High Court Dismisses Revision Tax Confirmed on Unproven Interstate Wheat Purchases
The revision was against the order dated 19/07/2019 made by the Commercial Tax Tribunal in Second Appeal for A.Y. 2016-17 under Section 28(2)(ii) of the UP VAT Act, 2008. The assessee produces and sells atta, maida, suji, and choker from wheat. Wheat was procured inside and outside the State after paying tax, as applicable, for production. The assessee reported interstate acquisitions of wheat from Delhi in Form 38 (E-Sancharan) amounting to Rs. 10,59,10,067/-, which were shipped by selling dealers by transporters. An examination on 24/08/2016 by the SIB at the business premises revealed that stock and manufacturing registers, purchase invoices and cash book were not there; stock register postings for wheat were carried out only up to 22/08/2016, discrepancies between book stock and physical stock, and in revealed interstate wheat purchases, the vehicle numbers stated were those of jeeps, motorcycles, tractors and bulldozers.
A show-cause notice dated 10/11/2016 was issued, and after considering the reply, the Assessing Officer passed an assessment order dated 20/06/2018, estimating suppressed intra-State purchases at Rs. 4,60,24,006 and levying a tax liability of Rs. 18,40,960. The first appeal before the Additional Commissioner was partly allowed, reducing the suppressed turnover to Rs. 2,30,00,000/- with tax of Rs. 9,20,000/-. The Tribunal, in the second appeal, further reduced the figure to Rs. 1,50,00,000/- with tax liability of Rs. 6,00,000/-.
Central Issue: Whether the dealer had discharged the burden under Section 16 of the UP VAT Act to prove actual physical movement of goods from outside the State, to justify the claim of exemption on interstate purchases.
Court’s Decision: The Court observed that the assessee had failed to prove actual physical movement of wheat from Delhi to its place of business. Validation of the vehicle registration numbers showed that most matched two-wheelers, tractors, and light vehicles, and the others were not traceable. The issue of creating invoices for taxes, Mandi Parchis, and proofs of bank transactions was not sufficient to establish valid interstate purchases.
The Court was supported by the earlier decision of the Commissioner, Commercial Tax v. Ramway Foods Ltd. and the Supreme Court judgment in State of Karnataka v. Ecom Gill Coffee Trading Pvt. Ltd. to repeat that the onus of proving the genuineness of transactions rests with the dealer. Drawing reference from Section 16 of the UP VAT Act, the Court reiterated that the dealer availing exemption would have to establish beyond doubt the presence of circumstances warranting such a claim, including proof of actual physical movement. The Court ruled that the Tribunal’s opinion was well-placed. The amendment, therefore, remained rejected, and all material issues of law were decided in favour of the Revenue against the assessee.
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