The main legal point established in the judgment is the requirement for the assessing authority to record reasons before initiating proceedings under Section 35(7) of the JVAT Act and the emphasis on tangible evidence to support a finding of underpricing.

JUDGMENT :

Deepak Roshan, J.

Heard learned counsel for the parties.

2. The instant writ petition has been preferred against the order dated 25th February, 2020 & 5th January, 2022 passed by the learned Commercial Taxes Tribunal, Jharkhand, Ranchi in Revision Case No. 29 of 2013, as well as Review Case No. JR 6 of 2020, respectively; whereby the revision petition and review petition of the petitioner have been rejected and the determination of sale price of Iron 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.

3. 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 ores are extracted from mines, known as “Run of Mines (ROM)” which requires further processing and screening. The premises of the petitioner 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 less than 55% Fe content, which would be evident from survey report as contained in Annexure-3.

The Assessment proceeding of the petitioner was completed wherein, in alleged exercise of power u/s 35(5)(b) 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. Rungta Mines Ltd.

4. Being aggrieved by the assessment order, petitioner filed appeal before the JCCT (Appeal) being Appeal Case No. CB-VAT-A-01/2012-13. However, the learned appellate court rejected the appeal of the petitioner. Thereafter, the petitioner filed a revision petition being JR 29 of 2013 before the Commercial Taxes Tribunal, Jharkhand at Ranchi which was dismissed on 25th February, 2020 and thereafter, petitioner also filed Review Case No. JR 6 of 2020 before the learned Tribunal. The learned Tribunal also rejected the review petition preferred by the petitioner; hence this application.

5. Learned counsel for the petitioner has taken us through the relevant provisions of JVAT Act, 2005 including Section 2 (xlvii) Sale and 2 (xlviii) sale price definition and in particular Section 35(7) and Section 40 relating to turn over escaping assessment. Learned counsel for the petitioner has, inter alia, questioned the impugned findings on two-fold legal issues:

Whether sale price of the petitioner company can be determined on the basis of average sale price of neighbouring mines namely, Rungta Mines Ltd. without even recording any finding that petitioner has sold goods at a price higher than the price reflected in its invoices, and, under such circumstances, whether provisions of Section 35(7) of the JVAT Act, 2005 can be invoked by the Respondents?

In support of the legal issues, following submissions have been made:

(a) Finding of AO that petitioner has sold goods at uniform rate @ 660/- per metric ton is perverse which is evident from tax invoices issued by petitioner at Annexure- 3 series.

(b) AO, in the order has not recorded its finding that petitioner has sold goods at a price higher than the price shown in its invoice and thus, no tax could have been levied to the petitioner under section 35(7) of the JVAT Act, 2005. From bare perusal of Section 35(7) of the JVAT Act it would reveal that assessing authority is entitled to determine the market value of the goods sold by the petitioner only and only if the assessing officer comes to a definite finding that the goods have been sold at the rate higher than the rate shown by the petitioner and admittedly, in the instant case, no such finding has been recorded by assessing officer. Thus, section 35(7) of the JVAT Act which permits the assessing officer to de