1998 (7) TMI 678 - HC - VAT and Sales Tax

Issues Involved:
1. Legality of the suo motu revision by the Assistant Commissioner of Taxes under section 20(1) of the Assam Finance (Sales Tax) Act, 1956.
2. Validity of the determination of the sale price based on market information and reports from the Department of Agriculture.
3. Disallowance of the shortage claimed by the assessee.
4. Legality of levying interest on the additional demand of tax from the date of original assessment to the date of revised assessment.

Issue-wise Detailed Analysis:

1. Legality of the Suo Motu Revision:
The petitioner challenged the order dated December 17, 1990, passed by the Assistant Commissioner of Taxes under section 20(1) of the Assam Finance (Sales Tax) Act, 1956, which directed fresh assessments for various periods. The Assistant Commissioner initiated the revision on grounds of public commotion over high onion prices, questions raised in the Assembly, and audit objections. The court held that the Commissioner is empowered under section 20(1) to revise any order if it is erroneous and prejudicial to the interest of revenue. The Commissioner is authorized to make or cause to be made such enquiry as deemed necessary and is not confined to the records available before the assessing authority. However, the power must be exercised lawfully and with due application of mind, not mechanically or at the behest of other authorities. The court found that the Commissioner's reference to public debate and audit objections did not vitiate the decision, but reliance on market information and reports from the Department of Agriculture without authentic material was erroneous.

2. Validity of the Determination of Sale Price:
The Assistant Commissioner determined the sale price of onions based on market information and reports from the Department of Agriculture. The court held that the Commissioner should act on materials on record and not on conjectures, assumptions, and presumptions. The determination of sale price based on the minimum and maximum rates indicated by the Commissioner, without valid evidence like sale receipts, was not legally sustainable. The revisional authority must base its decision on factual material to avoid the vice of perversity.

3. Disallowance of the Shortage Claimed by the Assessee:
The Commissioner disallowed the shortage claimed by the assessee, stating that the assessee failed to provide a valid explanation for the claimed shortage. The Commissioner noted that the accepted shortage or damage in the market ranged from 1% to 3%, and a 5% shortage was not admissible without valid material. The court upheld the Commissioner's inference regarding the disallowance of the shortage as it was based on market norms and the absence of valid material from the assessee.

4. Legality of Levying Interest on Additional Demand of Tax:
The respondents levied interest on the additional demand of tax from the date of the original assessment to the date of the revised assessment. The petitioner contended that interest could only be levied under section 22A of the Act, 1956, if the dealer did not pay the full amount of tax by the due date. The court referred to the statutory provisions and the decision in J.K. Synthetics Ltd. v. Commercial Taxes Officer, which stated that "tax payable" means the amount of tax as finally assessed. Since the petitioner paid the taxes within the due date, the levy of interest on the additional demand was not lawful and could not be sustained.

Conclusion:
The court set aside the impugned order dated December 17, 1990, directing fresh assessment based on the prevailing market rate, as well as the consequent assessment orders. The disallowance of the shortage claimed by the assessee was upheld. The levy of interest on the additional demand of tax was also set aside. The assessing officer was directed to make a fresh assessment regarding the shortage. The petition was allowed to the extent indicated, with no order as to costs.

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