1967 (7) TMI 106 - HC - VAT and Sales Tax

Summary

Issues:
1. Levy of penalty on the assessee based on turnover discrepancies.
2. Interpretation of provisions under section 12(2) and 12(3) of the Act.
3. Application of best judgment in determining correct turnover.
4. Differentiation between turnovers based on estimate and actual records.
5. Jurisdiction to levy penalty under sub-section (3) of section 12.

The judgment involved an appeal by the assessee against a penalty order imposed by the Board of Revenue for discrepancies in turnover during the assessment year 1961-62. The assessee, a dealer in various goods, failed to include specific turnovers in the monthly returns, leading to scrutiny by the assessing authority. The turnovers in question included delivery charges, sales of motor parts, and firewood proceeds. The assessing authority applied best judgment to estimate the turnovers, resulting in a penalty equal to the tax due. The Appellate Assistant Commissioner reduced the penalty to Rs. 500, citing the assessee's failure as a technical offense. However, the Board of Revenue reinstated the original penalty, prompting the appeal to the High Court.

The main contention was whether the assessment fell under section 12(2) of the Act, justifying the penalty under sub-section (3). The assessee argued that the assessing authority should have considered the correct figures provided before the final assessment. The Court noted that while a final return was not filed, the assessing authority was justified in applying best judgment due to incomplete or incorrect monthly returns. The power to levy a penalty under section 12(3) was limited to cases falling within the purview of section 12(2), necessitating an estimate of turnover after necessary inquiry.

Regarding the turnovers in question, the Court differentiated between those based on estimates and actual records. The turnovers related to delivery charges and firewood proceeds were based on actual account books and did not require estimation, thus not falling under section 12(2). However, the turnover of motor parts, where best judgment was applied at the assessee's invitation, fell within section 12(2), justifying the penalty under sub-section (3). The judgment clarified that assessments could be partly under different subsections of section 12, affecting the jurisdiction to levy penalties accordingly.

Ultimately, the High Court allowed the appeal in part, dismissing it concerning the turnover of motor parts and upholding the penalty in that regard. The Court made no order as to costs due to the partial success and failure of the assessee in the appeal.