1965 (7) TMI 50 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Denial of reasonable opportunity of being heard under Section 11(1) of the Bengal Finance (Sales Tax) Act, 1941.
2. Arbitrary and capricious best judgment assessment.
3. Justification of penalty imposed under Section 11(1) of the Act.

Detailed Analysis:

1. Denial of Reasonable Opportunity of Being Heard:
The appellant contended that they were denied a reasonable opportunity of being heard as required under Section 11(1) of the Act. The appellant had asked for time to produce books of account and documents, but this request was refused, leading to an assessment order that they argued was made in violation of the statute.

The court found that the Department was in possession of information indicating that the appellant had been bringing goods under false names and failed to produce complete books of account, including bank statements and railway receipt registers. Despite being given several adjournments, the appellant did not provide the necessary documents. The court concluded that there was no denial of opportunity to the appellant as they were aware of the charges and had ample opportunity to respond but failed to produce any material evidence.

2. Arbitrary and Capricious Best Judgment Assessment:
The appellant argued that the assessing authority acted arbitrarily and capriciously in imposing a tax liability of Rs. 13,700 based on surmise and conjecture. The assessment was based on the assumption that goods were brought in the same proportion throughout the year, leading to an estimated gross turnover.

The court referred to the principles laid down by the Judicial Committee and previous case law, stating that the assessment must be based on some material, even if it involves guess-work. The court found that the assessing authority had some basis for the inference drawn, such as the value of goods brought in fictitious names during certain periods. The court held that the inference was not arbitrary or capricious as it was based on available materials and the appellant's failure to provide adequate explanations.

3. Justification of Penalty Imposed:
The appellant contended that the penalty of Rs. 10,000 was not justified given the short delay of 22 days in filing the return and that the penalty was imposed without rejecting the appellant's explanations for the delay.

The court noted that the appellant did not provide any documentary evidence regarding the alleged illness of the managing partner's younger brother, which was cited as the reason for the delay. The court also observed that the appellant was a habitual defaulter in filing returns on time. The assessing authority had the power to impose a penalty if satisfied that the default was made without reasonable cause. The court found that the assessing authority acted on certain materials and that the penalty was justified given the appellant's history of defaults.

Conclusion:
The court dismissed the appeal, concluding that there was no denial of opportunity to the appellant, the best judgment assessment was not arbitrary or capricious, and the penalty imposed was justified. The judgment of the trial court was upheld, and no grounds were found for interfering with the findings of the assessing authority. Each party was ordered to pay its own costs.