M/S Jain Trading Company Kosikalan vs. The Commissioner Commercial Tax Lucknow

Court No. - 1 Case :- SALES/TRADE TAX REVISION No. - 414 of 2016 Revisionist :- M/S Jain Trading Company Kosikalan Opposite Party :- The Commissioner Commercial Tax Lucknow Counsel for Revisionist :- Aditya Pandey Counsel for Opposite Party :- C.S.C. Connected with. Case :- SALES/TRADE TAX REVISION No. - 415 of 2016 Revisionist :- M/S Jain Trading Company Kosikalan Opposite Party :- The Commissioner Commercial Tax Lucknow Counsel for Revisionist :- Aditya Pandey Counsel for Opposite Party :- C.S.C. Hon'ble Piyush Agrawal,J. Heard Sri Aditya Pandey, learned counsel for the revisionist and Sri A.C. Tripathi, learned Standing Counsel for the State. Both the above mentioned revisions have been listed together as the issue involved in the same are inter-linked, hence the same are being heard and decided together by this common judgement. The present revisions have been filed against the order dated 11th July, 2016 passed by Commissioner Tax Tribunal Agra in Second Appeal Nos. 29 and 30 of 2014 for the Assessment Year 2010-11 and 2011-12 respectively. In Sales/Trade Tax Revision No. 414 of 2016, following question of law have been framed:- 1.) Whether on the facts and circumstances of the case, the Commercial Tax Tribunal as well as the authority below was legally justified in enhancing the taxable turnover arbitrarily against the law laid down by this Hon'ble Court in the case of M/s Ram Shyam Trading Company, Bilsanda vs. C.T.T. reported in 2016 NTN (Vol. 61)-204 in which it has been held that "Being not oblivious of the fact that a best judgment assessment would necessarily entail an estimation and by the very nature of things involve a certain degree of guess work, this Court cannot loose sight of the fact that the estimation/assessment itself has to have some correlation or connection to the material and contemporaneous record which is found in the possession of the assessee. Estimation cannot be capricious or whimsical. It must necessarily be imbued with the characteristics of an empirical exercise which must necessarily be undertaken in order to adjudge the tax liability. When the material found in relation to sale for the present assessment year is of Rs. 30,917/- only? 2.) Whether on the facts and circumstances of the case, the Commercial 12.01.2015? 3.) Whether on the facts and circumstances of the case, the Commercial Tax Tribunal as well as authorities below were justified in levying the tax @ 13.5% because the goods found lying at one side of the shop, i.e, kesar thandai, shikanji, mango syrup and gulab jal come under the entry Schedule-II Part-A Serial No. 103:-Processed or preserved vegetables & fruits including fruit jams, jelly pickles fruit squash, paste, fruit drink & fruit juice (whether in sealed containers or otherwise). Taxable @ 4% only plus SAT equals to @ 5%. 4.) Whether on the facts and circumstances of the case, the Commercial Tax Tribunal as well as authorities below were justified in rejecting the account books of the applicant on the basis of the survey in which only goods, i.e., kesar thandai, shikanji, mango syrup and gulab jal were found outside the account books which belongs to Shri Kishore Jain son of the proprietor of the applicant firm and the goods and loose parch/paper found were not related to the applicant firm? In Sales/Trade Tax Revision No. 415 of 2016, following question of law have been framed:- 1.) Whether on the facts and circumstances of the case, the Commercial Tax Tribunal as well as the authority below was legally justified in enhancing the taxable turnover arbitrarily against the law laid down by this Hon'ble Court in the case of M/s Ram Shyam Trading Company, Bilsanda vs. C.T.T. reported in 2016 NTN (Vol. 61)-204 in which it has been held that "Being not oblivious of the fact that a best judgment assessment would necessarily entail an estuimation and by the very nature of things involve a certain degree of guess work, this Court cannot loose sight of the fact that the estimation/assessment itself has to have some correlation or connection to the material and contemporaneous record which is found in the possession of the assessee. Estimation cannot be capricious or whimsical. It must necessarily be imbued with the characteristics of an empirical exercise which must necessarily be undertaken in order to adjudge the tax liability. When the material found in relation to sale for the present assessment year is of Rs. 11,799/- only? 2.) Whether on the facts and circumstances of the case, the Commercial 12.01.2015? 3.) Whether on the facts and circumstances of the case, the Commercial

