2022 (4) TMI 472 - HC - VAT and Sales Tax

Determination of taxable turnover - enhancement of turnover - suppressed material found at the time of survey - rate of tax - kesar thandai - shikanji - mango syrup - gulab jal - HELD THAT - From perusal of the entry Schedule-II Part-A Serial No. 103, it is evidently clear that the fruits including fruit jams, jelly, pickle, fruit squash, paste, fruit drink fruit juice (whether in sealed containers or otherwise) are liable to be taxed @ 4% only plus SAT which comes to 5%. In the case in hand, the items which were found at the time of survey was mango syrup, gulab jal, shikanji and kesar thandai will fall as such in the aforesaid category at serial no. 103 and, therefore, liable to be taxed at a lower rate. Further counsel for the revisionist submits the the tax on purchase was also levied and, if the dealer deposit the tax on the same than as per the provisions of Section 13 of the Act, he is entitled for input tax credit on the full amount of the tax paid to him on purchase - To the said averment, learned standing counsel submits that for redetermining the benefit of input tax credit, the matter has to be examined by the Assessing Authority. The revisions are allowed in part and the matter is remanded to the Assessing Authority for the purpose of redetermining the input tax credit.

Summary

Issues involved:
- Best judgment assessment for taxable turnover
- Granting of Input Tax Credit
- Correct tax rate application
- Rejection of account books based on survey

Best judgment assessment for taxable turnover:
The revisions were filed against an order passed by the Commissioner Tax Tribunal, challenging the enhancement of taxable turnover for the Assessment Years 2010-11 and 2011-12. The key question raised was whether the authorities were legally justified in enhancing the turnover arbitrarily, contrary to the law. The Court noted that best judgment assessment involves estimation but should have a correlation to the material found with the assessee. The revisions argued that the enhancement was whimsical and not commensurate with the suppressed goods. The Court reduced the estimated turnover amounts, emphasizing that the assessment should not be capricious.

Granting of Input Tax Credit:
Another issue raised was the denial of Input Tax Credit by the Commercial Tax Tribunal and lower authorities. The revisions contended that the benefit of Input Tax Credit should have been granted as per relevant legal precedents. The Court referred to previous judgments and held that if excess tax had been paid, the dealer is entitled to Input Tax Credit. Consequently, the matter was remanded to the Assessing Authority for recomputing the input tax credit amount in accordance with Section 13 of the Act.

Correct tax rate application:
The revisions also challenged the tax rate applied on certain goods found during a survey, arguing that the tax levied on both sale and purchase was incorrect. The Court examined the relevant tax entry and determined that the items found fell under a category taxed at a lower rate. It was concluded that the tax on purchase was also levied, making the dealer eligible for input tax credit on the full amount paid. The matter was referred back to the Assessing Authority for reassessment in line with legal provisions.

Rejection of account books based on survey:
Lastly, the revisions contested the rejection of account books based on a survey where certain goods were found outside the books, belonging to an individual not related to the firm. The Standing Counsel argued that the absence of account books at the time of survey indicated an intention to evade taxes. The Court, after considering the submissions, focused on determining the taxable turnover for the suppressed material found during the survey and the applicable tax rates. It directed the Assessing Authority to redetermine the input tax credit and allowed the revisions in part, remanding the matter for further assessment.

This comprehensive analysis of the judgment highlights the key legal issues addressed by the Court and the decisions rendered in each aspect of the case.