1969 (11) TMI 84 - HC - VAT and Sales Tax

Summary

Issues:
1. Rejection of accounts and estimation of turnover by the assessing authority.
2. Different methods adopted for arriving at turnover for different years.
3. Inclusion of sales of live-stock and cow-dung in the turnover.

Analysis:
1. The case involved three tax revision cases concerning the assessment years 1962-63, 1963-64, and 1964-65, filed by the same assessee against a consolidated order of the Sales Tax Appellate Tribunal. The assessing authority rejected the accounts maintained by the petitioner due to various defects and determined the turnover to the best of his judgment. The Appellate Assistant Commissioner upheld the rejection of accounts but granted some relief by estimating the turnover based on average monthly sales. The Sales Tax Appellate Tribunal modified the turnover estimation but confirmed the assessment orders for two years and directed a re-computation for the third year based on earlier observations.

2. The assessee's counsel acknowledged the correctness of the rejection of accounts but contested the different methods used by the assessing authority to arrive at turnover for each year. The counsel argued that the basis for estimation was incorrect and arbitrary. However, the court found that the method adopted by the assessing authority and the Appellate Tribunal was consistent with similar cases and not arbitrary. The court cited a precedent where fixing turnover at five times working expenses was deemed acceptable. Therefore, the court upheld the method adopted by the Tribunal for turnover estimation.

3. The petitioner's counsel challenged the inclusion of sales of live-stock and cow-dung in the turnover, arguing that these were not part of the petitioner's business activities but incidental to the hotel business's milk requirements. Relying on a Supreme Court decision, the court held that unless a person is conducting business in a specific commodity, the turnover related to that commodity cannot be subject to sales tax. As the petitioner was not in the business of dealing with live-stock or cow-dung, the court directed the exclusion of these sales from the assessable turnover for all three years.

In conclusion, the revision petitions were partly allowed, directing the exclusion of sales related to live-stock and cow-dung from the assessable turnover. No costs were awarded in the circumstances.