right in upholding the order dated 21 st May 2013 even though the same was passed on assumption basis without appreciating the fact that there was no evidence on record to show that there was illicit clearance of goods?
iii. Whether the Revenue has discharged its burden to show that the appellants cleared the goods illicitly without payment of tax?Page 1 of 3
O/TAXAP/237/2014 ORDER
2. The assessee, a manufacturer dealer dealing in tiles. During a visit by the Gujarat Value Added Tax authorities, it was found that there was a discrepancy in stock to the extent of Rs.8.82 lakhs (rounded of). On such basis, a provisional assessment was framed. After hearing the assessee, the same was finalised. The value added tax and other additional taxes short-paid were ordered to be recovered. A total amount of Rs.4,30,365/- was demanded by way of tax, interest and penalty. This order ultimately came before the Tribunal. The Tribunal rejected the assessee's appeal making the following observations:
"We have considered the rival contentions of the parties. It is not in dispute that the appellant had paid all the tax dues as was determined by the learned assessing authority. The only dispute is relating to stock difference. The stock was taken in the presence of the appellant and he had signed the same. The stock was more of Rs.8,82,800 in the books of accounts. It was contended by the learned STP that as the stock was more on the books of accounts, there cannot be any evasion. In the view of this Tribunal barring a negligible difference, if the stock and the books are well maintained, there can be no much difference in the stock. Further, if the stock is found to be more on the books, it has to be presumed that the dealer had sol out the goods without recording the same in books of accounts. Such sales was not sale in accordance with the provisions of the statute.
The contention that the stock cannot be taxed and that the appellant would pay the tax as and when he sells is of no assistance to the appellant. The necessity to maintain the books of accounts in accordance with the statutory requirement has to be followed. If that is not done, there is always likelihood of mal-practice and evasion of tax on the part of the dealer concerned.
It is true that the learned first appellate authority had considered the contention that there was no difference in the quantity, but he also found that the difference was there in the different kinds of the goods i.e. tiles and therefore, there was difference in the value of the stock. The learned Government Agent submitted that at the time of spot visit, the stock of the tiles of 12 x 18 and 300 x 300 and some broken pieces were not found in the physical stock whereas the same were lying in the books of accounts. Iin the size of 302 x 302 the physical Page 2 of 3 O/TAXAP/237/2014 ORDER stock was more than on the books of accounts. These itself suggest that there was difference in the stock. Therefore, the order of the learned assessing authority so far as the stock difference is concerned and the order of the learned first appellate authority so far as the removal of enhancement and the reduction of penalty is concerned, the same are hereby confirmed. In this view of the matter, we pass the following order:
Order This second appeal No. 515 of 2013 is hereby dismissed with no order as to costs."
3. In our opinion, the entire issue is based on appreciation of materials on records. One conclusion by the Tribunal, the final fact finding authority, and what was not seriously disputed by the assessee was that there was excess stock worth Rs.8.82 lakhs in the books of accounts. On that basis, the authorities as well as the Tribunal confirmed the demand of the tax. We see no question of law arising. The counsel, however, submitted that the stock in the books of accounts and that found during the visit match, except for its valuation. The same was, therefore, only due to error. However, admittedly, the value added tax would be paid on the valuation of the goods cleared. When there was variation of valuation for the purpose of payment of value added tax as compared to the physical stock even at the time of the visit by the authorities, the liability to pay the differential tax cannot be avoided. In the result, Tax Appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) sndevu Page 3 of 3