1962 (6) TMI 45 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to sales tax assessment order based on arbitrary addition, reliance on secret account books, lack of opportunity for cross-examination, estimation of turnover, and failure to follow best judgment principles.

Analysis:
The writ petition challenges a sales tax assessment order for the year 1958-59, alleging arbitrariness in adding 25% towards omission without proper basis. The assessing authority relied on secret account books of a third party, leading to incomplete and incorrect accounts. The petitioner objected, stating the secret books are unreliable and raised other concerns, but the assessing authority proceeded with the assessment without clarifying how the turnover was estimated or providing an opportunity for cross-examination.

The assessing authority fixed the total turnover of the petitioner and another party, adding 25% towards omission without clear justification. The petitioner's objections, including the lack of investigation and opportunity for cross-examination, were not adequately addressed in the assessment order. The court criticized the reliance on third-party secret account books without proper verification or opportunity for the petitioner to contest the entries.

The court highlighted the assessing authority's failure to justify the 25% addition and criticized the lack of opportunity for the petitioner to present evidence or challenge the assessment properly. The assessment was deemed arbitrary and not in line with best judgment principles, as it did not consider the actual suppression amount and lacked statutory basis for the estimation method used.

Ultimately, the court set aside the assessment order, directing fresh proceedings with proper opportunities for the petitioner to present evidence and contest any reliance on third-party secret account books. The assessing authority was instructed to follow best judgment principles, provide a clear basis for the assessment, and allow objections before finalizing the assessment. The court emphasized the importance of procedural fairness and the right to a meaningful opportunity to be heard in tax assessment proceedings.