Monthly computation of provisional naphtha gains and losses upheld, rejecting six-month clubbing for adjustment.

Provisional clearance of raw naphtha for captive use was to be assessed on a monthly basis, with loss and gain worked out and adjusted from the monthly returns filed by the assessee. The governing procedure and departmental guidelines contemplated month-wise computation, and there was no legal basis for aggregating gains and losses across the full six-month provisional assessment period. The view that later-month gains could be set off against earlier-month losses for the entire period was rejected, and the monthly method of assessment was upheld.

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Issues: Whether loss and gain arising from provisional clearance of raw naphtha for captive use could be aggregated for the entire six-month provisional assessment period, or had to be worked out and adjusted on a monthly basis.

Analysis: The assessment records showed that the assessee filed monthly returns showing clearances, receipts and the monthly gain or loss in raw naphtha. The governing procedure required monthly assessment on the basis of the returns filed, and the departmental guidelines relied upon below specifically contemplated working out and adjusting loss or gain month-wise. The contention that gains in a later month could be set off against losses in an earlier month for the full six-month period was found to have no legal basis. The earlier appellate findings applying monthly computation were therefore accepted.

Conclusion: The monthly method of computing loss and gain was upheld, and the assessee's plea for clubbing the entire six-month period was rejected.

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