2003 (9) TMI 717 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of the suo motu revision by the Deputy Commissioner.
2. Classification of "Himtaj oil" as an "Ayurvedic drug" or "hair oil".
3. Justification of the enhancement of gross turnover by the Deputy Commissioner.

Issue-wise Detailed Analysis:

1. Legality of the Suo Motu Revision by the Deputy Commissioner:
The petitioner challenged the Deputy Commissioner's authority to initiate suo motu revision of the appellate order passed by the Assistant Commissioner. The argument was that the reasons for the revision were not properly disclosed. The respondent countered that the revision was initiated following the issuance of a notice under section 12(3) of the West Bengal Sales Tax Act, 1954, and that the Deputy Commissioner's powers in such revisions are extensive, as supported by precedent cases. The Tribunal held that the Deputy Commissioner's initiation of the suo motu revision did not suffer from any legal infirmity, noting that the notice provided sufficient details and the petitioner had the opportunity to be heard.

2. Classification of "Himtaj Oil" as an "Ayurvedic Drug" or "Hair Oil":
The petitioner argued that "Himtaj oil" should be classified as an "Ayurvedic drug" and thus taxable at 4%, relying on certifications and clinical trial reports indicating its medicinal properties. The respondent contended that the product was "hair oil" taxable at 8%, emphasizing that the classification should be based on the intention of the Legislature and common parlance theory. The Tribunal examined various notifications and definitions under the West Bengal Sales Tax Act and the Drugs and Cosmetics Act. It concluded that the petitioner failed to prove that "Himtaj oil" was an "Ayurvedic drug" as it did not meet the criteria set out in authoritative Ayurvedic texts and was commonly understood and sold as "hair oil". Therefore, "Himtaj oil" was classified as "hair oil" and taxable at 8%.

3. Justification of the Enhancement of Gross Turnover:
The Deputy Commissioner had enhanced the petitioner's gross turnover based on the presumption of suppressed sales, inferred from an excise raid and the subsequent seizure of undisclosed cash. The petitioner argued that there was no evidence linking the seized cash to unaccounted sales. The Tribunal referred to the Customs, Excise and Gold (Control) Appellate Tribunal's finding that the seized cash could not be conclusively linked to clandestine sales. It was noted that sales tax authorities also failed to find any evidence of suppressed sales during their raid. The Tribunal held that mere presumption could not substitute for concrete evidence, and thus, the enhancement of gross turnover was unjustified. Consequently, the portion of the impugned order relating to the enhancement of turnover was set aside.

Conclusion:
The Tribunal upheld the classification of "Himtaj oil" as "hair oil" taxable at 8% and dismissed the petitioner's prayer to classify it as an "Ayurvedic drug". However, the Tribunal set aside the enhancement of gross turnover due to lack of evidence of suppressed sales and directed the assessing authority to reassess the petitioner for the relevant period. No costs were awarded.