TaxTMI 
TaxTMI 
2023 (5) TMI 649
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....on Ore sold by the petitioner on the basis of average rate of neighbouring mines in exercise of the powers under Section 35(7) read with Section 30(4) of the JVAT Act has been upheld. 2. The brief facts of the case as pleaded by the petitioner is that the petitioner is engaged in the business of mining & trading of iron ore, and 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 thus, only ROM was being sold by the petitioner. ROM includes Fines & Lumps and the grade of minerals found in petitioner's premises was between 50-65% Fe content, which would be evident from survey report as contained in Annexure-1. The Assessment proceeding of the petitioner was completed wherein, in alleged exercise of power u/s 35(7) r/w Section 30(4) of the JVAT Act, tax and interest has been imposed upon the petitioner on the alleged ground that petitioner has concealed its Gross Turn Over (for short GTO). The assessing officer despite taking actual figure of sale price, has taken the value of goods sold on the basis of average sale price of nearby mines i.e., M/s....
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....ssing officer to determine the market value of goods is not applicable to the facts of the present case. (c) The State Tax authorities as well as the learned Tribunal has failed to take into consideration the definition of "Sale" and "Sale Price" as enshrined in Section 2 (xlvii) & 2 (xlviii) respectively of the JVAT Act which in substance provides that the VAT would be levied on the sale of goods and on the consideration received for such sale of goods and not on the basis of market value of the goods in question. Thus, they have 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. (d) Further finding with respect to "under valuation" of the goods sold by the petitioner recorded by the appellate court 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. (e) Further, the lower court records itself demonstrates that no such enquiry wha....
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.... from the above, petitioner also relied upon the judgment of Hon'ble Apex Court passed in the case of Commissioner of Income Tax Vs. Calcutta Discount Co. Ltd. reported in (1974) 3 SCC 260 (Para-11) wherein it has been held that a dealer cannot be assessed on the basis of market price of goods sold by the said dealer. 6. Mr. Deepak Kr. Dubey, A.C. to Sr. S.C.-II has argued on behalf of the State. A counter affidavit has been filed in the matter contending that ROM consists of less ferrous content of iron, while Iron Ore consists of higher quantity of Ferrous content. This is the reason that there is no mention of ROM in the rate of IBM. Based on the records showing the sale of iron ore filed by the petitioner, it is argued that the petitioner had been producing/raising iron ore as lumps which are more valuable than ROM and fines. It is also pointed out from these invoices that the rate of iron ore lump (ROM) and fines, ferrous wise mentioned in Tax invoices is lower rate than the ferrous wise, grade wise mentioned rate of IBM. The basis for initiation of the proceedings by the assessing officer was this satisfaction that the petitioner has sold the iron ore at a higher price ....
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....fer from any illegality or error. The impugned orders passed by the learned tribunal upholding the same, therefore, needs no interference. Learned counsel for the petitioner in reply has sought to distinguish these decisions on facts as they relate to a case of best judgment assessment when the Books of Account were either rejected or were not produced. 8. Having gone through the rival contentions of learned counsel for the parties and after going through the impugned order and other relevant documents placed before us it appears that revised assessment proceeding of the petitioner was completed and an order has been passed whereby, in exercise of power u/s 35(7) r/w section 30(4) of the JVAT Act, tax and interest has been imposed upon the petitioner on the ground that petitioner has concealed its GTO. The assessing officer despite taking actual figure of sale price, has taken the average sale price of M/s. Rungta Mines Ltd. Aggrieved by the assessment order, the petitioner assailed the same in appeal before the JCCT (Appeal), Jamshedpur being Appeal Case No. CBVAT-A- 09/ 2011-12. The learned appellate court rejected the appeal without appreciating that GTO of petitioner cann....
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.... claims, treating such sales as taxable by levying appropriate rate of tax, notwithstanding the fact that the dealer may have been prevented by sufficient cause to produce such declarations, certificates or evidence in support of his claim. * If a dealer has furnished all the returns and the revised returns, if any, within the prescribed period and in the prescribed manner or within next fifteen days thereafter and- The prescribed authority is satisfied that the returns or the revised returns as the case may be, and self assessment claim are prima-facie correct, consistent and complete, he shall accept the self assessment as filed by the dealer and shall assess the amount of tax and interest due from the dealer on the basis of such returns, after making prima-facie adjustment in the nature of arithmetical errors, if any, in the returns and the self assessment; * In the circumstances, if the self-assessment under sub-section (1), (2), (3), (4) and (5) has not been filed within the prescribed 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 eit....
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....ices. Therefore, the proviso to Section 35 (7) of the JVAT Act firstly stipulates that the reasons must be recorded by the prescribed authority for initiating the proceeding and secondly, the principles of natural justice should be followed. Though in the instant case the second ingredient of the proviso has been fulfilled; however, there is no document to suggest that the assessing officer has recorded his reason before initiating the proceeding. 11. The principles regarding concept of 'Sales Tax' as compared to Income Tax or Excise Duty have been explained in the case of Morriroku U.T. Indians Pvt. Ltd. (supra) at paragraphs 19 and 23 quoted hereunder :- "19. Before analysing Section 3 of the 1948 Act, it is important to keep in mind that in income tax cases, tax is exigible on "real income" which means the actual income received by or which accrues to the assesses. In case of sales tax, tax is exigible on real price received or receivable by the dealer in respect of a sale. A dealer is entitled to frame his price structure in a manner conducive to the type of his business or with a view to withstand the competition. In a given case, cost may be more than the price. T....
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....re, for sales tax purposes, what has to be taken into account is the consideration for transfer of property in goods from the seller to the buyer. For this purpose, tax is to be levied on the agreed consideration for transfer of property in the goods and in such a case cost of manufacture is irrelevant. As compared to the sales tax law, the scheme of levy of excise duty is totally different. For excise duty purposes, transfer of property in goods or ownership is irrelevant. As stated, excise duty is a duty of manufacture. The provisions relating to measure (Section 4 of the 1944 Act read with the Excise Valuation Rules, 2000) aim at taking into consideration all items of costs of manufacture and all expenses which lead to value addition to be taken into account and for that purpose Rule 6 makes a deeming provision by providing for national additions. Such deeming fictions and notional additions in excise law are totally irrelevant for sales tax purposes. Therefore, in any event, these notional additions cannot be read into Clause 5.1 and Clause 5.2 of the General Agreement for Purchase of Parts dated 31.7.1997." In the case of M/s. Girdharilal Nanhelal (supra) cited by the petit....
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....tisfaction is to be based on tangible materials as are found by the AO as the provisions are penal in nature where an assessee is found to be indulging in tax evasion by suppression or concealment of actual sales or turnover by selling goods at a higher price than shown by him. 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. The matter is therefore required to be remanded to the AO to comply the provisions of Section 35(7) of the Act for initiating the proceeding, if he finds any evidence that the goods have been sold at higher price than shown by the dealers. 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. 14. Before parting, it is made clear that though several contentions have been raised by the parties on the merits of the case regarding the levy of tax and interest but since the matter is being remanded to the AO on the point of recording of satisfaction under Section 35 (7) of....