2013 (7) TMI 896 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment of turnover, stock variation, estimation of first sales, penalty under section 12(3)(b).

Assessment of turnover: The High Court of Madras heard a tax case revision for the assessment year 1996-97. The Revenue challenged the Tribunal's order regarding the estimation of turnover amounting to Rs. 14,83,003 despite stock variation found during inspection at the assessee's business premises. The assessing officer estimated a stock difference of Rs. 99,081 and imposed a penalty under section 12(3)(b) at 150 percent.

Stock variation and estimation of first sales: During an inspection in August 1996, officers found discrepancies in the stock of goods purchased from outside the State, indicating first sales suppression. The assessing officer computed gross profit at 12 percent for the stock difference and made additional estimations, resulting in a total suppression amount of Rs. 1,98,162. The Appellate Assistant Commissioner upheld the assessment, but the Sales Tax Appellate Tribunal overturned the decision for the assessment year 1996-97 based on the explanation provided by the assessee regarding varying gross profit in second sales.

Penalty under section 12(3)(b): The assessing officer imposed a penalty under section 12(3)(b) at 150 percent, which was a subject of dispute in the appeal process. The Tribunal, after considering the reasons given by the assessee for the varying gross profit in second sales and the absence of specific allegations of misclassification of goods, deleted the addition of Rs. 14,83,003 and the penalty levied.

Conclusion: The High Court upheld the Tribunal's decision, stating that the varying gross profit in second sales was adequately explained by the assessee, and there was no evidence of misclassification of goods in the accounts. Therefore, the Court dismissed the tax case revision, emphasizing that the Tribunal's order did not warrant interference.