2003 (6) TMI 446 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the suo motu revisional order under section 36(1) of the Assam General Sales Tax Act, 1993.
2. Determination of the purchase price and inclusion of various charges in it.
3. Applicability of the Explanation to section 8(1)(a) of the Assam General Sales Tax Act, 1993.
4. Jurisdiction and powers of the Deputy Commissioner of Taxes in revisional proceedings.

Detailed Analysis:

1. Validity of the suo motu revisional order under section 36(1) of the Assam General Sales Tax Act, 1993:
The petitioners challenged the suo motu revisional notice and the subsequent order passed by the Deputy Commissioner of Taxes, arguing that the assessments made by the Superintendent of Taxes were not erroneous or prejudicial to the interest of the Revenue. The court observed that the power of suo motu revision under section 36(1) is supervisory and can only be exercised if the order is both erroneous and prejudicial to the Revenue. The court held that the Deputy Commissioner failed to correctly apply an independent judicial mind to determine if the orders were erroneous and prejudicial, thus making the impugned orders legally infirm.

2. Determination of the purchase price and inclusion of various charges in it:
The court examined whether various charges paid by the petitioner to the bonded warehouse owner (NSSSS) should be included in the purchase price. According to section 2(30) and rule 4, the purchase price includes any sum paid for anything done by the seller at the time of or before delivery of the goods. The agreement between the petitioner and NSSSS specified that charges like storage, special service, distribution, and C&F expenses were for services provided before delivery and thus should be included in the purchase price. The court found that the Deputy Commissioner erred in excluding these charges from the purchase price.

3. Applicability of the Explanation to section 8(1)(a) of the Assam General Sales Tax Act, 1993:
The court analyzed whether the resale price exceeding 40% of the purchase price would make the resale the first point of sale within the State, thereby attracting a higher tax rate. Since the included charges reduced the difference between the purchase and resale prices to below 40%, the Explanation to section 8(1)(a) was not applicable. The court concluded that the assessments made by the Superintendent of Taxes were correct and not prejudicial to the Revenue.

4. Jurisdiction and powers of the Deputy Commissioner of Taxes in revisional proceedings:
The Deputy Commissioner's revisional jurisdiction under section 36(1) is limited to correcting orders that are erroneous and prejudicial to the Revenue. The court emphasized that the revisional authority cannot substitute its judgment for that of the assessing officer unless the original order is found to be erroneous or perverse. The court found that the Deputy Commissioner initiated revisional proceedings based on objections from the A.G. audit party without applying independent judicial scrutiny, rendering the revisional orders invalid.

Conclusion:
The court set aside and quashed the impugned orders dated March 22, 1999, issued by the Deputy Commissioner of Taxes, and upheld the original assessments made by the Superintendent of Taxes. The court ruled that the charges paid by the petitioner to the bonded warehouse owner should be included in the purchase price, and the difference between the purchase and resale prices was below 40%, making the higher tax rate inapplicable. The court also highlighted the limitations of the Deputy Commissioner's revisional powers, emphasizing that they must be exercised with proper judicial scrutiny. The writ petitions were allowed, and the parties were directed to bear their respective costs.