2020 (6) TMI 498 - HC - VAT and Sales Tax

Whether the Tribunal was right in upholding the alleged stock variation merely for reason that departmental delivery notes were not issued? HELD THAT - The Tribunal erroneously deleted such additions made on the ground that addition would be taken care of in that made with respect to suppression. The addition made on the basis of the stock variation, to cover probable omissions and suppression is only that up to September of the assessment year; till which date the assessee had not been using departmental delivery notes. The under-valuation is insofar as the months from October to March of the assessment year. Computing the figures from the table available in the assessment order, the total products sent on departmental delivery note had a value of ₹ 3,50,01,765/- between October and March. The sale conceded as disclosed in the list available in the assessment year is ₹ 3,21,54,750/-. The difference comes to ₹ 28,47,015/-. The addition hence could be only of ₹ 28,47,015/-. In the facts and circumstances, we do not think there need be any further addition on lower sales reported, other than the difference arrived at from the value disclosed and the sale conceded - we affirm the addition to the turnover of ₹ 4,08,81,975/- with an equal addition as also the purchase return of ₹ 65,10,575/- and the under-valuation of sale coming to ₹ 28,47,015/-. The Assessing Officer is directed to modify the assessment order - revision allowed.

Summary

Issues:
1. Revision filed by the assessee challenging additions made in the assessment.
2. Revision filed by the State challenging deletion of turnover addition due to under-valuation.

Analysis:
1. The assessee and the State filed revisions against an order of the Tribunal regarding assessment of a dealer in cardiac stents. The assessment revealed a stock variation and additions were made for suppressed turnover and purchase return. In the first appeal, the additions were partly reduced. The Tribunal upheld some additions but deleted others. The assessee's revision questioned the Tribunal's decision on stock variation based on departmental delivery notes. The Court found no legal issue, as the assessee failed to provide evidence of actual sales to hospitals, leading to rejection of the revision.

2. The State's revision focused on the deletion of turnover addition due to under-valuation. The assessment showed discrepancies between departmental delivery notes and sales reported in accounts. The Tribunal had deleted the addition, but the Court disagreed. It observed that the assessee failed to prove the difference in values was due to unsold stents. The Court calculated the difference between delivery note values and reported sales for October to March, resulting in a revised addition. The Court upheld the original turnover addition, purchase return, and added under-valuation of sales. The State's revision was allowed, modifying the quantum of the addition.

In conclusion, the Court dismissed the assessee's revision due to lack of evidence supporting stock variation and allowed the State's revision by adjusting the turnover addition based on the difference between reported sales and values in delivery notes. The assessment order was directed to be modified accordingly, with parties bearing their own costs.