1974 (5) TMI 101 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Best Judgment Assessment
2. Arbitrary and Whimsical Assessment
3. Principles of Natural Justice
4. Adequate Alternative Remedy
5. Jurisdiction of High Court

Issue-wise Detailed Analysis:

1. Best Judgment Assessment:
The petitioner, a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, and the Central Sales Tax Act, 1956, was subjected to a "best judgment" assessment by the Commercial Tax Officer (C.T.O.) for the assessment year 1965-66. The C.T.O. estimated the dealer's gross turnover and taxable turnover without granting an adjournment requested by the petitioner due to spoilt account books. The assessment was made ex parte, and the petitioner contended that there was no material before the C.T.O. to arrive at the assessed figures. The petitioner argued that even in "best judgment" assessments, authorities must make a fair estimate with reference to previous returns and attendant circumstances, guided by judicial considerations and rules of justice, equity, and good conscience.

2. Arbitrary and Whimsical Assessment:
The petitioner argued that the assessment was arbitrary, whimsical, and based on no materials. The assessment did not consider previous years' assessments and was highly disproportionate without any cogent reason. The petitioner cited judicial decisions, including State of Orissa v. B.P. Singh Deo and Central Bank of India Ltd. v. Prakash Chand Jain, emphasizing that "best judgment" assessments must be based on relevant material and not on the whims of the authority.

3. Principles of Natural Justice:
The petitioner contended that the C.T.O. did not provide a reasonable opportunity of being heard, violating the principles of natural justice. The assessment was made without considering the petitioner's request for adjournment and without providing reasons for the estimated figures. The court noted that the requirement to give the dealer a reasonable opportunity of being heard is mandatory and embodies the principle of natural justice.

4. Adequate Alternative Remedy:
The court observed that the Bengal Finance (Sales Tax) Act, 1941, provides an elaborate and adequate remedy for appeal, revision, and review of any assessment order. The petitioner failed to avail of these remedies and instead approached the High Court directly. The court referred to the Supreme Court's observation in Champalal Binani v. Commissioner of Income-tax, stating that normally, a party feeling aggrieved by an action should resort to the machinery provided under the Act and not approach the High Court directly.

5. Jurisdiction of High Court:
The court held that the High Court should not entertain a petition challenging an order of the taxing authority when the aggrieved party has an adequate alternative remedy. The court emphasized that the impugned order, though erroneous, was within the jurisdiction of the taxing authority. The petitioner's failure to avail of the statutory remedies due to negligence and inaction did not warrant interference by the High Court in its constitutional writ jurisdiction.

Conclusion:
The court concluded that the petitioner failed to make out a strong case for interference by the High Court. The application was dismissed, and the rule was discharged without any order as to costs. All interim orders were vacated.