2010 (11) TMI 882 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of suppressed turnover by the assessing authority.
2. Treatment of the applicant as a manufacturer or deemed manufacturer under section 2(ee) of the Act.
3. Estimation of turnover and the contention of excessive estimate.
4. Evidence provided by the assessee regarding purchases from manufacturer-dealer.
5. Opportunity for the assessee to lead further evidence.

Analysis:
1. The assessing authority estimated the taxable turnover of the assessee at Rs. 3,20,00,000 based on suppressed turnover found in seized documents during a survey. The appellate authority reduced the estimate to Rs. 1,50,00,000, and the Tribunal further lowered it to Rs. 50,00,000. The Tribunal rejected the plea that the survey was not conducted at the business premises of the assessee and that the seized documents did not pertain to them.

2. The applicant contended that the assessing authority treated them as a manufacturer simplicitor, while the Tribunal considered them a deemed manufacturer under section 2(ee) of the Act for the suppressed turnover. The applicant argued that if purchases were made from a manufacturer-dealer with turnover below Rs. 1 lac not liable to tax, they should not be deemed a manufacturer. Citing the case of Jhunjhunwala v. State of U.P., the applicant claimed the estimate was excessive.

3. The assessing authority's estimate of turnover based on seized documents was upheld by the court, dismissing the contention of the applicant. The court found no error in the estimate and rejected the argument related to the deemed sale. The court held that the entries in the seized documents were not verified from the books of account, leading to the dismissal of the applicant's plea.

4. The standing counsel argued that the assessee failed to provide evidence that purchases for the suppressed turnover were made from a manufacturer-dealer with turnover exceeding Rs. 1 lac. The assessee consistently denied the relevance of the seized documents to their business, hindering the verification of purchases. The court ruled against providing further opportunity for evidence at this stage.

5. The court concluded that both revisions failed and were dismissed, maintaining the estimate of turnover and rejecting the applicant's contentions regarding the survey, deemed manufacturer status, and the need for additional evidence.