TaxTMI 
TaxTMI 
2023 (3) TMI 61
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmination of sale price of Iron Ore sold by the petitioner on the basis of average I.B.M. rate in exercise of the powers under Section 35 (7) read with Section 40 (1) of the JVAT Act has been upheld. Since the issue is common in both these writ applications as such the relevant facts of W.P.(T) No. 2221 of 2022 are referred which will suffice to dispose of the issue involved in these cases. 2. The brief facts of the case as pleaded by the petitioner are that the petitioner is having merchant mines of iron ore, namely, Ghatkuri Iron Ore Mines & Bihar Iron Ore Mines. Iron ore extracted from mines is known as "Run of Mines (ROM)" which requires further processing and screening. Petitioner's premise does not have processing and screening facility and therefore, only ROM was being sold by the petitioner. ROM includes Fines & Lumps and the grade of minerals found in petitioner's premises was between 58-60% Fe content, which would be evident from survey report as contained in Annexure-1. Assessment proceeding of the petitioner was completed wherein, in alleged exercise of power u/s 35(7) r/w Section 40(2) of the JVAT Act, tax and interest imposed upon the petitioner on the alleged g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the said notice. Vide order dated 30.01.2017, Tribunal passed a conditional stay order by directing petitioner to deposit 35% of arrear of tax. Petitioner filed Writ Petition, being W.P.(T) No. 1152 of 2017, before this Hon'ble Court against the stay order dated 30.01.2017. This Court vide its order dated 06.03.2017 stayed the conditional order of the Tribunal. This Court vide its order dated 28.03.2018 ordered that pendency of writ petition will not come in the way of disposal of revision petition. Vide order dated 02.02.2019, this Hon'ble Court directed the matter to be listed after disposal of the Revision Petition. Petitioner filed a written submission before the Commercial Taxes Tribunal. The learned Tribunal partly rejected the revision application of the petitioner and allowed the revision to the extent of claim of export sale. 5. Learned counsel for the petitioner has taken us through the relevant provisions of JVAT Act, 2005, Section 2 (xlvii) Sale and 2 (xlviii) sale price definition, in particular Section 35(7) and Section 40 relating to turn over escaping assessment. Learned counsel for the petitioner has, inter alia, questioned the impugned findings on two-fol....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or such sale of goods and not on the basis of market value of the goods in question. Thus, the learned court below has failed to consider the aforesaid provisions of the JVAT Act at the time of deciding the issue of determination of goods sold by the petitioner. Further finding with respect to "under-pricing" of the goods sold by the petitioner recorded by the assessing officer is totally misconceived and not tenable in the eye of law. It is really un-understandable that why purchaser of petitioner would purchase minerals at a lesser price just in order to evade payment of tax especially when the said purchaser is entitled to avail ITC under the JVAT Act, 2005. Further, assessing officer in its revised order has stated that "under-pricing" of the petitioner has been derived from the enquiry made from other businessmen, but no details of such enquiry has been mentioned in the revised order. The lower court records itself demonstrates that no such enquiry whatsoever was conducted by the learned assessing officer to conclude under-pricing done by the petitioner. Even, the petitioner has not been furnished any documents regarding alleged enquiry conducted by the assessing offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f less than Rs.300 per MT. On the basis of the said perverse finding, the Tribunal has held that the petitioner was unable to explain variation of quality of iron ore as well as rate of iron ore and thus; the said transactions of the petitioner are colorable transaction and the provision of Section 35(7) of the JVAT Act has rightly been invoked by the assessing officer as on the basis of the aforesaid finding, the assessing officer was satisfied that the price of goods has been under-priced by the petitioner. Further, in the impugned order, the Tribunal has recorded a specific finding that petitioner was guilty of misrepresenting before the appellate authority. The aforesaid finding of the Tribunal is not justified and such perverse finding is contrary to the records of the case. In this regard, reference may be given to the chart appended to the revised assessment order (Annexure-5) and, from bare perusal of the same, it would transpire that in column 3 of the said chart, the assessing