Mandatory reasons before invoking sale-price determination under VAT law; proceedings failed for non-compliance and were remanded.

Recording reasons before initiating action under Section 35(7) of the Jharkhand VAT Act was a mandatory statutory precondition, and the dealer had also to be given an opportunity of hearing. The assessing officer had not recorded reasons before commencing proceedings, and the alleged underpricing was not supported by tangible enquiry material. As the jurisdictional requirement for invoking Section 35(7) was not satisfied, the proceedings could not be sustained and the matter was remanded to the assessing authority for fresh action in accordance with law.

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Issues: Whether, for invoking the power to determine sale price under Section 35(7) of the Jharkhand Value Added Tax Act, 2005, the prescribed authority was required to record reasons before initiating proceedings and whether non-compliance with that requirement vitiated the assessment.

Analysis: Section 35(7) permits determination of the value of goods sold at a higher price than shown by the dealer, but its proviso makes the recording of reasons before initiation of proceedings mandatory and also requires an opportunity of hearing. The material on record did not show that the assessing officer had recorded reasons before setting the proceeding in motion. The finding of underpricing was also not supported by tangible enquiry material. In these circumstances, the statutory precondition for initiation of action under Section 35(7) was not satisfied.

Conclusion: The proceedings under Section 35(7) could not be sustained for want of recorded reasons, and the matter was remanded to the assessing authority for fresh action in accordance with law.

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