1984 (1) TMI 297 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of best judgment assessment under section 12(2) in relation to turnover chargeable under section 7-A of the Tamil Nadu General Sales Tax Act.
2. Validity of estimating turnover under section 7-A for assessment purposes.
3. Applicability of section 12(2) to turnover taxable under section 7-A.
4. Consistency of Tribunal's view with the legislative intent of section 7-A.

Analysis:

1. The High Court addressed the issue of whether best judgment assessment could be applied to turnover under section 7-A. The Tribunal had held that no estimate could be made under section 12(2) for turnover under section 7-A. The Court disagreed, stating that section 12(2) applies to all charging sections, including section 7-A. The Court emphasized that the expression "turnover" in section 12 encompasses the taxable turnover under section 7-A, which is a charging section. Therefore, best judgment assessment can be made for turnover under section 7-A.

2. The Court examined the Tribunal's view on estimating turnover under section 7-A. The Tribunal had concluded that only book turnover should be considered for assessment purposes under section 7-A, rejecting the assessing authority's estimate. The Court disagreed with this approach, stating that the purpose of section 7-A is to prevent tax evasion by plugging leakages. Therefore, the Tribunal's view that no estimate can be made for turnover under section 7-A contradicts the legislative intent. The Court held that if the assessee's accounts are incorrect or incomplete, a best judgment assessment can be made under section 12(2) for turnover taxable under section 7-A.

3. The Court analyzed the applicability of section 12(2) to turnover taxable under section 7-A. It clarified that the turnover of a dealer under section 7-A is also covered by section 12, allowing for best judgment assessment if the accounts are inaccurate. The Court emphasized that section 12(1) mandates dealers to submit returns related to their turnover, and section 12(2) enables best judgment assessment in case of incomplete or incorrect returns. Therefore, the Tribunal's view that section 12 applies only to turnover under sections 3, 4, or 5 was deemed incorrect by the Court.

4. Lastly, the Court considered the consistency of the Tribunal's view with the legislative intent of section 7-A. Referring to a Supreme Court decision, the Court highlighted that section 7-A serves to prevent tax evasion and should be interpreted to achieve its purpose. The Court concluded that the Tribunal's stance on not estimating turnover under section 7-A contradicts the legislative objective. Consequently, the Court set aside the Tribunal's order and reinstated the Appellate Assistant Commissioner's decision regarding turnover taxable under section 7-A. No costs were awarded in this matter.