2015 (3) TMI 387 - HC - VAT and Sales Tax

Valuation of goods - quantity of Calcium Carbide of a value of rupees three lacs was oversized and, therefore, it was sent back in 110 drums to the manufacturer for breaking into appropriate size, this amount of the raw material was not found recorded in the books of the assessee and he has been taxed on it - Held that - It is the contention of the assessee that in the appeal filed by the manufacturer M/s V.K.Carbide and Gases Private Limited the department reckoned with this fact and did record the fact that some oversized raw material had been sent back to it for breakage and despite this the Tribunal has not given any relief to the assessee and has assessed it in the hands of the assessee as a purchase. The Tribunal has discussed the matter. Insofar as this question is concerned, there is no doubt that they may have a practice of making raw material into a certain shape and size but for the given year the quantity has not been assessed and the quantity, which has been referred to by the assessee is not identifiable in that year as a return as it was not found on the books. It has rightly been assessed to tax. The contention of the learned Counsel for the assessee is that concessions were given to the manufacturer are not borne out from the facts and findings of this case. The second issue argued by the assessee is that sum 110 drums were sold empty to various parties and the assessee produced photostat bills at the stage of Tribunal to establish, for an example ten drums sold to M/s Chawla Traders Kanpur for a price of ₹ 300, stands to reasons that a drum was full of material will not be sold for a price of thirty rupees. The Tribunal is the last fact finding authority. It could have asked the assessee to produce the original bills and it could have examined the matter. - This aspect of the matter needs reconsideration - Matter remanded back - Decided in favour of assesee.

Summary

Issues:
1. Classification of oversized Calcium Carbide as job work or sale.
2. Rejection of books of account and imposition of tax on empty drums sold.
3. Purchase of Calcium Carbide under Section 3AAAA of the Act.

Issue 1:
The main issue in this case pertains to the classification of oversized Calcium Carbide sent for undersizing as either job work or sale. The assessee argued that the raw material was sent back to the manufacturer for resizing, which should not be considered a purchase. However, the Tribunal assessed the quantity as a purchase since it was not recorded in the assessee's books. The contention that concessions were given to the manufacturer was not supported by the facts and findings of the case. The Tribunal upheld the assessment, ruling that the quantity in question was rightly taxed as a purchase.

Issue 2:
Another point of contention was the sale of empty drums by the assessee. The Tribunal was presented with photostat bills showing the sale of drums to various parties. The assessee argued that selling a full drum for a nominal price was unreasonable. The Tribunal, being the final fact-finding authority, did not delve into the matter thoroughly and did not request original bills for verification. The High Court directed the Tribunal to reconsider this issue, allowing the assessee to produce original documents within three months for a proper examination.

Issue 3:
The final issue revolved around the purchase of Calcium Carbide under Section 3AAAA of the Act. The Tribunal confirmed the purchase amount, but the High Court did not provide detailed analysis or modifications regarding this issue in the judgment.

In conclusion, the High Court disposed of the revision with directions for the Tribunal to reconsider the sale of empty drums issue, allowing the assessee to present original documents for verification within a specified timeframe. No costs were awarded in this judgment.