2022 (8) TMI 636 - HC - VAT and Sales Tax

Validity of assessment order - turnover addition - reduction to 50% of the conceded turnover - contention raised by the petitioner is that compounding was done as some clerical errors were detected by the Intelligence officer, but the addition was not warranted - HELD THAT - No supporting evidence was produced to substantiate the contention of the petitioner. Subsequent to the compounding, no revised return was filed. The closing stock inventory filed is also defective. The petitioner has not uploaded the closing stock inventory in Form No.53 in a proper format. Though the Chartered Accountant had given a letter which was extracted in the order of the Tribunal, the same was not accepted as a reconciliation as to the difference of stock value within Form No.53 and audited account. The Tribunal held that the veracity of the contention as to the quantitative of analysis is impossible as Form 53 uploaded does not reveal the quantity of nature of gold. The stock verification of Rs. 2,23,32,982/- is of substantial nature and that too in respect of gold. Since the Tribunal is also held that in the absence of supporting documents, the Tribunal is unable to interfere with the finding. The rejection of the explanation of the alleged difference of closing stock value due to the increased rate of the ornaments, was not considered by the Tribunal. The Tribunal has not taken into consideration the entire contentions put forward by the revision petitioner. Hence, the matter has to be remitted to the Assessing Authority for fresh consideration and the Assessing Authority shall proceed with the finalisation of the assessment. The matter is remitted to the Assessing Authority for passing fresh orders in accordance with the law.

Summary

Issues:
Challenge to Tribunal's order on turnover addition reduction and best judgment assessment under KVAT Act.

Analysis:
The petitioner, a registered dealer under KVAT and CST Act, challenged the Tribunal's order reducing turnover addition to 50% of the conceded turnover. The assessment was made under Section 25(1) of the KVAT Act, imposing a compounding fee for alleged suppression of turnover. The petitioner contended that the assessment was based on clerical errors in stock records and challenged the estimation of turnover. The Tribunal upheld the best judgment assessment but reduced the addition to 50% of the suppression noticed. The petitioner raised substantial questions of law regarding the valuation of closing stock, treatment of stock valuation increase, compliance with KVAT Rules, consideration of precedent, and interference in closing stock valuation. The petitioner argued that the Tribunal failed to consider explanations and contentions fully, leading to an improper decision.

The petitioner maintained accurate records but faced discrepancies in stock valuation. The Intelligence Officer detected a suppression amount, compounded for clerical errors, and imposed a compounding fee. The petitioner argued that no addition was warranted after compounding, but failed to provide supporting evidence. The closing stock inventory was defective, not uploaded in the proper format, and lacked details on the nature of gold. The Tribunal found the stock verification substantial, especially for gold, and without supporting documents, declined interference. The petitioner highlighted a precedent where a similar issue was resolved differently by the KVAT Tribunal, emphasizing the rejection of explanations regarding stock valuation differences. The Court concluded that the matter should be remitted to the Assessing Authority for fresh consideration, setting aside all previous orders. The petitioner was directed to appear before the Assessing Officer for further proceedings within a specified timeframe.

In conclusion, the Court addressed the substantial questions of law in favor of the petitioner for statistical purposes, highlighting the need for a fresh assessment by the Assessing Authority to resolve the issues raised regarding turnover addition and best judgment assessment under the KVAT Act.