2011 (7) TMI 1077 - HC - VAT and Sales Tax

Whether the consumption of electricity, by itself, cannot be a ground for estimating the turnover? Held that - As rightly pointed out by the learned counsel for the appellant, if one reads the order of the Appellate Assistant Commissioner, there is at least some reason to justify the adoption of 12 units to 1 unit of jelly. But if one reads the order of the Joint Commissioner except for the arithmetical calculations based on the consumption of electricity there is hardly any material to arrive at the turnover at ₹ 18,54,400. Admittedly, except for the survey results conducted in the earlier year, no incriminating materials were found to arrive at this turnover. On balancing these orders that are before us, we find that the appellate authority orders appear to be more rational than the order before us. In the circumstances, we have no hesitation to set aside the orders and restore the order of the Appellate Assistant Commissioner. The tax case revision is allowed.

Summary

Issues:
- Dispute over the assessment of electricity consumption for crushing boulders into jelly
- Rejection of claims related to cooly crushing and electricity consumption by assessing officer
- Appeal before the Appellate Assistant Commissioner
- Revision by Joint Commissioner under section 34 of the Tamil Nadu General Sales Tax Act, 1959
- Re-calculation of turnover based on electricity consumption
- Discrepancy in the turnover amount determined by different authorities

Analysis:
The case involved a dispute regarding the assessment of electricity consumption for crushing boulders into jelly by a dealer. The assessing officer initially finalized that 8 units of electricity were required for producing 1 unit of jelly based on a survey conducted. The dealer contended that factors like voltage fluctuation, boulder sizes, feeding delays, and machinery wear and tear affected electricity consumption. However, these contentions were rejected by the officer, leading to an appeal before the Appellate Assistant Commissioner.

The Appellate Assistant Commissioner agreed that cooly crushing claims were invalid but noted discrepancies in the survey conducted for estimating turnover. He adjusted the electricity consumption to 12 units for 1 unit of jelly, reducing the turnover amount significantly. Subsequently, the Joint Commissioner initiated a revision under section 34 of the Act, setting aside the Appellate Assistant Commissioner's order and recalculating the turnover based on electricity consumption, adopting 9 units for 1 unit of jelly.

The dealer challenged this decision, arguing that electricity consumption alone should not determine turnover estimation. The court observed that the Joint Commissioner's re-calculation lacked substantial evidence beyond electricity consumption data, unlike the Appellate Assistant Commissioner's reasoned decision. The court found the Appellate Assistant Commissioner's order more rational and set aside the Joint Commissioner's decision, restoring the original turnover amount. The tax case revision was allowed with no costs incurred.