Tax Tribunal as well as authorities below were justified in levying the tax @ 13.5% because the goods found lying at one side of the shop, i.e, kesar thandai, shikanji, mango syrup and gulab jal come under the entry Schedule-II Part-A Serial No. 103:-Processed or preserved vegetables & fruits including fruit jams, jelly pickles fruit squash, paste, fruit drink & fruit juice (whether in sealed containers or otherwise). Taxable @ 4% only plus SAT equals to @ 5%. 4.) Whether on the facts and circumstances of the case, the Commercial Tax Tribunal as well as authorities below were justified in rejecting the account books of the applicant on the basis of the survey in which only goods, i.e., kesar thandai, shikanji, mango syrup and gulab jal were found outside the account books which belongs to Shri Kishore Jain son of the proprietor of the applicant firm and the goods and loose parch/paper found were not related to the applicant firm? Learned counsel for the revisionist submits that the revisionist is engaged in the business of trading of cigarette, match box, sugar candy, pan masala etc. The business premises of the revisionist was surveyed on 19th April, 2011. At the time of survey, some items, namely, kesar thandai, mango syrup, shikanji and gulab jal were found. The explanation was submitted that a seasonal business is being undertaken by the son of the proprietor of the firm. The seasonal business though have been accepted by the department but the turn over has been enhanced to 7.5 lacs and nine lacs respectively for the two assessment years. At the time of survey, only alleged concealment of Rs. 30,917/- was found but as to the said concealment, the enhancement have been made whimsically, which is not permitted under the Act. If any suppression was found that should commensurate with the suppressed goods and best judgment assessment can be allowed to that extent only. He further submits that the goods found at the time of survey was covered under Schedule-II, part-A, at serial no. 103 for which the rate of tax comes to 7.5 % only but the same was assessed to 13.5%. He further submits that the tax on suppressed purchase was imposed whereas the same rate was also assessed on the suppressed sale that means the rate of tax at 27% was imposed upon the revisionist which is not permissible. He prays for allowing the revision. Per contra, learned Standing Counsel supports the orders passed by the authorities below and submits that admittedly, at the time of survey, no books of account were found. Further the material/item which were found at the time of survey for which the revisionist was even not registered that shows the intention of the revisionist for avoiding legitimate tax due to the government. He prays for dismissal of the revision. After hearing learned counsel for the parties, the Court had perused the record.

On perusal of the record, it is found that at the time of survey dated 19.4.2011, certain items such as bottles of kesar thandai, mango syrup, shikanji and gulab jal were found. The explanation which was submitted that seasonable business was being undertaken by the proprietor's son was accepted by the authorities. The only issue now left for consideration by the Court is to determine the taxable turn over on the suppressed material found at the time of survey and at what rate such items could be accessed. Counsel for the revisionist submits that at the time of survey, the only alleged suppression of 30,917/- was found and that too the seasonal business of four months has been accepted by the revenue than such an high estimate cannot be determined. He submits that the best judgment assessment would necessarily entail an estimation and by the very nature of things involved a certain degree of guess work but at the same time, estimation cannot be permitted on whimsical basis. The suppression of four months have been estimated to 7.50 lacs and nine lacs which appears to excessive, the same is reduced to five lacs and six lacs each for the Assessment Year 2010-11 and 2011-12. Further, so far as the rate of tax to be levied is concerned, the relevant entry is quoted hereinbelow:- "Schedule-II Part-A Serial No. 103:-Processed or preserved vegetables & fruits including fruit jams, jelly, pickle, fruit squash, paste, fruit drink & fruit juice (whether in sealed containers or otherwise) Taxable @ 4% only plus SAT equals to 5% and the tax levied on the sale as well as on the purchase both is illegal and incorrect in eyes of law." From perusal of the aforesaid entry, it is evidently clear that the fruits including fruit jams, jelly, pickle, fruit squash, paste, fruit drink & fruit juice (whether in sealed containers or otherwise) are liable to be taxed @ 4% only plus SAT which comes to 5%. Order Date :- 4.4.2022 Shiraz Judicature at Allahabad