The Jharkhand High Court quashed the rejection of revision petition and ruled that the Recording of satisfaction necessary for initiation of proceedings under Section 35 (7) of the Jharkhand Value Added Tax Act, 2005 (JVAT Act).
The instant writ petition has been preferred against the order passed by the learned Commercial Taxes Tribunal, 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 Jharkhand Value Added Tax Act, 2005 (JVAT Act)has been upheld.
The petitioner, M/s. Mishri Lal Jain & Sons, is engaged in the business of mining and trading of iron ore, and Iron ore extracted from mines is known as Run of Mines (ROM) which requires further processing and screening. Petitioner’s premise does not have processing and screening facility and thus, only ROM was being sold by the petitioner.
The Counsel for the appellant submitted that from bare perusal of Section 35(7) of the Jharkhand Value Added Tax Act, 2005 (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.
The Counsel appearing on behalf of the State contended that from the invoices the rate of iron ore lump (ROM) and fines, ferrous wise mentioned in Tax invoices is lower rate than the ferrous wise, grade wise mentioned rate of IBM. The basis for initiation of the proceedings by the assessing officer was this satisfaction that the petitioner has sold the iron ore at a higher price than shown by him in these invoices. Thus, the ingredients of Section 35 (7) of the Jharkhand Value Added Tax Act, 2005 (JVAT Act)were satisfied for proceeding against him in terms of the Jharkhand Value Added Tax Act, 2005 (JVAT Act).
The Two-Judge Bench comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan observed that “It is appropriate to observe that the condition of recording satisfaction under proviso to Section 35 (7) of theJharkhand Value Added Tax Act, 2005 (JVAT Act) is a prerequisite before initiation of proceedings and cannot be dispensed with by the AO.”
“The matter is therefore required to be remanded to the AO to comply the provisions of Section 35(7) of the Jharkhand Value Added Tax Act, 2005 (JVAT Act) for initiating the proceeding, if he finds any evidence that the goods have been sold at higher price than shown by the dealers” the Bench opined.
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