Allahabad High Court
m/s gorakhnath food private limitedversuscommissioner of trade/commercial tax u.p. lucknow
- Decided
- Bench
- PIYUSH AGRAWAL
Holding
The Tribunal was justified in estimating turnover based on higher electricity consumption and confirming the enhancements, and the revision was dismissed.
Summary
M/s Gorakhnath Food Private Limited, a manufacturer of flour and related products, challenged a Commercial Tax Tribunal order that increased its taxable turnover based solely on higher electricity consumption and enhanced packing material without supporting evidence. The Tribunal had rejected the company's books of account and inferred suppression of production and sales. The revisionist argued that electricity consumption alone could not justify such enhancements, while the State contended that higher consumption indicated suppression, relying on the Supreme Court’s decision in Melton India v. Commissioner of Trade Tax, U.P. The High Court examined the record, found the Tribunal’s reliance on electricity consumption permissible as a reasonable inference of suppressed turnover, and upheld the Tribunal’s findings. Consequently, the revision was dismissed.
Issues considered
- Whether the Tribunal is legally justified in estimating turnover solely on the basis of electricity consumption without rejecting the books of account and in the absence of material showing suppressed purchase or sale.
- Whether the Tribunal is legally justified in confirming the enhancement in packing material without any material on record, rendering the order perverse.
- Whether the turnover confirmed by the Tribunal is justified and not excessively high.
Subjects
- sales tax
- turnover estimation
- electricity consumption
- commercial tax
- assessment
- suppression of production
- packing material
- revision
Judgment
HIGH COURT OF JUDICATURE AT ALLAHABAD
SALES/TRADE TAX REVISION No. - 67 of 2018
M/s Gorakhnath Food Private Limited
…..Revisionist(s)
Versus
Commissioner of Trade/Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Krishna Agarawal
Counsel for Opposite Party(s) : C.S.C.
AND
SALES/TRADE TAX REVISION No. - 66 of 2018
M/s Gorakhnath Food Private Limited
…..Revisionist(s)
Versus
Commissioner of Trade/Commercial Tax U.P. Lucknow
…..Opposite Party(s)
Counsel for Revisionist(s) : Krishna Agarawal
Counsel for Opposite Party(s) : C.S.C.
Court No. - 7
HON'BLE PIYUSH AGRAWAL, J.
1. Heard Mr. Krishna Agarwal, learned counsel for the revisionist and
learned ACSC for the Sate-respondents.
2. Since common substantial questions of law are involved in both the
revisions, both revisions are decided together with the consent of the
learned counsel for the parties.
2
STRE No. - 67 of 2018
3. For narration of facts, the Revision No.67 of 2018 is being taken first.
4. The present revision has been filed against the order dated 16.11.2017
passed by Commercial Tax Tribunal, Gorakhpur in Second Appeal
No.206 of 2006 for the Assessment Year 2010-2011.
5. Following substantial questions of law are involved in the present
revision:
"(I) Whether on the facts and in the circumstances of the case, the
Tribunal is legally justified in estimating the turnover merely on the
basis of consumption of electricity without rejection of books of
account and in absence of any material to show suppressed
purchase or sale ?
(II) Whether on the facts and in the circumstances of the case, the
Tribunal is legally justified in confirming the enhancement in
packing material without any martial on record and thus the order is
perverse ?
(III) Whether the turnover confirmed by the Tribunal is justified
and not highly excessive ?"
6. Learned counsel the revisionist submits that the revisionist is engaged
in business of manufacture and sale of Aata, Maida and Chokar etc. The
revisionist disclosed the turnover, which has been enhanced whole
framing the assessment order only on the basis of higher electric
consumption. He submits that merely consumption is higher, the
enhancement cannot be made. Against the assessment order, first appeal
was filed, which was partly allowed against which the second appeal
was filed which has been dismissed. He submits that merely for higher
consumption as alleged by the assessing authority, the enhancement
cannot be made.
7. Reverting to the said submission, learned counsel for the State submits
that if a higher consumption is found, the suppression of production as
well as sale is made out. In support of his submission, he has relied upon
3
STRE No. - 67 of 2018
the judgment of Apex Court in the case of Melton India vs. The
Commissioner Trade Tax, U.P. decided on 31.01.2007.
8. After hearing the parties, the Court perused the record.
9. The record shows that authorities have disbelieved the contention of
the revisionist on the ground of higher consumption of electricity. The
issue in hand is squarely covered by the judgment of the Apex Court in
the case of Melton India (supra), wherein the Court have held that higher
consumption the books of account can be rejected as reasonable
interference for prima facie suppression of production as sale are made
out.
10. No ground is made out for interference in the impugned order. The
revision fails and is hereby dismissed.
11. Question of law is answered accordingly in favour of the respondent
and against the revisionist.
September 29, 2026
Ajeet
(Piyush Agrawal,J.)
Digitally signed by :-
AJEET KUMAR PATEL
High Court of Judicature at Allahabad
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