1966 (7) TMI 62 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax based on best judgment assessment under section 11(4) of the C.P. and Berar Sales Tax Act, 1947.
2. Disallowance of deduction claimed for exported goods.
3. Imposition of penalties under section 10 of the Act.

Detailed Analysis:

1. The petitions before the Bombay High Court arose from assessments made under the C.P. and Berar Sales Tax Act, 1947, concerning a merchant dealing in bidi leaves. The Sales Tax Officer conducted best judgment assessments due to the petitioner's failure to maintain proper account books. In each petition, the Sales Tax Officer increased the sales turnover by 10% under section 11(4) of the Act. The petitioner claimed to have exported goods outside the State, supported by railway receipts, but the Sales Tax Officer only allowed deductions for a portion of the claimed exports. Penalties were imposed for failure to furnish returns on time.

2. The petitioner contended that deductions should be allowed for the added sales under section 11(4) as if the goods were exported. However, the court held that deductions under section 27-A are not automatic and must be substantiated by proof of export. The Sales Tax Officer's judgment indicated that deductions were allowed only when actual export of goods was proven. In cases where exports were not established, the presumption was that sales exceeding the value of exported goods occurred within the State. The court emphasized the need for actual proof of exports to claim deductions.

3. Regarding the imposition of penalties under section 10 of the Act, the petitioner argued that penalties should be reduced proportionately to the tax amount after the High Court's judgment exempting certain sales from tax. The court clarified that penalties could not exceed 1/4th of the tax leviable. Therefore, if the tax amount was reduced, penalties exceeding this limit could not be charged. The court modified the penalty orders accordingly, ensuring compliance with the statutory provisions.

In conclusion, the Bombay High Court dismissed the petitions, upholding the Sales Tax Officer's assessments and penalties while making modifications to ensure compliance with the law. The court emphasized the requirement for proper substantiation of export claims to avail deductions and clarified the limitations on penalty imposition under the relevant statutory provisions.