1972 (6) TMI 67 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge of best judgment assessments on the grounds of incorrect basis and non-voluntary statements.
2. Assessment under section 12(2) vs. section 16 and validity of the assessment orders.
3. Justification of penalty imposition without a finding of wilful non-disclosure.

Analysis:

1. The petitioner, a salt dealer, failed to submit returns for 1962-63 and 1963-64 under the Madras General Sales Tax Act. Following a surprise inspection, slips and pocket-note books related to transactions other than salt were found. The assessing officer estimated turnover based on these findings, leading to best judgment assessments and penalty imposition. The petitioner disputed the assessments, claiming the transactions were not related to their business. However, the court upheld the assessments, stating that the recovered materials were linked to the petitioner's business, rejecting claims of non-voluntary statements and lack of merit in the assessments.

2. The petitioner argued that assessments under section 12(2) were improper, citing a Supreme Court decision that assessments for non-submitted returns should fall under section 16. The court acknowledged the error in referencing section 12(2) but clarified that the power to assess under sections 12 and 16 is essentially the same, except for time limitations and penalty considerations. The court deemed the assessments valid under section 16 despite being labeled under section 12(2), emphasizing that the substance of the assessment matters more than the form.

3. Regarding the penalty imposition, the petitioner contended that no finding of wilful non-disclosure was present, which is essential for justifying penalties under section 16. Citing precedents, the court agreed that a finding of non-disclosure is crucial for penalty imposition. As the assessing officer failed to provide such a finding, the court set aside the penalty orders while upholding the assessment orders. The court partially allowed the petitions, setting aside penalties but maintaining the assessments.