Money value method for assessing stock variation in tax cases is unscientific and unsustainable.

ORDER :

N. ANAND VENKATESH, J.

This petition has been filed under Section 60 of the TNVAT Act r/w Rule 14(13), against the order passed by the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Madurai, dated 10.02.2023 made in MTSA No.711/2018.

2. The case of the petitioner is that they had reported a total and taxable turnover of Rs.4,86,26,908/- and Rs.4,86,19,808/-, respectively, by allowing an exemption of Rs.7,100/- reported in the monthly returns in Form-I filed by them for the year 2015–16 and the same was accepted for assessment, which is deemed to have been made as on 31.10.2016 under Section 22(2) of the TNVAT Act, 2006 , as per the proceedings of the Commercial Tax Officer, West Veli Street Assessment Circle, Madurai.

3. Based on the inspection report of the Commercial Tax Officer, Madurai, based on the inspection conducted at the business premises on 12.10.2015, the Assessing Officer ordered reversal of ITC under the heads of wastage and arrived at the conclusion that there was suppression with respect to the seller in Annexure II and suppression under the head of stock variation. The same resulted in the order passed by the Assessment Authority.

4. Aggrieved by the same, the petitioner filed an appeal before the Appellate Deputy Commissioner (CT), Madurai and the Appellate Authority, by order dated 30.08.2017, allowed the appeal in respect of the reversal of ITC and stock difference and at the same time, made an ad hoc addition of Rs.3,00,000/- at the rate of 14.5% and allowed the appeal in respect of equal time addition with penalty and partly allowed the appeal in respect of actual suppression with reference to Annexure II.

5. Aggrieved by the order passed by the Appellate Authority, a second appeal was filed before the Tribunal by the Department. The Tribunal, by proceedings dated 10.02.2023, was pleased to set aside the order passed by the Appellate Authority and directed reworking of the ITC in terms of the order and the provisions of the TNVAT Act. Aggrieved by the same, the present petition has been filed before this Court.

6. When this petition was entertained by this Court, the following substantial questions of law were framed by this Court on 07.07.2023:

(a) Whether on the facts and circumstances of the case, the Sales Tax Appellate Tribuna lis right in confirming the addition in relation to difference in stock and in holding that there was no proper reconciliation thereof?

(b) Whether on the facts and circumstances of the case, the Sales Tax Appellate Tribunal is right in confirming the levy of penalty under Section 27 of the Tamil Nadu Value Added Tax Act, 2006?

7. Heard the learned counsel for the petitioner and the learned Additional Government Pleader appearing on behalf of the respondent.

8. The main ground that was urged by the learned counsel for the petitioner is that the Tribunal went wrong in relying upon the judgment of this Court in case ofM/s.Arumugam Blue Metal , which was a case pertaining to best assessment and whereas, in the case in hand, it involved assessment of stock variation in terms of money value. The learned counsel submitted that this issue was squarely covered by the earlier judgment passed by this Court in State of Tamil Nadu Vs. Tvl.Jalaram Timber Depot in Tax Case Revision (MD) No.70 of 2012, dated 06.09.2012,

9. Per contra, the learned Additional Government Pleader appearing on behalf of the respondent submitted that the Tribunal had righty relied upon the judgment of this Court inM/s.Arumugam Blue Metal s and the Tribunal had also found that there was a huge stock difference to the tune of Rs.10,46,428/- after the revised return was filed, which was 14.5% from the actual stock. The learned Additional Government Pleader submitted that the petitioner was not able to reconcile this difference and therefore, the Tribunal had concluded