1968 (7) TMI 60 - HC - VAT and Sales Tax

Summary

Issues:
1. Legality of continuous watch over premises for assessment purposes.
2. Validity of estimating turnover based on watch results.
3. Interpretation of section 14(4) of the Andhra Pradesh General Sales Tax Act.
4. Retroactive effect of the amendment to section 14(4) on completed assessments.

Analysis:
The petitioner, a hotel firm, filed a writ petition seeking a writ of prohibition against the respondent from further proceedings based on a notice estimating an escaped turnover. The petitioner argued that continuous supervision over premises for assessment is illegal and that the notice proposing assessment based on watched sales is contrary to the Act. The court held that continuous watch does not invalidate the notice under section 14(4) of the Act, which allows assessment if turnover has escaped taxation. The court cited precedent to support this view, emphasizing the legality of using watched sales for assessment purposes.

Regarding the interpretation of section 14(4) before and after amendment, the court analyzed the powers granted to authorities. The pre-amendment section limited assessments to actual escaped turnover, while the amended provision allows for best judgment assessments. The court determined that the amended section affects substantive rights by altering the quantum of turnover assessed, thus impacting the tax liability of the assessee. Citing precedents on retrospective effect, the court concluded that the amendment cannot be applied retrospectively to assessments completed before the change.

In light of the above analysis, the court found the notice proposing assessment based on best judgment computation of turnover to be illegal under the pre-amendment section 14(4). The court ruled in favor of the petitioner, allowing the writ petition with costs. The decision highlights the substantive impact of statutory amendments on vested rights and emphasizes the need for clarity in legal provisions to ensure fair assessments and protect taxpayer rights.