1955 (9) TMI 43 - HC - VAT and Sales Tax

Issues Involved:
1. Use of material from subsequent assessment year for current assessment.
2. Justification for the estimated addition to turnover.
3. Basis for the estimation of profit rates.
4. Compliance with procedural rules for assessment.
5. Confidentiality of information from other assessees.

Detailed Analysis:

1. Use of Material from Subsequent Assessment Year for Current Assessment:
The Commercial Tax Officer held that the Deputy Commercial Tax Officer was not justified in utilizing the material relating to 1953-54 for enhancing the turnover of 1952-53, characterizing this as both "unjust and unwarranted."

2. Justification for the Estimated Addition to Turnover:
The Deputy Commercial Tax Officer added 6.5% to the turnover for "incorrect maintenance of the accounts," which was challenged. The Commercial Tax Officer restricted this addition to the retail business only, reducing the addition from Rs. 41,340 to Rs. 31,893. The Sales Tax Appellate Tribunal further reduced this to 5%, amounting to Rs. 24,534-0-2, stating that the addition of 6.5% was difficult to support due to the lack of detailed analysis of wholesale and retail turnover.

3. Basis for the Estimation of Profit Rates:
The judgment highlighted that the estimates of profit rates by both the Deputy Commercial Tax Officer and the Appellate Tribunal were based on "mere surmise and conjecture." The Tribunal's decision to fix an addition of 5% was also questioned due to the lack of material basis. The court emphasized that the estimate of profit should be based on profits earned by similar trades, similarly situated and circumstanced, and that the assessee should be informed and given a chance to respond.

4. Compliance with Procedural Rules for Assessment:
Rule 8 of the Sales Tax Turnover and Assessment Rules requires the assessing authority to make an enquiry and determine the turnover to the best of his judgment. Rule 11(3) mandates following the procedure prescribed in rules 8 and 9 before making a final assessment. The court noted that the determination under rule 8 cannot be mere guess-work and must be based on some material. The court found that the assessing authority did not act on any material but on pure surmise.

5. Confidentiality of Information from Other Assessees:
The Government Pleader cited Rule 30 of the General Sales Tax Rules, which prohibits the disclosure of particulars furnished by other assessees. However, the court clarified that Rule 30 does not prohibit disclosing the ultimate order of assessment made on other assessees. The court stated that there is no prohibition against informing the assessee that trades similarly situated and circumstanced have been taxed on the basis of a particular percentage of profit.

Conclusion:
The court allowed the revision, set aside the order of the Tribunal, and remanded the case with directions for a fresh assessment. The Tribunal was instructed to give full opportunity to the assessee to place any relevant material, and the assessing authority was permitted to present any evidence to support their estimates. The Tribunal may remit the case to the Deputy Commercial Tax Officer for a fresh assessment if deemed necessary. The costs of the revision will abide by the result of the appeal before the Tribunal, with the advocate's fee fixed at Rs. 100.

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