In a recent ruling, the Orissa High Court ruled that non-maintenance of books of account by the dealer whose registration has been cancelled under Section 9(3-f) of the Orissa Sales Tax Act 1947 cannot be taken as sales tax evasion.
A panel of two judges comprising Justice Dr. B.R. Sarangi and Justice M.S. Raman has overturned the contested decisions and remanded the issue back to the authorities for a further evaluation in accordance with the principles of natural justice and the law.
The petitioner is a proprietary concern registered dealer under the Orissa Sales Tax Act, however, the same was cancelled under Section 9(3-f) with effect from 01.04.1997. Consequently, the petitioner closed its business since the date of cancellation of registration certificate and had no business up to March, 2004.
The court pointed out that Section 15 of the Orissa Sales Tax Act, which is concerned with “Accounts,” mandates that “every registered dealer or other dealer on whom a notice has been served to furnish returns under Section 11(1)” keep accurate records of the value of the goods he purchases and sells, as well as the books of accounts pertaining to his business.
However, in this instance, neither the Department nor the Revenue made the argument that notice was provided to provide returns in accordance with Section 11(1), nor is it the contention of the Department that the dealer is a “registered dealer.”
Allowing the relief, a Division Bench of Orissa High Court ruled that the absence of accounting records cannot be interpreted as an indication that sales were being concealed. Also, held that the nature of evidence is more relevant than the date of discovery of the evidence.
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