1972 (2) TMI 73 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment based on best judgment.
2. Reopening of assessment under section 12-A.
3. Disputed turnover and liability for reassessment.

Analysis:
The judgment pertains to a revision petition by an assessee under section 23(1) of the Mysore Sales Tax Act, 1957. The assessee, a restaurant owner, declared a taxable turnover for the assessment year 1966-67. The assessing authority rejected the accounts and made an assessment based on best judgment, applying a formula to compute turnover. Subsequently, the assessment was reopened under section 12-A as a turnover of Rs. 7,210 was alleged to have escaped assessment due to the supply of refreshments to N.C.C. Cadets. The assessing authority added this amount to the originally determined turnover and levied tax along with a penalty. The assessee's appeal was dismissed by the Assistant Commissioner and the Sales Tax Appellate Tribunal.

In the Tribunal, the assessee contended that since the original assessment was made on best judgment basis, the escaped turnover cannot be added. However, the Tribunal rejected this contention, stating that the disputed turnover was not included in the declared turnover and thus liable for reassessment. The High Court, in its analysis, disagreed with the Tribunal's reasoning. It noted that the original assessment was based on a formula and not due to low working expenses. Considering the turnover declared and the added amount, it was deemed that the disputed turnover did not escape assessment. Citing a relevant case law, the Court held that the reassessment under section 12-A was not justified. Consequently, the Court allowed the revision petition, set aside the reassessment order and penalty, and awarded costs to the petitioner.

In conclusion, the judgment clarifies the scope of reassessment under section 12-A in cases where the original assessment was made on a best judgment basis. It emphasizes that mere addition of turnover does not warrant reassessment if it falls within the ambit of the original assessment. The decision provides a nuanced interpretation of the law regarding escaped turnover and upholds the principle that reassessment should be based on valid grounds supported by evidence.