1966 (8) TMI 50 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Scope of Section 16 of the Madras General Sales Tax Act, 1959.
2. Power to assess by best judgment under Section 16.
3. Validity of the Assessing Authority's orders based on best judgment assessment.

Detailed Analysis:

Scope of Section 16 of the Madras General Sales Tax Act, 1959
The primary issue in these writ appeals is whether Section 16 of the Madras General Sales Tax Act, 1959, includes the power to assess escaped turnover by best judgment. The appellant was assessed to sales tax for the years 1961-62 and 1962-63, and subsequent inspections led to the discovery of slips indicating unaccounted turnovers. The Assessing Authority issued notices and brought additional turnovers to tax based on best judgment.

Power to Assess by Best Judgment under Section 16
The main contention revolves around whether Section 16 implicitly includes the power to assess by best judgment. The court noted that Section 16 does not expressly provide for such power, unlike Sections 12 and 13 of the same Act, which explicitly confer the power to assess by best judgment. The court referred to previous judgments, including D. Sreenivasappa v. State of Madras and State of Andhra Pradesh v. Ravuri Narasimloo, which had conflicting views on this matter. The court emphasized that the legislative history and the explicit language used in Sections 12 and 13, as opposed to Section 16, suggest that the power to assess by best judgment is not implicitly included in Section 16.

Validity of the Assessing Authority's Orders Based on Best Judgment Assessment
The court scrutinized the method used by the Assessing Authority to determine the escaped turnovers. For the year 1961-62, the turnover was determined by multiplying an average rate by a serial number found on one of the slips. For 1962-63, the assessment was based on a proportionate calculation from a single day's suppression. The court found that the Assessing Authority's orders were based on the assumption that it had the power to assess by best judgment, which was not supported by Section 16.

The court held that Section 16(1) does not include the power to assess by best judgment, and the Assessing Authority's orders were quashed. The court allowed the writ appeals with costs, directing the Assessing Authority to proceed further under Section 16 in light of this judgment.

Conclusion
The judgment clarifies that Section 16 of the Madras General Sales Tax Act, 1959, does not implicitly include the power to assess escaped turnover by best judgment. The court quashed the Assessing Authority's orders based on this interpretation and allowed the writ appeals. The Assessing Authority is directed to reassess the escaped turnovers without relying on best judgment assessment.