TMI Blog2023 (5) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity to be heard. Section 35(7) contemplates of such a proceeding against an assessee regarding whom the Assessing Officer is satisfied that he has resorted to selling of goods at a higher price than shown in his invoices. Therefore, the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding. In the absence of any tangible materials to support such a finding, it is difficult to assume that a purchaser of petitioner would purchase minerals at a lesser price under an invoice in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. It is only after recording of reasons for initiation of proceedings under Section 35(7) the exercise for determination of value of goods at the time of sale and assessment of tax on such price is to be done by giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which would be evident from survey report as contained in Annexure-1. The Assessment proceeding of the petitioner was completed wherein, in alleged exercise of power u/s 35(7) r/w Section 30(4) of the JVAT Act, tax and interest has been imposed upon the petitioner on the alleged ground that petitioner has concealed its Gross Turn Over (for short GTO). The assessing officer despite taking actual figure of sale price, has taken the value of goods sold on the basis of average sale price of nearby mines i.e., M/s. Rungta Mines Ltd. 3. Being aggrieved by the assessment order, petitioner filed appeal before the JCCT (Appeal) being Appeal Case No. CB-VAT-A- 09/2011-12. However, the learned appellate court rejected the appeal of the petitioner. Thereafter, the petitioner filed a revision petition being JR 40 of 2013 before the Commercial Taxes Tribunal, Jharkhand at Ranchi which was dismissed on 25th February, 2020 and thereafter, petitioner also filed Review Case No. JR 04 of 2021 before the learned Tribunal. The learned Tribunal also rejected the review petition preferred by the petitioner; hence this application. 4. Learned counsel for the petitioner has taken us through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding with respect to under valuation of the goods sold by the petitioner recorded by the appellate court is totally misconceived and not tenable in the eye of law. It is really un-understandable that why purchaser of petitioner would purchase minerals at a lesser price just in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. (e) Further, the lower court records itself demonstrates that no such enquiry whatsoever was conducted by the assessing officer to conclude under-pricing done by the petitioner. (f) The quantity of goods sold has not been disputed either by the assessing officer or the learned appellate court or by the Tribunal. Further, nowhere the returns of the petitioner have been disputed by the Tax authorities or by the learned Tribunal. The assessment order should have only confined to the facts that whether petitioner has sold its goods at a higher price than shown in invoice. But the assessing officer has exceeded its jurisdiction and has determined the sale price of petitioner on the basis of sale price of neighbouring mines. Further, in respect of other mines owner similar assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that the petitioner had been producing/raising iron ore as lumps which are more valuable than ROM and fines. It is also pointed out from these invoices that the rate of iron ore lump (ROM) and fines, ferrous wise mentioned in Tax invoices is lower rate than the ferrous wise, grade wise mentioned rate of IBM. The basis for initiation of the proceedings by the assessing officer was this satisfaction that the petitioner has sold the iron ore at a higher price than shown by him in these invoices. Thus, the ingredients of Section 35 (7) of the JVAT Act were satisfied for proceeding against him in terms of the JVAT Act. Pursuant thereto; notices were issued upon the petitioner for the relevant assessment year. Since the Assessing officer found a case of underpricing, the order dated 23rd November, 2010 was passed imposing tax and interest upon the petitioner. The same were taken in appeal before the Joint Commissioner (Appeals). The appellate authority rejected the appeals vide order dated 22.02.2013. It is further argued by the State counsel that sale of lumps and fines have been made. It is submitted that for the relevant years though the petitioner did not have a scre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st has been imposed upon the petitioner on the ground that petitioner has concealed its GTO. The assessing officer despite taking actual figure of sale price, has taken the average sale price of M/s. Rungta Mines Ltd. Aggrieved by the assessment order, the petitioner assailed the same in appeal before the JCCT (Appeal), Jamshedpur being Appeal Case No. CBVAT-A- 09/ 2011-12. The learned appellate court rejected the appeal without appreciating that GTO of petitioner cannot be enhanced by comparing sale price of neighboring mines and the AO has not found that petitioner has sold its goods lesser than the price shown in sale invoices of the petitioner. 