Law: Sales Tax Act, 1990

Section: 2(14)(35),3,6,8(1)(b),11,22,23,26,33,34, 73

(a) Sales Tax Act (VII of 1990)--- ----Ss. 3, 6, 11, 22, 23, 26, 73 & 34---Assessment---Calculation of sales tax on the basis of consumption of electricity---Cash credits in bank account not to be deemed as the amount received on account of taxable supplies or in furtherance of taxable activity--- Scope---Certain discrepancies having been observed during audit of sales tax record, show-cause notice was issued to the appellant---Adjudicating Officer adjudged amount of Rs. 8,513,423 against the appellant---Said order was upheld by the Commissioner (Appeals)---Validity---No evidence was available to prove that receipts of money into the Bank accounts of the appellant were on account of taxable supplies of goods as envisaged under S. 3 of Sales Tax Act, 1990 and even there was no provision in the Sales Tax Act, 1990 purporting to deem the receipt of money to be a "sale"---Department failed to establish any nexus of Bank receipts appearing in Bank accounts of the appellant with that of sales and supplies---Department had to prove that any amount from undisclosed sources was in any way linked with taxable supplies or in furtherance of taxable activity as under the provisions of S. 3 of Sales Tax Act, 1990 sales tax could be charged, levied and paid on taxable supplies made by a registered person in the course or furtherance of any taxable activity carried on by him---Credit entries appearing in the Bank accounts of the appellant could not be treated as an amount received on taxable supplies or in furtherance of taxable activity particularly when the department had failed to bring any material evidence to substantiate its allegation against the appellant by corroborating Bank receipts with that of clandestine removal of alleged goods or with any taxable supply thereof---Consumption of electricity units, on the basis of which show-cause notice was issued, might have had any nexus with that of production of goods but no direct relationship could be established in electricity with that of sales and supplies of taxable goods---Both variables were completely independent to each other and as such, no functional relationship could be established---Demand of sales tax…

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