LAXMI SAW MILL Vs. STATE OF ANDHRA PRADESH

JUDGEMENT

(1.) THIS is an appeal filed against the order Dt. 24 -8 -1994 of the Appellate Dy. Commissioner, Secunderabad in Appeal No. 81/92 -93 arising out of assessment order in G.I. No. 9805/89 -90 Dt. 30 -6 -1992 of the Commercial Tax Officer -II, Nizamabad. The dispute in this appeal is about rebate of Rs. 9,492/ -. The appellant was originally assessed by the Commercial Tax Officer, Nizamabad -II on a total and net turnover of Rs. 21,15,680/ - and Rs. 3,16,470/ -. The net turnover related to sales to cut sizes. The tax on this net turnover worked out to Rs. 36,552.28 & 11.55%. The assessee was eligible for set off of tax levied and collected on timber from which cut sizes were obtained or produced, from the tax payable on cut sizes in terms of G.O.Ms. No. 572 Dt. 9 -6 -87. As per the G.O. the assessee who sells cut sizes obtained from the timber that suffered tax within the State is eligible for set off of tax paid on such timber which suffered tax at the earlier stage. The assessing authority arrived at the value of timber from which cut sizes were obtained by deducting 20% from the sales of cut sizes and arrived at the purchase value of timber in this case at Rs. 2,53,180/ -, tax on which @ 9% worked out to Rs. 22,786/ - which he deducted from the tax due Rs. 36,552.28 and arrived at the net tax due at Rs. 13,766.08. Subsequently the successor Commercial Tax Officer revised the assessment withdrawing the set off granted by the earlier Commercial Tax Officer by an amount of Rs. 9,492/ - and granted him set off of tax of an amount of Rs. 13,294.20 which he arrived at on the basis of the purchases of timber made by the dealer during the year of assessment. Aggrieved of this order of the Commercial Tax Officer, the dealer filed an appeal before the Appellate Dy. Commissioner challenging the order of the C.T.O. on the grounds:

(2.) IT is contended by the appellants that the Commercial Tax Officer had first granted the rebate after verifying the regular books of accounts but the subsequent Commercial Tax Officer on a mere change of opinion revised the assessment order by revising the amount of rebate which according to him was illegal. The petitioner relied upon judgments of A.P. High Court reported in : 54 STC 166 and : 75 STC 82 (A) i.e. in the case of Fatehchand and Sons and in the case of Ratnasree Box Makers respectively. It is claimed by them that the assessing authority can revise the assessment order only on the basis of fresh material dehors the assessment records. In the present case as there is no finding by the subsequent Commercial Tax Officer to this effect the assessment is bad in law. On merits it is claimed by the appellants that set off has to be worked out only on the purchase value of the timber, whose cut sizes have been sold. They claim that the Commercial Tax Officer cannot take a whimsical stand and restrict the set off to the tax on purchase value of the timber purchased locally in that year only without taking into account the opening and closing stocks in contravention of G.O.Ms. No. 572 Rev. Dt. 9 -6 -1987. He states that the assessee was maintaining and showing the opening and closing stocks of exempted and taxable timber and as such, it was highly impossible for any Commercial Tax Officer to grant any rebate more than what the dealer was eligible. In reply to the arguments of Authorised Representative the State Representative states that it is not correct to say that a successor officer cannot re -open an assessment passed by his predecessor in any case. He says that only where the officer revises the assessment on change of opinion with that of the opinion of the previous officer or on change of his own opinion such an assessment is held to be bad in law. He says that in the cases cited by the assessee there was a change of opinion. Therefore the Courts have held those re -assessments as bad in law. In the present case, he says that, there is no change of opinion. The G.O. requires an exemption to be given on the purchase value of timber purchased and utilised in conversion of such timber into cut sizes which are sold. He states that to take the correct value of such timber from the books of accounts cannot be called a change of opinion when the earlier officer has worked out such value by assuming certain profit whereas the books show the correct purchase value. Hence, he states that, there is nothing wrong in a successor officer revising the assessment of his predecessor and according to him it is permissible under Section 14(4)(cc) of the APGST Act. On the merits of the case, the State Representative states that when there is actual purchase value available there is no need to estimate the purchase value of timber by deducting a profit margin from the sales. We consider the rival contentions. The issues involved in this case to be decided by us are as follows:

(3.) REGARDING the merits of the case it may be seen that the G.O. requires the tax levied and collected under the Act on the timber cut into sizes to be reduced from the tax on the cut sizes which are obtained from tax suffered timber. In the present case the C.T.O., had first arrived at the turnover of timber from which cut sizes are obtained by deducting 20% profit from sale turnover of cut sizes. Such an estimation would have been perfectly justified had it been not possible to quantify the quantity from which such cut sizes are obtained and if it had not been possible to ascertain the purchase price of such timber which was not the case in the present case. The subsequent officer on the other took out only the purchases of timber made during the year without ascertaining the opening and closing stocks and tax paid on it and deducted tax paid on it (purchases of timber during the year) as set off from the tax paid on cut sizes. The authorised representative has pointed out that the dealer had the details of opening and closing stock in the books of accounts. He also contended that in the previous year only profit margin was adopted which was actually to the disadvantage of the assessees but they accepted it for the sake of continuation of method of assessment. Hence he contends that, the assessing authority should have not revised this year's assessment also completed by his predecessor simply because this year's assessment is not to the advantage of the Department. We find that method adopted by both the assessing officers in original assessment as well as in re -assessment is incorrect. The earlier officer in view of the availability of the value of the timber used for obtaining cut sizes should have adopted such value and should not have resorted to notional profit margin method, similarly the subsequent officer should have taken into account the opening and closing stocks which were available while working out the value of the timber used for obtaining cut sizes sold. We therefore remand this matter to the assessing authority to work -out the set off to be allowed correctly in view of the dealer's contention that the opening and closing stocks and details of purchase and sales are available with them for the stocks purchased within the State and outside the State. The set off in our view will be available to the assessee as follows: