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2021 (3) TMI 237 - HC - VAT and Sales TaxLevy of sales tax - on the ground that there is abnormally low reporting of purchases when compared to the sale - Mismatch - check post movement where the Assessing Officer wanted to verify the transactions and called for documents relating to check post movements - short payment of tax - stock difference for the assessment year 2016-17. Mismatch - cross verification of the buyers' and the sellers' returns as per the web report - HELD THAT:- The issue is with regard to cross verification of the buyers' and the sellers' returns as per the web report and verification of the purchase details from other dealers' Annexure II and the purchase details from the petitioner-dealer's Annexure I has been kept in abeyance by the Department on account of verification, which is being done. Check post movement where the Assessing Officer wanted to verify the transactions and called for documents relating to check post movements - HELD THAT:- The assessment orders that the dealer produced necessary documents namely Form F declarations, which, according to the Assessing Officer, were insufficient and therefore, the proposal made in the revision notices was confirmed. Thus, that adequate opportunity should be given to the dealer to place all the records on account of the submission made before us that all records are available with the dealer. Hence, the levy of tax as a result of verification of the check post movement details has to be redone by the Assessing Officer. Short payment of tax - for all the assessment years involved except for the assessment year 2016-16 - Stock difference for the assessment year 2016-17 - HELD THAT:- The dealer has agreed to go before the Assessing Officer by producing details - Therefore, the finding rendered in that regard by the Assessing Officer on (i) levy of tax upon verification of the check post movement details, (ii) short payment of tax and (iii) stock difference are set aside and the matters are remanded to the Assessing Officer for a fresh consideration after affording an opportunity of personal hearing to the authorized representative of the dealer. A reading of the relevant assessment orders, which contained the basis, on which, re-assessment proceedings were initiated, shows that the Assessing Officer, on verification of the books of accounts, noticed that the dealer reported their purchases during the relevant years and in the opinion of the Assessing Officer, there is abnormally low reporting of purchases when compared to the sale. Hence, he proposed to treat it as a purchase suppression and issued revision notices. The dealer would state that for the relevant assessment year, their opening stock as per the balance sheet was ₹ 4,57,36,085/-, out of which, 75% of the value constituted stock of Chennai unit and the amounts spent for stitching and job work charges were not considered, which came under direct expenses reported in the balance sheet, which were to be added to the purchase. Further, the dealer would contend that valuation of the closing balance as per the consolidated balance sheet was ₹ 5,21,41,736/-, out of which, ₹ 3,33,98,729/- constituted stock of Chennai unit and the total purchases amounted to ₹ 9,70,07,869/- and there was no suppression of purchases - Assessing Officer rejected the said stand taken by the dealer stating that reconciliation was not properly done nor was supported by documentary evidence. It is the settled legal position that revision of assessment cannot be done on surmises and conjectures, but should have foundational facts. Though the Assessing Officer used the term 'purchase suppression', what has been levied by the Assessing Officer is essentially sales tax on ₹ 9,70,74,613/-, on which, the dealer already paid sales tax at 14.5%. Though elaborate submissions were made by the learned Special Government Pleader as to under what circumstances purchase tax can be levied under Section 12 of the Act, the said issue does not arise in the instant case on account of the fact that the show cause notice issued by the Assessing Officer for revision of assessment was not with a proposal to levy purchase tax. The writ appeals are partly allowed and the levy of sales tax for all the assessment years except for the assessment years 2012-13 and 2016-17 on the ground that the purchases were abnormally low is set aside - With regard to levy of tax under the heads (i) 'check post movement' for all the assessment years except for 2010-11, 2011-12 and 2016-17 and (ii) 'short payment of tax' for all the assessment years involved except for the assessment year 2016-17 and (iii) 'stock difference' for the assessment year 2016-17 alone, the matters are remanded to the Assessing Officer for a fresh consideration after affording an opportunity to the dealer. Appeal allowed in part and part matter on remand.
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