2003 (5) TMI 505 - HC - VAT and Sales Tax

Summary

Issues:
1. Jurisdiction of Deputy Commissioner under section 10-B of the U.P. Sales Tax Act, 1948 to revise assessment order based on subsequent materials.
2. Interpretation of section 10-B and section 21 of the Act.
3. Consideration of subsequent information in revising assessment orders.
4. Correctness of the revisional order and imposition of tax on purchases.

Analysis:

The judgment in question revolves around the jurisdiction of the Deputy Commissioner under section 10-B of the U.P. Sales Tax Act, 1948 to revise an assessment order based on materials that came into existence after the original assessment order was passed. The case involved a registered dealer engaged in the business of manufacturing and selling petha and namkeen, whose assessment order was revised by the Deputy Commissioner following an income-tax search and seizure operation where the proprietor admitted to suppressing sales in the books of account.

The primary argument raised was that the Deputy Commissioner's order under section 10-B was without jurisdiction as it was based on subsequent materials not on record at the time of the original assessment. The Tribunal had previously held that the Commissioner could revise an order under section 10-B based on fresh information obtained from other sources, but the High Court disagreed. Citing precedents, the Court emphasized that the revising authority must confine itself to the material available on record of the assessing authority and cannot consider any material not on record. The power of revision is limited to ensuring the legality or correctness of the order based on existing materials.

The Court further referred to a judgment highlighting that the authority under section 10-B can examine orders for legality and propriety, including cases of escaped assessment, but subsequent materials should not form the basis for revision. In this case, the revising authority had imposed tax on purchases of coal and raddi from unregistered dealers, but the assessing authority had already taxed coal purchases. The Court upheld the revision only in part, setting aside additions made based on subsequent information obtained during the income-tax search and seizure operation.

Ultimately, the High Court allowed the revision in part, setting aside the orders of the Trade Tax Tribunal and the Deputy Commissioner except for the turnover of raddi. The judgment clarified the limitations of the revising authority under section 10-B and emphasized the importance of basing revisions on existing materials rather than subsequent information.