2020 (2) TMI 1162 - HC - VAT and Sales Tax

Valuation - supply of Supari - rejection of declared value - Enhancement of value - revisionist has disclosed the sale of Supari at the rate of 44-45 per kg and instead the Assessing Authority was of the view that revisionist has undervalued the price of the said product, which according to him was ₹ 90/- per kg only with a view to evade tax - HELD THAT - The entire exercise undertaken by the assessing authority in rejecting the books of account and subsequently carrying out best judgment assessment is on the basis that the price of Supari is ₹ 90/-. No material has been disclosed from which the assessing authority could determine the said price. Not only the material should have been duly considered by him in his order, but due opportunity should be provided to the assessee to rebut the same. In absence of due disclosure of the material which resulted in formation of opinion, the order of the Assessing Authority is clearly vitiated, as well as the First Appellate Authority and the Tribunal. The order Commercial Tax Tribunal, Lucknow deserves to be set-aside and the matter is remanded to the Assessing Authority to pass a fresh order after giving an opportunity of of hearing to the petitioner - Petition allowed by way of remand.

Summary

Issues:
Challenge to order of Commercial Tax Tribunal based on assessment of turnover for trading business.

Analysis:
The revisionist challenged an order by the Commercial Tax Tribunal, Lucknow, which upheld the First Appellate Authority's decision enhancing the turnover of Supari for a trading business. The Assessing Officer increased the turnover based on a higher price per kg than what was disclosed in the return. The revisionist argued that the Assessing Authority had not provided details on how the higher price was determined.

The Tribunal noted the discrepancy in selling price disclosure and upheld the assessment. The revisionist contended that there was no clarity on how the Assessing Authority arrived at the higher price. The court observed that the Authorities failed to consider the revisionist's plea and did not address the issue of the sale price of Supari adequately. The assessment solely relied on the higher price, lacking transparency in determining it.

The court found the assessment lacking bona fide and proper consideration of relevant material. It emphasized that the Assessing Authority should have disclosed the basis for determining the higher price and allowed the revisionist to challenge it. Due to the lack of transparency and opportunity for rebuttal, the court deemed the Assessing Authority's order, as well as those of the First Appellate Authority and the Tribunal, flawed.

The court set aside the Commercial Tax Tribunal's order and remanded the matter to the Assessing Authority for a fresh decision within three months, emphasizing the importance of providing a fair hearing to the petitioner. Ultimately, the writ petition was allowed, granting relief to the revisionist.