Allowed

M/S Vandana Minerals Elite Chauraha Lalitpur v. the Commissioner Trade Tax U.P. Lko.

Allahabad HC13 Nov 2018STRE/1435/2007

Case brief

AI extract

What is this about?

The court allowed a trade tax revision, holding that the Tribunal erred in upholding an addition to sale turnover. The assessment was based solely on conjectures regarding suppressed values without any evidence, rejecting valid Form III-A returns and cash receipts.

What did the court decide?

The revision petition is allowed; the finding recorded by the assessing authority and upheld by the Tribunal is quashed.

M/S Vandana Minerals Elite Chauraha Lalitpur Vs the Commissioner Trade Tax U.P. Lko. — Allahabad HC (2018) — LawSathi Research

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Court No. - 7

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Case :- SALES/TRADE TAX REVISION No. - 1435 of 2007

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Applicant :- M/S Vandana Minerals, Elite Chauraha Lalitpur Opposite Party :- The Commissioner, Trade Tax, U.P. Lko. Counsel for Applicant :- Alok Kumar Counsel for Opposite Party :- S.C.

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Hon'ble Saumitra Dayal Singh,J.

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Heard Sri Alok Kumar, learned counsel for the assessee and Sri B.K.Pandey, learned Standing Counsel for the State.

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Though the revision had been admitted on 26.10.2007 without reference to any particular question law, the present revision has been heard today on the following question of law:

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(i) Whether, the Tribunal is justified in upholding the estimation of the sale turnover of the assessee purely on surmises and conjectures?

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Admittedly, the present revision arises for the A.Y. 2003-04 under the U.P. Trade Tax Act, 1948 (hereinafter referred to as 'the Act'). Admitted facts of the case are that the assessee had earlier engaged in the business of granite stones etc. It regularly conducted business up to the A.Y. 2000-01. Thereafter, the business was discontinued leaving a closing stock of Rs. 6,93,800/- of the granite stones valued at Rs. 31,66,496/-.

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During the A.Y. 2003-04 the assessee claimed to have disposed of the entire stock of granite stones available with it for Rs. 6,93,800/- against cash sale made against Form 3-A issued by the registered dealer who purchased goods for sale in the same form and condition and thus owned the liability to pay tax.

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In the assessment proceedings the assessing authority did not dispute either the quantum of closing stock disposed of during the assessment year in question or other details of the sale transaction including the purchaser etc. However, doubts were raised as to the value/sale price recovered by the assessee. While no inquiry was made from the purchasing dealer, the assessing authority proceeded to reject the sale value disclosed by the assessee at Rs. 6,93,800/- and estimated the same at Rs. 39,48,200/-. Accordingly, he imposed tax on the assessee. The matter was carried in first appeal, which was rejected. The second appeal therefrom had also been partly allowed by the Tribunal and the value of stock of the assessee was estimated at

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Rs. 17 lacs. Accordingly, disputed tax liability of Rs. 1,36,000/arose against the assessee on the addition to the sale turnover made by the Tribunal (Rs. 17 lacs).

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Learned counsel for the assessee submits that in the first place, it is undisputed that the assessee had discontinued his business during the A.Y. 2000-01 and that he was never found to have re-engagement in any business thereafter. Then, it is also undisputed that the assessee had not acquired any additional stock of granite stones. Only the already available closing stock for the A.Y. 2000-01 was disposed of during the A.Y. 2003-04. Then in view of the fact that it is also undisputed that the entire stock was sold against a valid Form-III-A to another registered dealer and there is no evidence to doubt the correctness of the disclosure made by the assessee, the addition made to the sale turnover was purely conjectural and it did not arise on any evidence.

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Alternatively, it has also been submitted that in any case, if any, additions were to be made to the sale turnover, it would be revenue neutral inasmuch as the revenue authorities never disputed the validity of form III-A that covered the entire volume of transaction of sale made by the assessee. In absence of any material or finding of any additional stock having been dealt with by the assessee, other than closing stock for the A.Y. 2000-01, even if the sale turnover to be enhanced it may only impact the tax liability of the purchasing dealer and not the assessee.

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Learned Standing Counsel on the other hand submits that the sale turnover disclosed by the assessee is wholly inadequate and suppressed. According to him, the assessee had itself disclosed the value of the stock in excess to Rs. 30 lacs in the A.Y. 200001. Further looking into the nature of stock it cannot be said that the same would have lost in value over a period of two years. He therefore, submits that it was for the assessee to establish the correctness of the sale turnover disclosed by him and the assessing authority had not erred in making the addition. As to the submission advanced by learned counsel for the assessee that the addition if any that would remain revenue neutral, it has been submitted that issue had not been raised before any of the authorities and therefore, the same may not be gone into in the present revision.

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Having considered the submissions so advanced by learned counsel for the parties, in the first place there is no dispute as to the quantity of goods dealt with by the assessee. The entire quantity of granite stones sold by the assessee during the A.Y. 2003-04 as were such as were available with the assessee by

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way of closing stock for the A.Y. 2000-01 i.e. the last year of the assessee's business. There is also no dispute that the entire stock was sold by the assessee to another registered dealer against Form III-A. No doubt has been expressed by the revenue authorities as to that.

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In such circumstances, it is further seen that the assessee disclosed the sale of its closing stock of the A.Y. 2000-01 through cash sale. The revenue authorities did not carry out any inquiry from the purchasing dealer but admitted that the sale was made to a registered dealer against Forms III-A.

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In such circumstance, it is difficult to imagine how an addition could have been made at the hands of the assessee purely on the basis of conjectures arising on a presumption that goods would not have lost in quality or value and therefore, the sale turnover is wholly suppressed. In the present case the assessee had led positive evidence in the shape of cash receipts as also statutory Form III-A to establish that it had made sale of its closing stock of Rs. 6,93,800/- to a registered dealer. The assessee had thus discharged the onus cast upon him to support the sale turnover. Thereafter, it was for the revenue authority to have led evidence either by inquiring from the purchasing dealer or by other means to disprove the sale price disclosed by the assessee.

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In absence of such evidence being led it stood established that the sale price as disclosed by the assessee was in fact true. The fact the assessee may have earned huge losses cannot itself be a factor to reject the sale turnover. Business does not follow any rule or principle as to losses as may be recognized by any court. Loss having occurred in the course of the commercial transaction there is no warrant to elaborate on this issue any further.

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In view of the above, it is seen that the finding recorded by the assessing authority as upheld by the Tribunal cannot be sustained. It is based on no evidence and is thus perverse. The question of law is answered in the negative i.e. in favour of the assessee and against the revenue.

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Accordingly, the present revision is allowed . No order as to costs.

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Order Date :- 13.11.2018 Lbm/-

M/S Vandana Minerals Elite Chauraha Lalitpur v. the Commissioner Trade Tax U.P. Lko.

Case brief

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M/S Vandana Minerals Elite Chauraha Lalitpur v. the Commissioner Trade Tax U.P. Lko.

Case brief

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What did the court decide?

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