STATE OF ANDHRA PRADESH Vs. ARIHANT ENTERPRISES

JUDGEMENT

(1.) THE State of Andhra Pradesh preferred this revision aggrieved by the order of the Sales Tax Appellate Tribunal (hereinafter referred to as "the Tribunal") in T.A. No. 1027 of 2004, dated January 31, 2005 under which the order of competent authority, as confirmed by the first appellate authority of the acquisition proceedings under Section 28A of the Andhra Pradesh General Sales Tax Act, 1957 (hereinafter referred to as "the Act") was set aside.

(2.) THE respondent - -M/s. Arihant Enterprises is a registered dealer on the rolls of the Commercial Tax Officer, M.J. Market Circle, Abids Division, Hyderabad. The respondent was carrying on business in plywood and decorative laminates. During the assessment year 2003 -04, the jurisdictional Commercial Tax Officer noticed that the turnovers, reported by the respondent -dealer in its returns, are too low and are not matching with the huge quantities of goods the dealer was purchasing and selling, therefore, it was suspected that the dealer was suppressing the values of its purchases and sales by under -invoicing and the values recorded by the dealer in the purchase/sales invoices and books of account are far less than fair market value of the goods. Therefore, the Commercial Tax Officer stated to have gathered certain information, and thereafter, inspected the premises of the respondent -dealer and the purchase value of the stock, as per the purchase invoices available with the dealer as well as the sale invoices of similar goods and the entries in the books of account, and he felt that there was variation of more than 100 per cent less than the fair market value compared with the sale price recorded in the sale invoices, while the variation was noted at 200 per cent in respect of the fair market value and the purchase prices, and therefore, initiated acquisition proceedings as contemplated under Section 28A of the Act. A show cause notice was issued, for which the respondent -dealer submitted its explanation and also sought for certain information with reference to the prices specified in the notice. The Commercial Tax Officer without supplying the price details as sought for by the respondent -dealer, proceeded with the matter and finally passed the order of acquisition, determining the compensation payable for the entire stocks available with the respondent -dealer at Rs. 44,00,254 as against the fair market value, estimated by the assessing officer at Rs. 58,37,873 which figure was arrived at by increasing the sale value by 25 per cent.

(3.) AT the time of hearing, the learned Special Standing Counsel contended that the Tribunal failed to appreciate the contentions advanced on behalf of the State. It was contended that the assessing officer and the competent authority to initiate proceedings under Section 28A of the Act, had gathered information and brought on record sufficient material to come to the conclusion that he has reason to believe that the invoice value of the purchase/sales was less by more than 20 per cent of fair market value. In fact, the assessing officer notices that there was a variation of 100 per cent with reference to the sale prices while the variation with reference to the purchase invoice was more than 200 per cent. Therefore, there was no justification for the Tribunal in setting aside the acquisition proceedings, and hence, sought to set aside the order of the Tribunal.