officer has himself recorded name of goods as ROM and only with respect to four transactions, the goods have been reflected as fines. Further, column 5 of the said chart itself demonstrates that goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... below. In fact, the remand order passed by the learned appellate court was limited remand order and the revised order should have only confined to the facts that whether petitioner has sold its goods at a higher price than shown in invoice. But the assessing officer has exceeded its jurisdiction and has held that the instant case relates to under-pricing of goods sold by the petitioner. Surprisingly, learned Tribunal has not appreciated it. Without appreciating the above submission, learned appellate court has confirmed the revised order passed by the assessing officer which is itself contrary to the earlier order passed by the learned appellate authority. From bare perusal of the earlier remand order (Annexure-4), it would be evident that the learned appellate court himself has recorded its finding that sale price of the petitioner could not be compared with the average sale price of IBM as IBM rate has been determined by taking average sale price of the mining dealer, majority of whom has better grade of iron ore, but, admittedly, the grade of iron ore of the petitioner is of inferior quality. But, on the contrary, the learned appellate court has upheld the revised order on t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osed upon the petitioner while passing the revised order which is wholly illegal, untenable in the eye of law. It is pertinent to mention here that the revised order has been passed in compliance to the limited remand order passed by the learned appellate court and, therefore, penalty under Section 40(1) of the JVAT Act could not have been imposed upon the petitioner. However, learned appellate court has failed to consider this fact which is itself contrary to the earlier order passed by the learned appellate court. To the utter surprise of the petitioner, learned appellate court has recorded its finding that the petitioner has not objected against the initiation of proceeding under section 35(7) read with Section 40(1) and by recording such facts, the learned appellate court has held that no procedural error has been committed by the learned assessing officer while passing the revised order. Further, initiation of proceeding under Section 40(1) of the JVAT Act is in the nature of re-assessment proceeding and could not have been initiated by converting original proceeding initiated under Section 40(2) which is a before assessment proceeding to a proceeding under Section 40(1)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessing officer was this satisfaction that the petitioner has sold the iron ore at a higher price than shown by him in these invoices. Thus, the ingredients of Section 35 (7) of the JVAT Act were satisfied for proceeding against him in terms of Section 40 (1) of the JVAT Act. Pursuant thereto; notices were issued under Section 40 (1) and 40 (2) upon the petitioner for the relevant assessment years by order dated 17.10.2012 concerning the assessment year 2011-12 and 28th January, 2013 for the year 2010-11. Since the Assessing officer found a case of underpricing, the assessment orders dated 31st January, 2013 was passed imposing tax and penalty upon the petitioner. The same were taken in appeal before the Joint Commissioner (Appeals), who set aside the order and remanded the matter to the assessing officer to take a fresh decision in accordance with law. Thereafter, the revised assessment order was passed by the assessing officer, inter-alia holding that the petitioner has indulged in underpricing of the goods sold at a higher price after enquiries from the businessmen. Since the IBM rates of royalty are determined on average of 10 such mines operating in the area, revised ev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rms of Section 35 (5) and 35 (6) of the JVAT Act. Only when such evidence is not there and on the basis of enquiry conducted by the assessing officer, he was satisfied that the goods have been underpriced, then a case under Section 35 (7) is made out. 10. According to the learned tribunal the entire plea of violation of the principles of natural justice also do not have any factual basis. The variance in the sale price compelled the authority to take the average price notified by I.B.M., which does not suffer from any illegality. Therefore, enhancement of gross turnover by enhancing the same value by fixing it with reference to the rate declared by IBM does not suffer from any illegality or impropriety. This plea was rightly rejected by the learned tribunal. Learned counsel for the State has placed reliance on the decisions