1963 (3) TMI 31 - HC - VAT and Sales Tax

Summary

Issues:
Compliance with natural justice in assessing sales tax under the Orissa Sales Tax Act, 1947.

Detailed Analysis:

Issue 1: Compliance with natural justice
The Sales Tax Tribunal referred a question regarding the correctness of holding that there was sufficient compliance with natural justice in the assessment of sales tax under the Orissa Sales Tax Act, 1947. The assessee-dealer, a wholesaler in grocery goods, was assessed for sales tax for four consecutive quarters. The Sales Tax Officer found that the dealer had suppressed sales to certain retailers and assessed the dealer to the best of judgment. The dealer appealed, requesting to summon the retailers for examination. The Assistant Commissioner and the Tribunal upheld the decision, leading to the reference question.

Issue 2: Legal Provisions
Section 21 of the Act grants powers to summon and examine individuals for assessment purposes. The contention arose regarding the admissibility of evidence obtained from the seized books of account of the retailers against the assessee-dealer without providing an opportunity to confront the retailers during the assessment proceedings.

Issue 3: Rival Contentions
The assessee-dealer argued that denial of the opportunity to confront the retailers amounted to a breach of natural justice. The department contended that the assessing officers were not obligated to accede to the request to examine the retailers in the presence of the assessee-dealer.

Issue 4: Precedent
Referring to the case law, the court reiterated the principle that the assessing officer must disclose the material on which an estimate is made and provide the assessee an opportunity to rebut it. The essence of private information collected should be communicated to the assessee for a fair assessment process.

Issue 5: Analysis of Proceedings
The court found that the extracts from the retailers' books of account were disclosed to the assessee-dealer, who failed to disprove the entries. The dealer did not request to confront the retailers during the assessment proceedings, indicating a lack of objection at that stage. The court concluded that there was sufficient compliance with natural justice as the dealer had the opportunity to challenge the disclosed transactions.

Conclusion
The court held that there was adequate compliance with natural justice in the assessment proceedings. The Tribunal's decision was upheld, and the reference question was answered in the affirmative. The assessee-dealer was directed to pay the costs of the reference.

*Judges: Narasimham R.L. C.J. and Baan S.RM, JJ.*