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TMI Blog2000 (9) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... section 40(1) of the Act proposing suo motu revision of the assessment order and vide order annexure P5 dated May 7, 1998, he held that the petitioner liable to pay tax amounting to Rs. 51,578 on consignment sales. He also levied interest amounting to Rs. 43,236 under section 25(5) of the Act. The appeal filed by the petitioner against that order was partly allowed by respondent No. 2 and the case was remanded to respondent No. 3 with the direction to work out tax liability excluding the purchase tax element from the amount received by the petitioner. However, the levy of tax of consignment sales was upheld. 3.. The petitioner has challenged the impugned orders on the following grounds: (i) respondent No. 3 did not have the jurisdiction to initiate proceedings for revision of the order of assessment solely on the basis of audit note-Sha M. Hastimal and Co. v. Deputy Commissioner of Commercial Taxes, Administration, City Division II, Bangalore [1989] 72 STC 308 (Kar). (ii) levy of interest on the tax assessed by respondent No. 3 is contrary to the law laid down by the Supreme Court in J.K. Synthetics Ltd. v. Commercial Taxes Officer [1994] 94 STC 422 and by this Court in United ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said record, I have found the following illegality in the assessment order passed by the Assessing Authority: (i) Trading account reveals that you had opening stock of rice for Rs. 7,11,590 and purchases of rice during the year are of Rs. 1,93,357 from the State of Haryana and that purchases of paddy from the State of Haryana and from out of the Haryana are for Rs. 1,30,16,256. Against this you have made sales of rice for Rs. 1,46,87,685 and the closing stock at the end of the year of rice was of Rs. 9,81,399. This shows that against milling of paddy for Rs. 1,30,16,256 the maximum rice available could be of Rs. 1,46,87,685 + Rs. 9,81,399-Rs. 7,11,590 and Rs. 1,93,367 = Rs. 1,47,64,137 which shows that against milling of paddy for 100, the sale value of rice could at the most up to Rs. 113.43. Further on verification of the returns for the quarter ending September 30, 1994 and December 31, 1994, I find that the total sales of rice during these quarters are of Rs. 1,27,01,134. After excluding the value of opening stock of rice in case it is accepted that total opening stock of rice has been utilised during the first three quarters, the sale value of rice procured out of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paddy purchased from outside the State of Haryana had also been sold within the State of Haryana and the dealer's claim that such rice was procured only from the paddy purchased from the State of Haryana was incorrect. This shows that respondent No. 3 had independently applied his mind to the relevant record and recorded cogent reasons for issuing notice under section 40(1). There is nothing in the language of the notice from which it can be inferred that respondent No. 3 had relied on the audit note for the purpose of initiating action under section 40(1) of the Act. Therefore, merely because the Assessing Authority had forwarded a copy of the audit note to respondent No. 3, it cannot be said that the decision taken by him to revise the assessment order was based on the audit note or that the said respondent had not applied his mind to the record or had not recorded reasons before issuing notice to the petitioner. 8.. The judgment of the Karnataka High Court in Sha M. Hastimal and Co.'s case [1989] 72 STC 308, relied upon by Shri Jhingan is clearly distinguishable. The facts of that case show that the decision to initiate the proceedings for revision of the assessment order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as required by sub-section (2A), in other words, if the full amount of tax due 'shown' in the return is paid, there can be no question of charging interest under clause (a) of section 11B. So far as clause (b) is concerned it is a post-assessment situation. Where tax is found due on final assessment and the dealer is required to make good the difference, a notice of demand will issue. If the dealer fails to pay the tax within the time specified in the notice, and if no time is specified within 30 days from the receipt of notice, he is required to pay interest at the rates prescribed by the sub-section. But if he pays the difference of tax within the prescribed time, there is no question of charging interest. The conjoint reading of section 7(1), (2) and (2A) and section 11B of the Act leaves no room for doubt that the expression 'tax payable' in section 11B can only mean the full amount of tax which becomes due under sub-sections (2) and (2A) of the Act when assessed on the basis of the information regarding turnover and taxable turnover furnished or shown in the return. Therefore, so long as the assessee pays the tax which according to him is due on the basis of information sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved as under: "But the position here is explicitly distinguishable from the factual situation in M/s. J.K. Synthetics Ltd. [1994] 94 STC 422 (SC). Here, nobody had doubt that if section 6B of the Act was valid the tax was payable on the turnover. It was the constitutional validity of section 6B which was challenged by the appellants in the earlier writ petitions before the Calcutta High Court and which finally ended up in upholding of its validity. Hence, there was no question of the assessee waiting for the determination and the turnover as there was no dispute on that aspect. The fact that appellants questioned the constitutional validity of the charging provision cannot be equated with a dispute whether the freight paid would also form part of the sale amount. It was a highly debated dispute whether price amount would envelope the freight charges paid by the dealer and until the controversy was resolved by the court in Hindustan Sugar Mills Ltd. v. State of Rajasthan [1979] 43 STC 13 (SC); (1978) 4 SCC 271 the dealers were justified in excluding the freight charges from sale price. It was for that reason the Constitution Bench refrained from mulcting the tax-payer with liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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