1985 (1) TMI 293 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the assessment order under the U.P. Sales Tax Act for the assessment year 1981-82.
2. Consideration of legal questions raised by the assessee before the Tribunal and the Assistant Commissioner (Judicial).
3. Non-issuance of notice by the assessing authority before determining the turnover for best judgment assessment.
4. Compliance with rule 41(7), proviso (2) regarding the issuance of a show cause notice.

Detailed Analysis:
1. The judgment pertains to a revision filed by the assessee under section 11(1) of the U.P. Sales Tax Act against the order passed by the Sales Tax Tribunal for the assessment year 1981-82. The assessee, engaged in the business of bhang as a licensed dealer, contested the enhanced turnover determined by the Sales Tax Officer, which led to the imposition of additional sales tax. The Assistant Commissioner (Judicial) upheld the assessing authority's decision, prompting the assessee to appeal to the Sales Tax Tribunal, resulting in a reduction of the turnover. Subsequently, the assessee approached the High Court through the revision challenging the Tribunal's order.

2. The legal counsel for the assessee argued that a crucial legal question raised before the Tribunal and the Assistant Commissioner (Judicial) was not adequately addressed. The contention highlighted the failure to consider the ground of appeal related to the non-issuance of a mandatory show cause notice before rejecting the disclosed turnover. The counsel specifically referred to rule 41(7), proviso (2), which necessitates the assessing authority to serve a notice on the dealer explaining the reasons for non-acceptance of the turnover before resorting to best judgment assessment.

3. The judgment emphasized the mandatory nature of rule 41(7), proviso (2), requiring the assessing authority to issue a show cause notice to the dealer if the disclosed turnover is deemed unacceptable. The absence of such notice in the instant case was deemed as vitiating the best judgment assessment. The failure to provide the dealer with reasons for non-acceptance of turnover before passing the assessment order was considered a violation of the procedural requirement, rendering the assessment order unsustainable.

4. Consequently, the High Court allowed the revision, quashed the orders of the lower authorities, and directed the matter to be remanded to the Sales Tax Officer for a fresh assessment. The court instructed the Sales Tax Officer to comply with the provisions of rule 41(7), proviso (2) by issuing a show cause notice to the assessee before determining the turnover for the assessment year. The judgment highlighted the importance of procedural fairness and adherence to statutory requirements in conducting tax assessments under the U.P. Sales Tax Act.