2008 PTD 242

CH. FARRUKH MAHMUD, MEMBER (JUDICIAL).--- This appeal has been directed against Order-in-Appeal No.1 of 2006, whereby the learned Collector (Appeals) has upheld Order-in-Original No.423 of 2005.

2. The briefly stated facts are that during audit for the period 4 of 1999 to 3 of 2002, following discrepancies were observed:--

(i) Shortage of stock

(ii) Suspicious invoices

(iii) Violation of section 23 of the Sales Tax Act, 1990.

3. The learned counsel has submitted that during scrutiny of the sales tax record, it was observed that the appellant unit had declared stocks of 1185742 meters, whereas physically verification revealed 1174232 meters, hence a difference of 11510 meters was found and the value of the said short stock was assessed to Rs.3,45,300 against which sales tax of Rs.62,154 was found payable @ 18%. The learned counsel further submits that during audit the respondent-Department had failed to show that the physically verification was made in presence of appellant. Hence, the same stands denied by the appellant.

4. On the other hand, the representative of the Department submits that the auditors had physically verified stocks and the measurements taken, were duly recorded which revealed difference of 11310 meters. The value of the short stock was duly calculated and sales tax of Rs.62,154 was found payable by the appellant.

5. After considering the stand taken by the appellant, I am of the considered view that the appellant has failed to point out any material irregularity in physical verification of the stocks. Even otherwise the appellant could not satisfy any of the forums below that there was no shortage of stocks. In view of the same, the findings against shortage of stocks by the lower forums are upheld and the appeal to this extent stands rejected,

6. Regarding second observation with respect to suspicious invoices, it was alleged that the appellant had claimed inadmissible input tax on suspicious invoices and on this account inadmissible sales tax amounting to Rs.11,73,014 was recoverable along with additional tax. Details of the suspicious invoices had been duly provided in the order-in- original. In this regard the learned counsel has placed on file photocopies of the various sales tax invoices which have been marked as "Annexure C-1 to C-13" against which the amount of refund has been withheld. In these circumstances, it is alleged that the same cannot be recovered from the appellant as the amount has already been withheld. These annexures i.e. C-1 to C-13 have not been at all considered by the lower forums.

7. It will be proper and just to reconcile the record by the Department and after reconciling the exact inference should be drawn. In this view the findings of the lower forums on this account are set aside and the matter in respect of this issue is remanded back to the learned Adjudicating Officer with the direction to reconcile the record keeping in view the Annexures C-1 to C-13 and any other record if produced by the appellant.

8. As regards charge No.3 which deals with violation of section 23 of the Sales Tax Act, 1990. Allegedly, it was observed that the appellant had made sales of empty P. P. bags and paper cones without charging sales tax on them. Details in this regards are as under:--

Yarn sold:

23416 bags

Value per PP bag:

Rs. 3

Value of 23416 PP bags:

Rs. 70,248

Sales Tax @ 18%

Rs. 120675

Number of paper cones per PP bag

40

Number of paper cones in 23416 PP bags:

936640

Value per paper cone:

Rs. 0.40

Value of 936640 paper cones:

Rs. 3,74,656

Sales Tax @ 18%

Rs. 67,438

The learned counsel has challenged the findings on this issue in the light of order passed by the learned Collector (Appeals), in Appeal No.178 of 2005, wherein the said learned Collector had held as under:

"It has however, been ignored that in the instant case the goods were supplied to vendors packed in PP bags and paper cones which were received back in the form of cloth only without packing material. The packing material received from the appellant along with yarn has been subsequently disposed of by the vendors/weavers (who are also registered persons) on payment of sales tax as is evident from their certificates. As such the appellants are not required to pay tax on the goods, which were never received back by them, nor sold or disposed of as per their record. In these circumstances, demand of sales tax from the appellants is not justified".

10. It is, therefore, submitted that the learned Collector (Appeals) cannot deviate from his previous decision/findings. Equity demands that the same principle should have been applied in the instant case. Agreeing with the contention of the learned counsel that it was unjust on the part of the learned Collector (Appeals) to give different findings with respect to the same issue. Hence, the findings in respect of Issue No.3 given by the lower forums are set aside and the charge framed to this extent stands dropped.

11. The appeal stands disposed of in the above manner.

H.B.T./145/Tax(Trib.) Order accordingl