1962 (4) TMI 80 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the orders of assessment of Sales Tax Authorities and levy of penalties.
2. Reliability of accounts maintained by the petitioner for two businesses.
3. Justification of best judgment assessment by Sales Tax Authorities.
4. Assessment based on loss of account books due to a flood.
5. Validity of penalties imposed by Sales Tax Officer without proper approval.

Detailed Analysis:
1. The petitioner challenged the orders of assessment by Sales Tax Authorities and the imposition of penalties in two petitions. The assessment period for each petition varied, and the petitioner maintained accounts from Diwali to Diwali for both businesses, a lime works at Rajur and a manganese ore business at Nagpur.

2. The Sales Tax Officer found inaccuracies in the petitioner's accounts for both businesses, leading to an assessment based on a gross turnover of Rs. 1,20,000. The Assistant Commissioner of Sales Tax confirmed these findings, leading to a second appeal that was dismissed. The petitioner contended that the revisional authority incorrectly stated that the accounts for the manganese business were properly maintained, which was not the case as per earlier findings. The court held that if accounts were not correctly maintained, a best judgment assessment under the Sales Tax Act was justified.

3. For the second year of assessment, the petitioner claimed loss of account books in a flood at Rajur, which the Sales Tax Authorities did not believe. The court found that without the accounts, a best judgment assessment was justified under the Act. The court referenced a Supreme Court judgment on making fair estimates in assessments based on available evidence.

4. The court addressed the argument of arbitrary or capricious assessment by the authorities, noting that the assessment must be based on evidence and material, not mere suspicion. The court found that the authorities had provided reasons for their assessment based on discussions of figures and account books, leading to a fair estimate of the turnover.

5. The issue of penalties imposed by the Sales Tax Officer without proper approval was raised. The court held that the essential condition for imposing penalties under the Sales Tax Act was not fulfilled as the approval was given by the Assistant Commissioner, not the Commissioner, contravening the Act. The court set aside the penalties but upheld the rest of the orders of the authorities. The petitions were partly allowed with no costs imposed.