of the Hon'ble Apex Court in the case of M/s VEENA THEATRE, PATNA versus THE STATE OF BIHAR reported in 1970 (3) SCC 79, Para 9 and THE COMMISSIONER OF SALES TAX, MADHYA PRADESH versus M/S H.M. ESUFALI, H.M. ABDULALI, SIYAGANJ, MAIN ROAD, INDORE reported in (1973) 2 SCC 137, Para 8 and 11 in support of his submission that in a case where the invoices and b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment order, the AO has compared the sale price of the petitioner with IBM Rate only and has proceeded to levy penalty three times of alleged concealment of tax u/s 40(1) of the JVAT Act, 2005. The AO further u/s 81 of the JVAT Act, 2005, passed review order wherein two times penalty has been imposed u/s 40(1) of the JVAT Act, 2005. 12. After going through the aforesaid facts and the history of the case it appears that to decide the lis involved in this case, section-35 of JVAT Act play an important role as it deals with assessment and self-assessment. For brevity, Section 35 is quoted herein below: "35. Assessment and Self-Assessment - (1) Subject to provisions of sub-Section (2), the amount of tax due from a registered dealer or a dealer liable to be registered under this Act shall be assessed in the manner hereinafter provided, for the Tax Period during which the dealer is so liable as prescribed. (2) Notwithstanding anything contained in this Section, if a registered dealer has failed to furnish return or returns under sub-Section (1) of Section 29 in respect of any tax period or periods, the prescribed authority shall proceed to make provisiona....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... time, the prescribed authority shall serve on such dealer a notice in the prescribed manner requiring him on a date and at a time and place to be specified therein either to attend in person or through an authorised representative or to produce or to cause to be produced any accounts and other evidences on which such dealer may rely in support of such returns and claims thereof and assess the dealer, the amount of tax and interest due from the dealer on the basis of such returns which have come on records and after making such adjustments as may be necessary including - (i) disallowance of claim of input tax credit, exemptions, discounts and deductions and any other concessions or rebates not supported by requisite evidence as required under the Act or the rules made thereunder; and (ii) disallowance of claims of tax payments and refund adjustment not verified or otherwise not admissible; and (iii) withdrawal of claim of tax credit including carry forward of tax credit not admissible under the Act; and (iv) levying of interest applicable under this Act. Provided, notwithstanding anything contained in Section 36 if registered dealer fail....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rdingly and for this purpose, 'the dealer shall pay by way of penalty, a sum equal to thrice the amount of additional tax assessed. "(2) If the prescribed authority in the course of any proceeding or upon any information, which has come into his possession before assessment or otherwise, under this Act, and is satisfied that any registered dealer or a dealer to whom the registration certificate has been suspended under sub-section (7) of Section 25 - (a) has concealed any sales or purchases or any particulars thereof, with a view to reduce the amount of tax payable by him under this Act, or (b) has furnished incorrect statement of his turnover or incorrect particulars of his sales or purchases in the return furnished under sub-section (1) of Section 29; or otherwise, the prescribed authority shall, after giving such a dealer an opportunity of being heard, by an order in writing direct that he shall, in addition to any tax payable which is or may be assessed under Section 35 or 36 or 38, pay by way of penalty a sum equal to thrice the amount of tax on the concealed turnover or on concealed or incorrect particulars* for each month of such suppr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2022 which is extracted hereunder for both the periods 2010-11 & 2011-12: "05.07.2022: The two writ petitions relate to assessment years 2010-11 and 2011-12 and arise out of the common order passed by the learned Commercial Taxes Tribunal, Jharkhand, Ranchi dated 01.02.2022. Regarding the third revision application No. JR 02 of 2017 for the period 2009-10, the learned Tribunal has held that the assessment proceedings were time barred. Learned counsel for the petitioner submits that after making an assessment under Section 40(2) of the JVAT Act, 2005, on an erroneous pricing index obtained by comparing prices of three neighbouring mines, the petitioner was levied with enhanced tax liability. The matter was remanded to the Assessment Officer by the Appellate