1975 (3) TMI 128 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Stage of recovery of tax under the Central Sales Tax Act when the monthly return is not accompanied by a challan or cheque for the admitted tax.
2. Authority of the assessing officer to make a best of judgment assessment under the Central Sales Tax Rules.
3. Requirement of giving an opportunity to the dealer before making a best of judgment assessment.

Issue-wise Detailed Analysis:

1. Stage of Recovery of Tax under the Central Sales Tax Act:

The central question was whether the tax recovery process under the Central Sales Tax Act could proceed when the monthly return filed by the dealer was not accompanied by a challan or a cheque for the admitted tax. The court examined Rule 14-A(1) of the Central Sales Tax (Andhra Pradesh) Rules, which mandates that monthly returns must be accompanied by a receipt from a Government treasury or a crossed cheque in favor of the assessing authority for the full amount of tax payable for the relevant month. The court noted that the Commercial Tax Officer issued a demand notice for the payment of the tax, which was challenged by the petitioner.

2. Authority of the Assessing Officer to Make a Best of Judgment Assessment:

The petitioner argued that the Central Sales Tax Rules did not provide for a best of judgment assessment in cases where the turnover disclosed in the return was not disputed but the return was not accompanied by proof of payment. The court compared the provisions of the A.P. General Sales Tax Rules and the Central Sales Tax Rules, noting that while both required monthly returns to be accompanied by payment proof, the A.P. Rules explicitly allowed for a best of judgment assessment in such cases. The court concluded that under Rule 14-A(4) of the Central Sales Tax Rules, the assessing authority could make a best of judgment assessment when the return was incomplete, including when it lacked proof of payment.

3. Requirement of Giving an Opportunity to the Dealer:

The court upheld the petitioner's contention that the assessing authority must provide an opportunity to the dealer before making a best of judgment assessment. Rule 14-A(4) of the Central Sales Tax Rules requires the assessing authority to give the dealer an opportunity to prove the correctness and completeness of the return before determining the turnover to the best of his judgment. The court emphasized that failure to provide such an opportunity would violate the principles of natural justice and render the assessment illegal. The court rejected the government's argument that demanding admitted tax without notice would not prejudice the dealer, stating that statutory requirements for notice must be followed.

Conclusion:

The court quashed the impugned notices due to the failure to provide the petitioner with an opportunity to contest the provisional assessment. The writ petitions were allowed, and the court clarified that this decision did not preclude the respondent from issuing a proper notice and giving the dealer an opportunity before making a best of judgment assessment, provided such assessment was not otherwise barred by law. The petitions were allowed without costs, and an advocate's fee of Rs. 100 was awarded in each case.