Delhi High Court Remits VAT Assessment, Directs Fresh Consideration Of Tax Paid On Subsequent Sales
The Delhi High Court has set aside a VAT assessment concerning alleged stock shortage at a jewellery store, directing the VAT Officer to undertake a fresh assessment after taking into consideration the effect of subsequent sales of the goods found short during a survey.
The division bench of Justices Avneesh Jhingan and Shail Jain was hearing an appeal under Section 81 of the Delhi Value Added Tax Act, 2004, against an order passed by the Appellate Tribunal Value Added Tax.
The appellant was engaged in the business of sale of branded watches, jewellery and bullion. During a survey conducted at its business premises on May 5, 2010, a stock shortage of ₹2,96,11,028 and cash of ₹56,461 was found.
Following the survey, assessment proceedings were initiated. The appellant appeared before the VAT Officer and produced the delivery note prescribed in Form-33.
A default assessment was subsequently framed on December 22, 2011, creating a total demand of ₹73,52,661, apart from a penalty of ₹59,33,498. The appellant's objections were dismissed and its challenge before the VAT Tribunal also failed.
Before the High Court, the appellant submitted that the goods corresponding to the alleged stock shortage were subsequently sold and tax had been duly paid on those sales. It was argued that this aspect had not been considered by the authorities, including the Tribunal.
The Department did not dispute that tax had been received on the subsequent sale of the goods which had allegedly been found short during the survey. However, it contended that the subsequent sales and payment of tax were merely a cover-up by the appellant to overcome the proceedings initiated after the survey.
The High Court observed that the issue involved was whether there could be double taxation on the sale of the goods.
"This aspect strikes at the root of the jurisdiction of the VAT Officer," the Court observed.
It consequently held that the impugned assessment could not be sustained and remitted the matter to the VAT Officer for a fresh assessment, taking into consideration the effect of subsequent sales.
For Appellant: Advocates Rajesh Mahna & Ruchir Bhatia
For Respondent: Advocates Urvi Mohan, Sumit Kumar & Aakrit Bhargava