1984 (11) TMI 314 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the assessment made by the assessing authority is a "best judgment assessment" under Section 14(1) of the Andhra Pradesh General Sales Tax Act.
2. Whether the assessing authority has the power to levy penalty under Section 14(2) of the Act based on the assessment made.
3. The validity and impact of revised returns filed by the assessee.
4. The quantum of penalty levied and its justification.

Issue-Wise Detailed Analysis:

1. Best Judgment Assessment under Section 14(1):
The court examined whether the assessment made by the assessing authority could be considered a "best judgment assessment" under Section 14(1) of the Andhra Pradesh General Sales Tax Act. The court noted that the assessing authority has the power to assess to the best of his judgment if the return submitted appears incorrect or incomplete. The court referenced the Supreme Court's interpretation in State of Kerala v. C. Velukutty and State of Madras v. Jayaraj Nadar & Sons, which clarified that a best judgment assessment involves reasonable guesswork based on available material and circumstances. The court concluded that the assessment made by the assessing authority, which was based on the turnover recorded in the assessee's books of account, was indeed a best judgment assessment. The court rejected the assessee's argument that a best judgment assessment must always involve an estimate based on guesswork and not on the actual records.

2. Power to Levy Penalty under Section 14(2):
The court addressed whether the assessing authority had the power to levy a penalty under Section 14(2) of the Act. The court noted that Section 14(2) allows for the levy of a penalty when an assessment is made to the best of judgment under Section 14(1). Since the court had already established that the assessment was a best judgment assessment, it held that the assessing authority was within its rights to levy a penalty.

3. Validity and Impact of Revised Returns:
The court examined the validity and impact of the revised returns filed by the assessee for the months of April and May 1973. The court noted that there was no legal provision under the Andhra Pradesh General Sales Tax Act for filing revised returns, unlike the Income-tax Act, 1961, which explicitly allows for revised returns under Section 139(5). The court held that the revised returns filed by the assessee had no legal sanction and could not nullify the existence of the original returns. The court further stated that the filing of revised returns did not excuse the concealment of turnover in the original returns.

4. Quantum of Penalty:
The court reviewed the quantum of the penalty levied, which was initially Rs. 39,050 but was reduced to Rs. 7,180 by the Assistant Commissioner. The court noted that the penalty was reduced "taking lenient and liberal view in the context of the assessee's financial position." However, the court found this reduction unwarranted, emphasizing that the seriousness of the offence, not the financial position of the assessee, should determine the penalty. The court criticized the Assistant Commissioner's leniency but noted that the Revenue did not appeal against the reduction. The court concluded that the penalty of Rs. 7,180 was justified given the circumstances.

Conclusion:
The court dismissed the tax revision case, upholding the penalty of Rs. 7,180 levied on the assessee. The court emphasized that the assessment made was a best judgment assessment, the revised returns had no legal standing, and the penalty was justified based on the concealed turnover. The assessee was ordered to pay the Revenue's costs, with an advocate's fee of Rs. 500.