9911796707
TMI Blog1995 (11) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... esented second sales of liquor and beer. The first sales of beer equivalent to the above net turnover were assessed to tax. It is not in dispute that the petitioner imported during the relevant year beer of different varieties of the value of Rs. 22.47 lakhs from outside the State. In respect of such imported beer sold to local dealers, the petitioner became the first seller and, therefore, was liable to pay tax at 10 per cent under entry 26 of the First Schedule. In addition to the purchases effected from manufacturers/ dealers outside the State, the petitioner also claimed to have purchased beer from its sister concern by name Raj Trading Company, Vijayawada and another concern by name S.S. Wine Palace, Visakhapatnam. It is not in dispute that the sale price at which the beer was alleged to have been purchased from the said two dealers was much less than the cost price of beer. Before making such purchases from the two dealers, the petitioner himself claimed to have sold beer to the two dealers, namely, Raj Trading Company, Vijayawada and S.S. Wine Palace, Visakhapatnam, to the tune of Rs. 8.71 lakhs and Rs. 3.54 lakhs respectively (total Rs. 12.26 lakhs approximately). Here also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficials on the transport permits were also doubted by the assessing officer. The assessing authority observed: "From the above, it is clearly established that he has directly sold the goods purchased from outside the State to local dealers and to evade tax on a part of the sale price, he has created fake transactions of sale and purchase with M/s. Raj Trading Company, Vijayawada. So, that part of gross turnover over which he claimed exemption towards second sales of liquor (being the purchases effected from Raj Trading Company, Vijayawada) has to be subjected to tax." Then, he observed: "It is undoubtedly established that the assessee has made a wrong claim for exemption by producing before the assessing authority fake sale invoices for transactions which have not been actually effected by them. He has built up all the connected evidence with an ulterior motive to support his bogus claim." The assessing authority, therefore, overruled the objections of the petitioner and withdrew the exemption on a turnover of Rs. 6,86,840 in exercise of his powers under section 14(4)(cc) of the Act. To the assessment order, two statements showing the details of the alleged sales to and purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sale and repurchase from the same dealer, there was no need for movement of goods. In other words, according to the contention of the petitioner, the delivery of goods was only symbolic and the transactions of sale and purchase as between the petitioner and the Vijayawada dealer were brought about by mere exchange of sale bills and passing of sale consideration. But there is an inherent fallacy and improbability in such explanation of the petitioner. No business expediency or exigency or any plausible reason was shown for resorting to this modus operandi. What was the reason for selling the goods at a far less price (i.e., 15 to 50 per cent less) than the cost price of the goods to another dealer? What was the reason for the repurchase of the goods from the same dealer within the next few days at an equally low price? Where was the need for the petitioner to purchase the beer from outside the State at a much higher price when he was in a position to purchase the same at a far lesser price from the two dealers? We could find no convincing answer to any of these questions either from the explanation submitted by the petitioner or from the contentions urged before us or the appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the movement of goods, it is for the assessing and appellate authorities to appreciate that evidence and come to a conclusion as to which of the factors are entitled to greater weight. In this revision petition, we cannot reappraise the evidence and substitute a different opinion as it is only on a question of law that revision lies. Assuming that the sale consideration was received by means of "account payee" drafts (for which there is no evidence on record), that cannot be regarded as a clinching factor as it is not difficult to create such evidence in perpetuation of the design to evade tax. We, therefore, reject the first contention of the learned counsel. The next contention raised is one with regard to the jurisdiction of the assessing officer to reopen the assessment under section 14(4)(cc) of the Act. Clause (cc) was added to sub-section (4) of section 14 in the year 1978. Broadly speaking, sub-section (4) deals with what is known as "escaped turnover" or underassessment of turnover. In so far as it is relevant, sub-section (4) reads as follows: "(4) In any of the following events, namely, where the whole or any part of the turnover of a business of a dealer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estricted meaning has to be given to the words "escaped turnover". Referring to the decision in Andhra Steel Corporation Ltd. v. Commercial Tax Officer [1988] 68 STC 126 (AP), the learned Judge observed thus: ".............the said decision does not support the contention for the department that even in a case where turnover was exempted after deliberation, the assessing authority by mere change of opinion can reopen under section 14(4) of the Act." It was further held: "Thus it can be seen that mere fact of wrong allowance of deduction or exemption does not give power to reopen the assessment. Only when material de hors the assessment record is available disclosing escaped turnover referred to in section 14(4), the power of reopening can be exercised under section 14(4) of the Act." The learned Judge agreed with the view expressed by the Division Bench of this Court in Fatechand and Sons v. Commercial Tax Officer [1983] 54 STC 166 that mere change of opinion cannot be a basis for reopening under section 14(4) of the Act. Jeevan Reddy, J., in his separate but concurring judgment, after highlighting the fact that the language of section 14(4) of the Andhra Pradesh General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yawada. From those way-bills, it can be deduced that there was no real movement of goods. At the same time, the excise transport permits showed that the goods were received and taken to stock by the Vijayawada dealer. This naturally evoked reasonable doubt in the mind of the assessing authority and made him to probe further into the matter. It was as a result of such probe it was found that the alleged first sales made by the petitioner were fictitious and the alleged purchases from M/s. Raj Trading Company, Vijayawada and S.S. Wine Palace, Visakhapatnam were also fictitious. This is how the proceedings for reopening the assessment were initiated. It is obvious that the material de hors the assessment record was taken into account for the purpose of initiating the reassessment as well as for the purpose of recording the conclusion that the petitioner failed to disclose the correct turnover. It is not a case of reassessment made on change of opinion at all. The assessment order does not show that the assessing authority had in mind the grossly low sale price realised by the petitioner from the alleged first sales and the repurchase of the same stocks from the buyers at a slightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, certificate or other document with a view to support or make any claim that a transaction of sale or purchase effected by him or any other dealer, is not liable to be taxed or is liable to be taxed at a reduced rate, the assessing authority shall on detecting such issue or production, direct the dealer issuing or producing such document to pay as penalty; (i) in the case of first such detection, three times the tax due in respect of such transaction; and (ii) in the case of a second or subsequent detection, five times the tax due in respect of such transaction: Provided that before issuing any direction for the payment of the penalty under this section, the assessing authority shall give to the dealer an opportunity of making representation against the levy of such penalty." The ground on which the penalty was levied under the aforementioned provision is that the petitioner knowingly produced false purchase bills obtained from its own sister concern M/s. Raj Trading Company, Vijayawada and another firm by name M/s. S.S. Wine Palace, Visakhapatnam, to support the claim for exemption on the turnover on which reassessment was made under section 14(4). The assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof are false. It may be, as contended by the learned counsel for the petitioner, that the department's case is not that the two dealers of Vijayawada and Visakhapatnam did not issue the bills at all but if the bills did not reflect the true state of affairs but were meant to be sham documents showing fictitious sales, that is enough, in our view, to attract section 7A(2) of the Act. The learned counsel for the petitioner has strenuously contended that in the case of the assessment of Raj Trading Company, Vijayawada, the Sales Tax Department accepted the bills partially in the sense that without rejecting the bills treating them as relatable to non-existent sales, subjected the said dealer to tax on a higher turnover. That means, the very transactions of sales to the petitioner by Raj Trading Company, Vijayawada, were considered to be first sales by that dealer, accepting his claim in that behalf but certain turnover was added on the ground that there was understatement of turnover. It is, therefore, contended that the department cannot take a different stand in the instant case. It is also contended that no enquiries were made with the Vijayawada dealer and his records were no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
