Arbitrary turnover estimation under GST cannot stand when higher evaded sales are fixed without reasons; remand follows.

Under Section 74 of the Uttar Pradesh GST Act and the CGST Act, an estimate of evaded turnover must have a rational basis and be supported by reasons. The High Court found the appellate order unsustainable because it fixed evaded sales above the assessed purchases without explaining the basis for that figure. As the estimation was arbitrary and not a speaking determination, the impugned orders were quashed and the matter was remanded for fresh consideration after hearing the stakeholders.

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Issues: Whether the order fixing evaded sales at a figure higher than the evaded purchases, without reasons, was arbitrary and liable to be quashed and remanded for fresh consideration.

Analysis: Proceedings were initiated under Section 74 of the Uttar Pradesh Goods and Services Tax Act, 2017 and the Central Goods and Services Tax Act, 2017 on the basis of a survey. The appellate order upheld an estimated turnover higher than the determined purchases, but no reasoning was recorded to justify that estimation. Estimation of taxable turnover must rest on a rational basis and cannot be arbitrary; a finding that exceeds the foundation without explanation is unsustainable. The matter therefore required reconsideration by a reasoned and speaking order after hearing the stakeholders.

Conclusion: The impugned orders were held unsustainable, quashed, and the matter was remanded for fresh decision.

Final Conclusion: The petitioner obtained setting aside of the existing demand and a fresh adjudication before the authority below.

Ratio Decidendi: An estimation of evaded turnover under tax assessment proceedings cannot be sustained when it is not supported by reasons and is arbitrary in relation to the material found on record.

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