1970 (3) TMI 142 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment based on unaccounted way bills.
2. Disputed tax payment for appeal.
3. Jurisdiction of the Commercial Tax Officer in determining turnover.
4. Compliance with section 14(1) of the Act in assessment.

Analysis:
1. The judgment concerns the assessment of a petitioner based on unaccounted way bills found during an inspection. The Commercial Tax Officer proposed to assess the petitioner on the turnover disclosed in the accounts plus an estimated suppression of paddy purchases based on the unaccounted way bills. The petitioner objected, stating that the turnover represented by the way bills could not be brought to account due to the absence of the clerk. However, the authorities rejected this explanation, finding suppression of accounts. The Court held that the authorities were justified in rejecting the petitioner's explanation and in determining suppression of accounts based on the unaccounted way bills.

2. The petitioner contended that even if there was suppression on specific days, it did not justify assuming suppression throughout the year. The Court noted that the Commercial Tax Officer has the authority to estimate additional turnover beyond what is represented by unaccounted way bills. However, it emphasized that the officer must make a genuine effort to estimate the actual turnover, considering all relevant factors. In this case, the assessment was deemed arbitrary as no genuine effort was made to estimate the turnover beyond adding 50% based solely on the unaccounted way bills. The Court quashed the assessment and remitted the matter for fresh disposal.

3. The jurisdiction of the Commercial Tax Officer in determining turnover was also scrutinized. Section 14(1) of the Act allows the officer to make a best judgment assessment when the return is incorrect or incomplete. The Court clarified that while the officer can estimate additional turnover based on unaccounted transactions, this must be done after a genuine enquiry considering all relevant factors. In this case, the assessment was considered arbitrary as no proper enquiry was conducted to estimate the turnover beyond what was represented by the unaccounted way bills.

4. Compliance with section 14(1) of the Act was a key aspect of the judgment. The Court emphasized that the Commercial Tax Officer must conduct a genuine enquiry, allowing the petitioner a reasonable opportunity to present relevant factors before making a best judgment assessment. In this case, the assessment was found to be arbitrary and contrary to the provisions of section 14(1) as no proper enquiry was conducted before estimating the turnover. Consequently, the orders of the Commercial Tax Officer and the Assistant Commissioner were quashed, and the matter was remitted for fresh disposal in accordance with the law.