1959 (12) TMI 30 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Validity of assessment to best judgment.
2. Disclosure of material and opportunity for hearing in assessment process.

Detailed analysis:
The petitioner, a registered dealer in cloth, challenged an order by the Sales Tax Appellate Tribunal regarding the assessment for the year 1955-56. The petitioner raised questions of law regarding the validity of the assessment to best judgment and the lack of disclosure of material and opportunity for hearing. The assessing officer conducted a provisional assessment and later proceeded with an ex parte assessment due to the petitioner's failure to submit the annual return and appear before the Sales Tax Officer despite multiple notices. The petitioner contended that the assessment was arbitrary and lacked a proper basis. The Deputy Commissioner and the Sales Tax Appellate Tribunal dismissed the appeals filed by the petitioner.

The petitioner argued that the assessment order did not disclose the basis of assessment and that no opportunity was provided to represent the turnover and tax fixed by the officer. The legal dispute revolved around the interpretation of rule 13 of the Hyderabad General Sales Tax Rules, which governs the procedure for determining turnover to the best of judgment. The petitioner relied on legal precedents emphasizing the importance of natural justice in assessment proceedings and the need for the assessing authority to provide the assessee with relevant information and an opportunity to respond.

The Court referred to previous judgments related to income tax and sales tax assessments to establish the principles of fair assessment. It highlighted the requirement for the assessing officer to base the judgment on reasonable grounds and substantial material, rather than arbitrary guesswork. The Court scrutinized the figures presented by the Sales Tax Officer and the petitioner, noting a close alignment between the gross turnover figures. However, it raised concerns about the lack of clarity regarding the basis for assessing the turnover and tax amount.

Ultimately, the Court found that the assessment suffered from a lack of disclosure of material and opportunity for the petitioner to present his case effectively. As a result, the Court concluded that the assessment to best judgment was flawed and set it aside. The Court directed a fresh assessment to be conducted in accordance with the rules. The revision petition was allowed, with costs awarded to the petitioner.