9. After going through the aforesaid facts and the history of the case it appears that to decide the issue involved in this case, Section-35 of JVAT Act play an important role as it deals with assessment and self- assessment. For brevity, Section 35 is quoted herein below: 35. Assessment and Self-Assessment Subject to provisions of sub-Section (2), the amount of tax due from a registered dealer or a dealer liable to be registered under this Act shall be assessed in the manner hereinafter provided, for the Tax Per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter making prima-facie adjustment in the nature of arithmetical errors, if any, in the returns and the self assessment; In the circumstances, if the self-assessment under sub-section (1), (2), (3), (4) and (5) has not been filed within the prescribed time, the prescribed authority shall serve on such dealer a notice in the prescribed manner requiring him on a date and at a time and place to be specified therein either to attend in person or through an authorised representative or to produce or to cause to be produced any accounts and other evidences on which such dealer may rely in support of such returns and claims thereof and assess the dealer, the amount of tax and interest due from the dealer on the basis of such returns which have come on records and after making such adjustments as may be necessary including disallowance of claim of input tax credit, exemptions, discounts and deductions and any other concessions or rebates not supported by requisite evidence as required under the Act or the rules made thereunder; and disallowance of claims of tax payments and refund adjustment not verified or otherwise not admissible; and withdrawal of claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on real income which means the actual income received by or which accrues to the assesses. In case of sales tax, tax is exigible on real price received or receivable by the dealer in respect of a sale. A dealer is entitled to frame his price structure in a manner conducive to the type of his business or with a view to withstand the competition. In a given case, cost may be more than the price. The dealer may base his price structure to give an incentive to his clients, agents, distributors, etc., particularly if he is a manufacturer. In such cases, his price structure has to be scrutinized by the Department under the sales tax law to find out the real sale price receivable by him. There may be cases where he is required to give a discount on account of defect in quality or delay. The important thing to be noted is that price is the amount of consideration which a seller charges the buyer for parting with the title to the goods. It comprises of the amount which the dealer himself has to pay for the purchase of the goods, the expenditure, which he is to incur for transporting the goods from the place of purchase to the place of sale, the duties, if any, levied on the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... makes a deeming provision by providing for national additions. Such deeming fictions and notional additions in excise law are totally irrelevant for sales tax purposes. Therefore, in any event, these notional additions cannot be read into Clause 5.1 and Clause 5.2 of the General Agreement for Purchase of Parts dated 31.7.1997. In the case of M/s. Girdharilal Nanhelal (supra) cited by the petitioner, the Hon ble Apex Court has at para-7 held that for the purpose of levy of Sales Tax it would be necessary not only to show that the source of money has not been explained but also to show existence of some material that such acquisition of money has resulted from transactions liable to Sales Tax and not from other sources. 12. The finding of assessing officer that petitioner has sold goods at uniform rate of Rs. 660/- per metric ton upheld by Tribunal is contrary to the records of case particularly Annexure- 3 series of writ petition. The finding with respect to undervaluation/under pricing of the goods sold by the petitioner recorded by the appellate court and Tribunal is not tenable in the eye of law. Further, Tribunal in its impugned order has stated that underpricing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner shall be at liberty to raise all the grounds available to him before the AO which shall be considered accordingly. 14. Before parting, it is made clear that though several contentions have been raised by the parties on the merits of the case regarding the levy of tax and interest but since the matter is being remanded to the AO on the point of recording of satisfaction under Section 35 (7) of the JVAT Act before initiation of the proceedings; we consciously refrain from making any observation on the merits of the case regarding the levy of tax and interest upon the petitioner under Section 35 (7) r/w Section 30 (4) of the JVAT Act. The judgment relied upon by the learned State counsel i.e. M/s VEENA THEATRE, PATNA and THE COMMISSIONER OF SALES TAX, MADHYA PRADESH (supra) relate to cases of best judgment assessment after the rejection of Books of Account of the Assessee. Since in the present case the requirement of law for initiation of the proceedings have not been fulfilled, these decisions are not of assistance to the present case. 15. Having regards to the discussions made hereinabove, the impugned order dated 25th February, 2020, passed by the learned Commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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