KHANDELWAL ENTERPRISES SHIVPURI Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) This revision under Section 58 of the U.P. Value Added Tax, 2008 (hereinafter referred to as 'the Act') is by the assessee, questioning imposition of value added tax in proceedings under Section 28 of the Act, pertaining to assessment year 2009-2010. Assessee is engaged in the business of purchase and sale of lubricant oil, which it purchases from Indian Oil Corporation (hereinafter referred to as 'IOC'), under an agreement, from within the State. According to assessee, it has entered into an agreement with the IOC, according to which lubricant oil is sold to the retailer as per discount directed to be given every month by IOC. It is alleged that difference between the purchase price of revisionist and sale price to the retailer is made good by IOC in the form of incentives etc. Assessee pays VAT upon turnover of purchase made from IOC and also charges VAT on the sale of lubricants to the retailers. The revisionist has submitted annual tax returns in Form 26-A, according to which it purchased lubricant worth Rs.8,52,29,213.02 and incurred a sum of Rs.49,47,445 for procuring the lubricant oil, which was appropriated towards transportation expenses in trading account. It had sold products worth Rs.8,62,62,905.27 and also received an incentive of Rs.64,85,695.40 from IOC. As per the return, assessee had purchased a total of 7,39,916.03 litres of lubricant, and sold 7,39,756.65 litres. It transpires that during the assessment year, a survey was conducted, in which one loose parcha was found, which has been attempted to be explained in one way by the assessee, but has been understood in quite another manner by the revenue. However, on 24.4.2009 when the survey was conducted, there was no discrepancy found between the books of account and the stocks physically verified to be present at the premises of the revisionist.

(2.) The assessing authority exercising its jurisdiction under Section 28-A of the Act passed assessment order on 4.12010. The assessing authority added Rs.49.47 lacs to the turnover of purchase, rejecting revisionist's plea of having incurred it towards transportation expenses and added it to the purchase price, and thus worked out the sale price as Rs.130/- per litre. The turnover of revisionist was assessed at Rs.9,61,68,364.50. The loose parcha found during survey was made the basis for rejecting account books of the revisionist. The assessing authority estimated 12000 litres of lubricant oil to have been sold by the revisionist without reflecting it in the account books, and added it to the turnover of the assessee. The assessing authority based upon the average sale price worked out at Rs.130/- per litre held that a sum of Rs.14,68,320/- was additional purchase that had not been reflected in the account books. The turnover disclosed by revisionist at Rs.8,62,62,905.27 was not accepted, and stood enhanced to Rs.9,91,96,684.50. As against the admitted tax of Rs.1,15,36,928.23, the assessee was held liable to pay Rs.1,32,60,905.70 as tax.

(3.) The assessee preferred first appeal, and various grounds were urged in support thereof. However, the Additional Commissioner (Appeals) rejected the appeal preferred by the revisionist, and affirmed the order passed by the assessing authority. A second appeal thereafter was preferred before the Tribunal, which has been partly allowed, vide order dated 26.5.2011. The Tribunal disallowed the alleged suppressed sale price amounting to Rs.15,60,000/-, and thereby determined the turnover at Rs.9.29 crores. The total liability of tax assessed earlier at Rs.1,32,60,905.70 was accordingly reduced to Rs.1,24,33,400/-. The Tribunal, however, negatived the dealer's plea with regard to challenge laid to inclusion of Rs.49,47,445/- as expenses and held that this amount was to be appropriated towards the purchase price. The incentive amount received from IOC of Rs.64,85,695.40 was held to have rightly been appropriated towards the sale price. Thus aggrieved, the revisionist has preferred instant revision.