IMPORTANT POINT
The court established that the burden of proof lies with the appellant to substantiate claims of tax-free transactions, which was not met in this case.

ORDER :

Bhargav D. Karia, J.

1. Heard learned advocate Ms. Vaibhavi K. Parikh for the appellant and learned Assistant Government Pleader Mr. Raj Tanna for the respondent State.

2. By this appeal under section 78 of the Gujarat Value Added Tax Act, 2003 (For short “the VAT Act”), the appellant has proposed the following substantial questions of law arising out of order dated 20.02.2024 passed by Gujarat Value Added Tax Tribunal, Ahmedabad (For short “the Tribunal”) in Second Appeal No.1023 of 2022:

“(i) Whether, in the facts and under the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law and on facts in treating the tax-free transactions entered into by the appellant as taxable by disallowing the entire purchase/ sale transaction and levying tax at a higher rate on the same.

(ii) Whether in the facts and under the circumstances of the case, the order of Gujarat Value Added Tax Tribunal is perverse in as much as :

(a) it fails to take into consideration and take proper cognizance of the various documentary evidences placed before it;

(b) it fails in not considering, adjudicating and dealing with the arguments and submissions made by the appellant;

(c) it fails to take cognizance of the fact that even on merits of the appellant's case no amount of tax and interest is required to be paid by the appellant in the facts and the circumstances of the case;

(iii) Whether, in the facts and under the circumstances of the case, the Gujarat Value Added Tax Tribunal was right in law and on facts in not deleting penalty levied by the adjudicating authority.”

3. Brief facts of the case are that Shri Babulal Manmal Dugar proprietor of Shakti Agrochem who is late father of the appellant, was engaged in the business of re-selling of tax free goods like ‘Wheat’ which is purchased from Rajasthan dealers by issuing Form-C as well as purchase of cotton seed cake which is exempted from value added tax from the Gujarat dealer and thereafter sales are made within the State of Gujarat as well as branch Transfer outside State against Form-F.

4. The Late father of the appellant was a registered dealer under the VAT Act as well as Central Sales Tax Act, 1956 (For short “the CST Act”). As per the returns and VAT audit report, the liabilities for the year under consideration i.e. for the year 2008-2009 was as under:

5. The place of business was visited by officers of the respondent department on 24.01.2012 as per the direction of the Additional Commissioner of Commercial Tax – (Enforcement)-Div-2, Ahmedabad and at that time no discrepancies or suppressed transactions were found and it was informed that the purchases of ‘Wheat’ which was tax free in the State of Gujarat was made from the registered dealers of Rajasthan against Form-C for which tax invoices were issued.

6. It is the case of the appellant that purchases and sales made were accepted as per the returns filed under the VAT Act and the output tax liability for the sales and input tax credit admissible for the purchases were accepted in the return submitted under the VAT Act.

7. Along with the returns containing the details of purchases made from the dealer and goods sold to a dealer were also filed as annexures in Form 201A and 201B. The Annual Returns under VAT Act for the year 2008-2009 were also filed by the appellant within the prescribed time.

8. It appears that during inspection, two notices dated 19.11.2012 were issued by the VAT authority and no reply was filed to such notices inspite of granting time by the authority. Thereafter show cause notice dated 18.03.2013 was issued and reply was filed on 25.03.2013.

9. During inspection, the officers of the respondent authority se