1951 (3) TMI 19 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Legality and propriety of the method adopted by the Sales Tax Officer for determining the assessee's turnover for the quarter ending 30th September, 1945.
2. Legal justification for the finding that the average sale of the assessee was Rs. 8,000 per day.

Issue-Wise Detailed Analysis:

1. Legality and Propriety of the Method Adopted by the Sales Tax Officer:

The first issue revolves around whether the Sales Tax Officer's method for determining the assessee's turnover was legal and proper. The Sales Tax Officer assessed the assessee under Section 10(2) of the Bihar Sales Tax Act, 1944, on a total taxable turnover of Rs. 5,88,000 for the quarter ending 30th September, 1945. The assessee's appeal was rejected by the Commissioner of Sales Tax and subsequently by the Board of Revenue. The High Court was asked to determine the legality of the method used by the Sales Tax Officer.

The court noted that the Sales Tax Officer had jurisdiction under Section 10(3) of the Act, given his finding that the accounts produced by the assessee were not genuine. Section 13(2)(a) and (b) of the Act allows the Commissioner to require the presence of a registered dealer or the production of evidence if not satisfied with the returns. If the dealer fails to comply, Section 13(3) permits the Commissioner to assess the tax to the best of his judgment.

The court found that the Sales Tax Officer had exercised his discretion appropriately, given that the assessee had withheld genuine books of accounts and sought time to prepare a fresh set of incorrect accounts. The court emphasized that it was not within its purview to question the adequacy of the reasons given by the Sales Tax Officer for rejecting the returns. The Sales Tax Officer's decision was also affirmed by the Commissioner and the Board of Revenue, reinforcing the conclusion that the assessment was made to the best of his judgment, as mandated by the Act.

2. Legal Justification for the Finding of Average Sales of Rs. 8,000 per Day:

The second issue concerns whether there were legal materials to justify the finding that the average sale of the assessee was Rs. 8,000 per day. The Sales Tax Officer based his estimate on several observations, including his frequent visits to the dealer's shop, the shop's location, customer traffic, and stock levels. He also considered an estimate made by the Assistant Commissioner for the previous quarters.

The court noted that the determination of the quantity of sales is a question of fact, not law. The Sales Tax Officer's estimate, made to the best of his judgment, was deemed reasonable by both the court of appeal and the court of first revision. The court highlighted that an assessment under Section 10(3) is inherently arbitrary to some extent, as it is based on inadequate material. However, if made bona fide and to the best of the officer's judgment, the assessee has no grounds for complaint.

The court also addressed an argument by the assessee regarding the lack of notice under Section 10(2) of the Act. However, this issue was not part of the questions formulated for reference by the High Court, and no statement of the case was made by the Board of Revenue on this point. The court, therefore, declined to examine this argument, noting that the High Court's jurisdiction under Section 21 of the Act is limited to the questions of law duly raised in the statement of the case.

Conclusion:

The High Court answered both questions in the affirmative, upholding the method adopted by the Sales Tax Officer and the finding of average sales of Rs. 8,000 per day. The assessee was ordered to pay the costs of the reference, with a hearing fee of Rs. 250.