2013 (8) TMI 378 - HC - VAT and Sales Tax

Court sets aside assessment orders valuing imported goods at 'floor rate' in circular, orders fresh assessment based on actual facts

The Court allowed the writ petition, setting aside the assessment orders that valued imported raw cashew nuts at a 'floor rate' established in a circular. ... Value of imported goods - Respondent issued demand notice to assessee for differential extent - Held that:- Actual price of the commodity imported by the petitioner is much less than the 'floor rate' and that the petitioner has produced all the materials before the assessing authority in support of the same. It is also stated that, nothing has been observed by the assessing authority in assessment orders, as to the correctness, acceptability or otherwise of such documents produced by the petitioner - It is fit and proper to intercept assessment order in the said circumstance and to direct the first respondent to effect the assessment afresh, taking note of the actual facts and figures; more so when, absolutely no enabling provision of the Statute or any binding judicial precedent is brought to the notice of this Court from the part of the respondents, to hold that, irrespective of actual price, the department is entitled to reckon the 'floor rate' for the purpose of final assessment - Decided in favour of Assessee. Issues:Challenge to assessments based on 'floor rate' circularAnalysis:The petitioner, a dealer of raw cashews and cashew kernels, challenged assessments rejecting returns based on a circular setting a 'floor rate' for imported raw cashew nuts. The assessing officer proposed a value higher than the circular's rate, leading to objections from the petitioner. After considering objections, assessment orders were issued valuing the commodity at the 'floor rate'. The Department justified its actions based on a counter affidavit.During the hearing, the Court referred to a previous judgment regarding the Commissioner's power to issue circulars for revenue protection. The Court highlighted that circulars were provisional for advance tax collection, allowing parties to prove actual facts for proper assessment. In the current case, the petitioner argued the actual price was below the 'floor rate' and provided supporting documents. The assessment orders were solely based on the circular, without assessing the documents' credibility. The Court intervened, setting aside the assessment orders and directing a fresh assessment based on actual facts and figures within three months.In conclusion, the Court allowed the writ petition, emphasizing the need for proper assessment based on actual prices rather than relying solely on a 'floor rate' circular.