The assessee, C.P. Rasheed, a dealer in chicken, had filed returns for the year 2005-06. The audit team discovered that the assessee had understated the inter-state purchases in the returns after verifying the delivery notes, and therefore, made an addition to the gross profit (GP) at the rate of 5.16%.
HC noted assessee’s contention that he had in fact sold the purchased goods at a price lower than that seen from the Delivery Notes and that as per the Circular of the Commissioner, it was mandated that Delivery Notes show the sale value of goods for the purpose of payment of advance tax. It stated that assessee had failed to produce copy of the invoices showing sales being carried out at a lower price to prove his contention before the Assessing Officer (AO) or Appellate Authorities. Consequently, it rejected assessee’s claim and sustained the additions made on inter-state purchase at the GP computed by AO.
Another issue before the HC was denial of input tax credit w.r.t purchases made from three dealers whose registration was cancelled by the Department. The assessee contended that such cancellation was after the purchases made by him on the basis of registration granted by Department at that time.
Finding that the tax had not been paid to the Department by selling dealer, HC observed that the State was deprived of the tax to that extent and hence, there was no question of ITC. It elucidated further that, having not received the tax at the first instance of sale, there was no obligation on the State to grant ITC.
Accordingly, HC directed the AO to redo the assessment in accordance with above directions and grant mortality at the rate of 1% by the First Appellate Authority.
Citation: [ TS-401-HC-2018(KER)-VAT ]