Authority clearly observing that the Assessing Officer has not given a finding that the assessee has sold the goods at higher price. On remand the Assessing Officer has without any notice, conducted reassessment proceeding under Section 40(1) read with Section 35(7) of the JVAT Act and this time relied upon the IMB pricing to levy enhanced tax upon the petitioner. The Assessing Officer upon remand has rendered ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the goods. It comprises of the amount which the dealer himself has to pay for the purchase of the goods, the expenditure, which he is to incur for transporting the goods from the place of purchase to the place of sale, the duties, if any, levied on the particular goods bought by him, the octroi duty, which he may have had to pay and his own margin of profit after meeting handling charges including interest on the capital invested. The cost price of the goods actually paid by him under various heads of accounts would no doubt constitute the consideration for which he would part with his title to the goods. The entire amount of consideration, including the sales tax component, which the purchaser pays, would constitute the price of goods. To this extent, there is no difficulty. The difficulty comes in when by law or by legal fiction the Department seeks to introduce a notional concept as an element of the "real price". This is particularly important when there is no rule to that effect in the sales tax law. Even under the definition of turnover in Section 2(i) one has to take into account only the aggregate amount for which goods are bought or sold. It is this aggregate amount wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the finding that it is a case of 'underpricing'. The finding with respect to "underpricing" of the goods sold by the petitioner recorded by the assessing officer is not tenable in the eye of law. Further, assessing officer in its revised order has stated that "underpricing" of the petitioner has been occasioned due to connivance of the seller and the purchaser, but no details of such enquiry has been mentioned in the revised order. The lower court records do not show that any such enquiry was conducted by the learned assessing officer to conclude underpricing done by the petitioner before proceeding to impose tax and penalty under Section 40(1) based on the IBM rates. Even the appellate authority on the second occasion in its order dated 26.11.2016 accepted the above finding of the Assessing Officer in the revised assessment order that it is not case of the assessee having sold goods at a higher price than shown by him in the invoices but a case of 'underpricing'. In the absence of tangible materials to support such a finding, it is difficult to assume that a purchaser of petitioner would purchase minerals at a lesser price under an invoice in order to evade payment of tax espe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ince in the present case the requirement of law for initiation of the proceedings have not been fulfilled, these decisions are not of assistance to the present cases. 19. As such, on remand, the AO shall proceed strictly in accordance with law. The petitioner shall be at liberty to raise all the grounds available to him before the AO which shall be considered accordingly. 20. Learned Tribunal has completely failed to consider that the requirement of law for initiating a proceeding under Section 35(7) by recording reasons has not been fulfilled by the Assessing Officer even after remand by the Appellate Authority on the first instance. Consequently, the common impugned order dated 1st February, 2022, passed by the learned Commercial Taxes Tribunal, Jharkhand, Ranchi in Revision Case No. JR 04 of 2017 and JR 03 of 2017 is quashed. 21. As a result, W.P.(T) No. 1151 of 2017, W.P.(T) No. 1152 of 2017 & W.P.(T) No. 1153 of 2017 are dismissed as infructuous and W.P.(T) No. 2221 of 2022 and W.P.(T) No. 2222 of 2022 are, hereby, allowed in the manner and to the extent indicated above on contest. Pending I.A., if any, is also disposed of. 22. Before parting, it is observed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... पà¥à¤°à¤¾à¤¨à¥à¤¤à¥€à¤¯ आदेशानà¥à¤¸à¤¾à¤° JVAT, Act & 05 की धारा 40 (1) & 40 (2) के तहत सूचना निरà¥à¤—त। तिथि 17/10/12. Sd/- ACCT यथा वरà¥à¤· 09-10 के अà¤à¤¿à¤²à¥‡à¤–ा अनà¥à¤¸à¤¾à¤° 31 /1/13 निशà¥à¤šà¤¿à¤¤ कर JVAT, Act_40(2) की सूचना निरà¥à¤—त करे।" Sd/- ACCT" Document 2 Schedule V-Form No. 29 SI XXIX "Part-File 2010-11 ORDER SHEET Sales Tax Office- DCCT Chaibasa Circle Name of the dealer with address: M/s Nirmal Kumar Pradeep Kumar Serial number in the alphabetical of registered dealers: Chaibasa Registration number: TIN 20941200746 Serial Number of order and date Brief Order 1/28/1/13 “माईनिंग विà¤à¤¾à¤—, चाà....