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TMI Blog2019 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... that no uniform method has been followed. This is probably a part of the report submitted by the inspecting officials. The revision of assessments itself are based upon a report of the Enforcement Wing. It has been held in several decisions that if incriminating material is unearthed during the course of inspection, it cannot form a basis of a revision of assessment. In other words, the Assessing Officer would be entitled to issue show cause notice to the assessee calling upon the assessee to explain as to why the turnover should not be revised; and why higher rate of tax should not be levied and demanded. Upon issuance of such notice and receipt of the reply from the dealer, it is incumbent upon the Assessing Officer to take an independent decision in the matter based on the materials placed before the Assessing Officer. There is no finding by the Tribunal that the stand taken by the assessee that it is an indirect expense and in commercial terms, it is a postsale expense was never disbelieved. Consequently, the appellate Tribunal could not have included the said amounts in the taxable turnover. More importantly, cement, being a controlled commodity, price fixation is done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses, hence, cannot form part of taxable turnover. 4.Further, the petitioner stated that freight charges are shown separately in the accounts and the commodity being cement, the assessee cannot sell the same for a higher price than the price fixed by the cement producing companies and if done, they will loose their dealership. Further, the charges were not collected from the customers and are reflected as indirect expenses in the Profit and Loss account, which, in commercial terms, are 'post-sales expenses' and therefore, freight charges cannot form part of taxable turnover. 5.With regard to the handling or coolie charges, the assessee stated that they are paid while loading and unloading cement and will not form part of taxable turnover and similar stand was taken in respect of discount, which was extended for promoting the trade and the same also cannot form part of taxable turnover. The assessee produced sale invoices in support of their claim. The Assessing Officer rejected the objections filed by the assessee stating that the sale invoices are not printed bills, but are manually typed one and no uniform method has been taken by the assessee while allowing di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale expense. But the dealer collected the entire amount along with all charges before sale of goods and therefore, it is a pre-sale expense. Accordingly, the levy of tax on the same, as done by the Assessing Officer, was approved to be correct. So far as the discount is concerned, the Tribunal concurred with the first appellate authority. The State is not aggrieved by such portion of the order passed by the Tribunal. 8.We are required to examine as to whether the reason assigned by the Tribunal to upset the finding of the first appellate authority was just and proper. 9.The first appellate authority took note of the nature of business done by the assessee, viz., being a retailer in cement. It noted that as a retailer, the assessee has no role in the fixation of price of goods, as they are fixed by the companies through wholesale agents and if there is a shortfall between the procurement price and the sale price inclusive of transportation charges, if any, the expenses incurred by the retailer are compensated by the manufacturers by way of monetary adjustments effected at the time of subsequent purchase. 10.Before the Tribunal, the respondent contended that it is essential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd coming to know that the taxable turnover has not been correctly determined. This aspect looms large. 15.On a reading of the revised assessment orders wherein, the Assessing Officer says that the inspecting officials have verified and found that the assessee has not shown the freight and coolie charges and discount allowed in the sale bills issued by them. Further, the Assessing Officer states that the assessee has not produced sale bills issued by them for verification before him. The next sentence in the revision orders speaks of verification from the bill wise details furnished in respect of discount, freight and coolie charges and it is stated that no uniform method has been followed. This is probably a part of the report submitted by the inspecting officials. 16.We have come to such a conclusion because, the Assessing Officer himself records that no sale bills were produced. Therefore, the Assessing Officer could not have verified any bill, as he alleges that sale bills were not produced. Therefore, in our considered view, the revision of assessments itself are based upon a report of the Enforcement Wing. It has been held in several decisions that if incriminating m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e turnover. The explanation given by the dealer that freight charges are carriage outward expenses borne out by the assessee while delivering the cement to the customers and reflected as 'indirect expenses' in the profit and loss account, which, in commercial terms, are post-sale expenses was not disbelieved by the Tribunal. In other words, there is no finding by the Tribunal that the stand taken by the assessee that it is an indirect expense and in commercial terms, it is a postsale expense was never disbelieved. Consequently, the appellate Tribunal could not have included the said amounts in the taxable turnover. More importantly, cement, being a controlled commodity, price fixation is done by the manufacturer or wholesale distributor, and the assessee, being a small retailer, has no role in fixation of the price, any other charges cannot form part of taxable turnover. The decision of the Hon'ble Supreme Court in Vinod Coal Syndicate vs. Commissioner of Sales Tax, [1989] 73 STC 317 (SC) would support the case of the assessee. 19.Thus, for the above reasons, these tax cases are allowed and the substantial questions of law are answered in favour of the assessee. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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