Allowed

The Commissioner Commercial Tax U.P. Lucknow v. S/S Kamdhenu Ispat Ltd. Ghaziabad

Allahabad HC15 Nov 2018STRE/90/2017

Case brief

AI extract

What is this about?

The High Court allowed the Revenue's revision against the Commerce Tax Tribunal. The Tribunal had accepted the assessee's lower declared turnover without deep scrutiny of accounts. The Court held MRP is not turnover, but deep scrutiny of documents is still required before accepting a discount claim, and remitted the matter for assessment.

What did the court decide?

The Tribunal order dated 11.11.2016 set aside and matter remitted to the assessing authority for complete assessment. Taxation questions answered in favor of the revenue.

The Commissioner Commercial Tax U.P. Lucknow Vs S/S… — Service and Employment | Allahabad HC (2018)

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Court No. - 7

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Case :- SALES/TRADE TAX REVISION No. - 90 of 2017

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Applicant :- The Commissioner, Commercial Tax, U.P. Lucknow Opposite Party :- S/S Kamdhenu Ispat Ltd., Ghaziabad Counsel for Applicant :- Bipin Kumar Pandey Counsel for Opposite Party :- Shubham Agrawal

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Hon'ble Saumitra Dayal Singh,J.

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Heard Sri B.K. Pandey, learned Standing Counsel for the applicant and Sri Shubham Agrawal, learned counsel for the assessing authority.

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The present revision has been filed against the order of the Commerce Tax Tribunal, Ghaziabad on 11.11.2016 by which the tribunal has allowed the assessee appeal being number 533/2016 for the year 2012-13 and accepted the returned turnover.

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Learned Standing Counsel has pressed this revision on following two questions:-

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"(i) Whether on the facts and in the circumstances of the case Commercial Tax Tribunal was legally justified in deleting the enhancement made by the assessing authority in the absence of any documentary evidence like audited balance sheet, profit and loss account etc.?

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(ii) Whether on the facts and in the circumstances of the case Commercial Tax Tribunal was legally justified in accepting the taxable turnover and tax of the dealer?"

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The dispute in essence is to the determination of the sale value of the goods namely paints, etc. sold by the assessee which it had received from its factory outside the State of U.P. The sale turnover became an issue because the stock transfer and invoices accompanying document disclosed the assessable value for the purpose of payment of excise duty as the value of goods whereas the sale turnover disclosed by the assessee was lower than the M.R.P. mentioned on the goods.

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The short submission advanced by learned Standing Counsel is that though the assessee did not produce the books of accounts before the assessing officer during the regular assessing proceeding resulting in a determination made against him on the basis of M.R.P., before the first appeal authority certain books of account, invoices, etc. were produced that were also examined. Finding prima facie credibility in the documents so produced, the first appeal authority had remitted the matter to the assessing authority to examine the same, however, the tribunal has allowed the appeal of the assessee without adopting the process of assessment where correctness of the books of account and other material may have been tested.

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In this regard, it is further submitted that the Tribunal has cursorily referred to M.R.P. list, dealer price list and invoice list submitted by the assessee and has accepted the same without a deep scrutiny being first made.

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Learned counsel for the assessing authority has opposed the revision and submitted that there can be no dispute that the M.R.P. can not form the basis to determine the sale turnover. The sale turnover has to be determined on the basis of actual price realised by the dealer. Therefore, it has been submitted that the tribunal has not erred in rejecting the conclusions drawn by the assessing authority or the lower appeal authority.

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He has also relied on the decision of M/S Amrutanjan Ltd. Vs. Commissioner Trade Tax reported in 2018 U.P.T.C [VOL.99] Page-591 that held as under:-

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"Having considered the submissions, I find that the turnover of the assessee would have to be determined with reference to the rate at which the product is sold by the assessee, and for such purposes the maximum retail price i.e. MRP at which product would be sold by the retailer is not material. There is no factual issue on the plea of stock transfer. There is further no dispute that the product had been sold upon the rate before tax as is being disclosed by the assessee. Such figures could not have been disbelieved only because the MRP shown on the product specifies a higher rate. MRP is usually fixed/specified by the manufacturer to ensure that the product manufactured by it is sold at one rate across the State. It is not at MRP that the product is being sold by the manufacturer from its stocks situated within the State of U.P. The Tribunal, therefore, was not justified in enhancing the turnover of the assessee and thereby imposing higher tax. The question posed for consideration is thus answered in favour of the assessee and against the revenue"

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While it may not be disputed that M.R.P. could not have itself resulted in the sale turnover inasmuch as once the assesee had claimed to have sold the goods on a discount, the sale price had to be determined on the strength of the evidence that may have been led before the authorities. To that extent the submissions advanced by learned counsel for the assessing authority has to be accepted.

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At the same time accepting that principle would not lead to determination of the sale price and it could not lead to automatic acceptance of the claim made by the assessee. It would remain an issue to be adjudicated upon deep scrutiny of the books of account of the assessee including the price list and invoice list as also the invoices relied upon by the assessee. That enquiry inherently and necessarily was a part of the regular assessment procedure.

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Admittedly, in the original assessment proceeding such proceeding could not be adopted in absence of books of account. Though, the account books were produced before the first appeal authority no deep scrutiny of the nature required in a regular assessment proceeding was made as may allow the claim of discount to be accepted in respect of all transactions.

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Therefore, in absence of such enquiry the conclusions drawn by the Tribunal appear to be premature. Without prejudice to the ultimate conclusion that may be drawn, however, a proper enquiry must precede such conclusions. To that extent submission advanced by learned standing counsel is well founded and the order of the Tribunal cannot be sustained for that reason.

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In view of the above, the order of the tribunal dated 11.11.2016 is set aside and the matter is remitted to the assessing authority who may now complete the assessment strictly in accordance with law in the light of the above observations. The question of law raised are answered accordingly.

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Accordingly, the revision is allowed .

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Order Date :- 15.11.2018

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Gaurav Pal

The Commissioner Commercial Tax U.P. Lucknow v. S/S Kamdhenu Ispat Ltd. Ghaziabad

Case brief

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What did the court decide?

The Commissioner Commercial Tax U.P. Lucknow v. S/S Kamdhenu Ispat Ltd. Ghaziabad

Case brief

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What did the court decide?

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