2015 (8) TMI 1129 - HC - VAT and Sales Tax

Increase in Purchase price Increase in tax Rejecting books of Account Petitioner maintained books of account and had paid purchase tax as per these books however assessing officer did not rely upon books of account and assessed purchase price of raw rubber at higher rates alleging that price shown by petitioner was very lower than market situation Held that - mere ipse dixit of assessing officer cannot be accepted No doubt assessing officer may have jurisdiction to increase rates, but then he should have clearly pointed out differential rates and prevailing market trends Merely because one dealer has paid higher price was no ground to say that all dealers should pay same price Government organization like TFDPC will normally pay higher price since it was non-profit organization Law was well-settled that books of account of assesse cannot be rejected merely on whims and fancy of assessing officer If assessing officer does not want to accept books of account, he must give some cogent and valid reasons for not accepting No evidence was reflected in order of assessing officer or appellate authority Assessment orders set aside and assessing authority directed to reassess income Decided in favour of Assesse.

Summary

Issues:
- Dispute over assessment of purchase tax rates on raw rubber goods and rubber scrap.
- Rejection of dealer's books of account by assessing officer.
- Appellate authority's decision to increase rates without proper grounds.
- Reliance on Tripura Forest Development and Plantation Corporation (TFDPC) rates.
- Legality of assessing authorities' actions and the need for valid reasons for rejecting books of account.

Assessment of Purchase Tax Rates:
Two writ petitions were filed concerning different assessment years. The petitioner, a registered dealer under the Tripura Purchase Tax Act, purchased raw rubber goods and rubber scrap. The assessing officer rejected the dealer's accounts, citing discrepancies in purchase rates compared to prevailing market rates. The officer assessed higher rates for raw rubber in the respective years, leading to disputes over the rates used for assessment.

Rejection of Books of Account:
The assessing officer's rejection of the dealer's books of account raised concerns over the lack of valid reasons provided for the rejection. The judgment highlighted the necessity for the assessing officer to give cogent reasons and inform the assessee about the material relied upon before rejecting the books of account. The legality of rejecting books of account solely based on market rates without proper grounds was emphasized.

Appellate Authority's Decision:
The appellate authority's decision to increase the assessed rates beyond the assessing officer's findings was deemed illegal. The judgment questioned how the authority could raise rates without departmental appeal or revision, emphasizing the need for valid grounds for such actions. The authority's lack of adherence to basic legal principles in altering the rates was highlighted as unjustifiable.

Reliance on TFDPC Rates:
Both appellate and revisional authorities relied on Tripura Forest Development and Plantation Corporation (TFDPC) rates without clear documentation of the rates used. The judgment emphasized the need for transparency in relying on external rates, especially from government organizations like TFDPC, which may operate differently from private dealers due to their non-profit nature.

Legality of Assessing Authorities' Actions:
The judgment reiterated that assessing authorities cannot reject books of account arbitrarily. It emphasized the requirement for valid reasons and evidence before rejecting accounts, as established in previous legal precedents. The judgment directed the reassessment of income based on the dealer's account books, stressing the importance of providing necessary information to the assessee for a fair assessment process.

Overall, the judgment highlighted the legal principles governing the assessment of purchase tax rates, the rejection of books of account, the limitations on appellate authority's actions, and the necessity for transparency and valid reasons in assessing tax liabilities.