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2014 (4) TMI 492 - HC - VAT and Sales TaxValidity of Board Order – Evasion of tax – Suppression of Turnover – Recalling of the assessment orders – Revisional Jurisdiction - Show Cause Notice u/s 36(1) Assam General Sales Tax Act 1993 - Object and scope of Section 36 - Held that:- Judgment in Malabar Industrial Co. Ltd. vs. Commissioner of Income Tax [2000 (2) TMI 10 - SUPREME Court] - Since the object and scope of Section 36 of the Act is in pari materia with the object and scope of Section 263 of the Income Tax Act, the principle laid down by the Supreme Court in the case of Malabar Industrial Co. Ltd. can be applied to the facts of this case - The only grounds on which the Commissioner invoked his suo motu revisional jurisdiction for recalling of the assessment orders was that Assessee had shown low profit margin and therefore it seemed unreasonable to him and Assessee was alleged to had suppressed sales to the extent of ₹ 11,39,132.24 in two years - No basis is found in these grounds for invoking suo motu powers under Section 36 more than one reason - Primarily, there was no factual basis for forming the opinion that two grounds exists for invoking Section 36 against assessee - Neither the Commissioner and nor the Board took into consideration the detail explanation offered by the petitioner with a view to find out as to whether any ground had been made out to withdraw the show cause notice - This being the legal error in the proceedings, the impugned orders are not legally sustainable. Evasion of tax – Intention to Evade – Whether assessment order was erroneous and prejudicial to interest of revenue – Invocation of power u/s 36(1) Assam General Sales Tax Act 1993 - Held That:- Mere perusal of the explanation given by the petitioner would go to show that they had disclosed in their reply all sales both (inter-state and intra- state) and had also filed their price lists applicable for the North East Region - It clearly indicated that looking to their market strategy applied for North East Region due to long distances from other part of the country, coupled with a separate price list for sale of the products, the explanation offered deserved acceptance for withdrawal of the show cause notice issued u/s 36 - It was for the manufacturer to decide as to what should be their profit margin ratio - It was only when AO or/and Commissioner had been able to notice some kind of manipulation or false entries made in the books of accounts made with an intention to evade the payment of taxes, the issue could have been examined – Lastly, no order of assessment could be said as being erroneous and prejudicial to interest of revenue only because in the opinion of the Commissioner, the dealer claimed low profit margin - It was for the reason that it is bound to vary from manufacturer to manufacturer and depends upon various market and financial strategy. Once it is determined by the assessing authority by applying his mind on the basis of facts brought on record by the dealer, then Commissioner in his suo motu jurisdiction could not substitute his own opinion - To this Court, it appears that Commissioner acted like an Appellate Court over the decision of the Assessing Authority for examining the findings - It was not permissible in law while invoking powers u/s 36 - There was no reason for the petitioners to have suppressed their sales to the extent of ₹ 11,39,132. 24 because petitioner’s yearly sales were in crores - If the petitioner’s intention was to evade the payment of taxes, then they would have indulged in suppression in crores rather than in few lacs - It is apart from the fact that even the revised tax liability after invoking the powers under Section 36 ibid was not found to be such so as to satisfy the phrase “prejudicial to the interest of revenue“ - The petition succeeds and is allowed - The impugned orders dated 24.7.2003 passed by Board in case no 15 STA and 16 STA of 2001 which in turn arise out of the order dated 14.7.2000 passed by the Commissioner of for the assessment year 96-97/97-98 are quashed by issuance of writ of certiorari – Decided in favour of assessee.
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