2022 (8) TMI 1349 - HC - VAT and Sales Tax

Application of IBM rate which is ad-valorem rate for payment of royalty and fixation of sale price for the months of September to December 2009 - whether the petitioner had sold ROM at a higher price than shown by him? - HELD THAT - Learned counsel for the State has not been able to show any distinguishing features in the assessment orders passed against the petitioner for the Financial Years 2009-10 and subsequent years 2010-11 and 2011-12. The petitioner was imposed tax and penalty under section 35(7) read with section 40(2) of the JVAT Act in the subsequent financial years also treating the IBM ad-valorem rate of royalty as the benchmark comparative rate of two other dealers regarding the sale of ROM. The Appellate Authority vide order dated 27.08.2015 has remanded the matter to the Assessing Authority to examine the aforesaid aspect and in the light of the fact that no categorical findings on suppression of sale price have been made by the petitioner or that the Assessing Authority had not found proof of sale of ROM having ferrous content of 60 to 62%. Learned Tribunal in the impugned judgment has also categorically taken note that the State has not made any allegation of concealment of turnover or fixation of any higher price by the petitioner but State s only contention is that IBM rate or the price fixed for calculating royalty amount should have been considered as a measure to calculate the total GTO on the ground that the IBM rate has been evolved after considering the production grade and the prices fixed by top ten Mining Companies dealing in the field. It appeals to reason the assessment made in respect of the Financial Year 2009-10 for the months of September to December 2009 also deserves to be remanded to the Assessing Authority to examine these aspects of the matter - Matter is remanded to the Assessing Officer to examine the case of petitioner - Petition allowed by way of remand.

Summary

Issues Involved:
1. Validity of the Assessment Order dated 31.01.2011.
2. Retrospective application of Section 2(lxA) and Section 35(7) of the JVAT Act, 2005.
3. Determination of the sale price using IBM price as a benchmark.
4. Consistency in the assessment for different financial years (2009-10, 2010-11, and 2011-12).

Detailed Analysis:

1. Validity of the Assessment Order dated 31.01.2011:
The petitioner challenged the assessment order dated 31.01.2011, which was confirmed by the Commercial Taxes Tribunal and the Appellate Authority. The petitioner argued that the assessment order was passed without jurisdiction as Section 35(7) of the JVAT Act, 2005, which allows the determination of the value of goods at the time of sale, was not in effect at the time of the assessment.

2. Retrospective Application of Section 2(lxA) and Section 35(7) of the JVAT Act, 2005:
The petitioner contended that Section 35(7) was given retrospective effect from 01.04.2006, but there was no clear date for the application of Section 2(lxA). The Notification indicated that Section 2(lxA) came into effect on 07.05.2011, which was after the assessment order date of 31.01.2011. The petitioner argued that without the retrospective application of Section 2(lxA), the Assessing Authority lacked the mechanism to determine the value of goods based on market value, rendering Section 35(7) ineffective.

3. Determination of the Sale Price Using IBM Price as a Benchmark:
The petitioner argued that the sale price of iron ore should not be fixed using the IBM price, which is intended for royalty calculations. The respondents, however, maintained that the Assessing Officer could determine the sale price by comparing it with the fair market price, using the IBM price as a benchmark. The Appellate Authority had accepted the petitioner's plea for the financial years 2010-11 and 2011-12, stating that the IBM price should not be the sole benchmark for assessing the sale price.

4. Consistency in the Assessment for Different Financial Years:
The petitioner highlighted that the Appellate Authority had remanded the assessment for the financial years 2010-11 and 2011-12, directing the Assessing Officer to reconsider the sale price determination. The Tribunal noted that the State had not alleged any concealment of turnover or higher price fixation by the petitioner but argued that the IBM rate should be used for calculating the total GTO. The Tribunal's impugned judgment did not find any distinguishing factors between the assessments for different financial years, leading to the conclusion that the assessment for 2009-10 should also be reconsidered.

Conclusion:
The High Court quashed the impugned orders of the Tribunal, the Assessment Order dated 31.01.2011, and the Appellate Authority's order. The matter was remanded to the Assessing Officer to re-examine the case in light of the observations made by the Appellate Authority for the financial years 2010-11 and 2011-12. The petitioner was directed to cooperate in the proceedings. The Interlocutory Application No. 555/2021 was also disposed of.