1987 (1) TMI 460 - HC - VAT and Sales Tax

Summary

Issues:
1. Rejection of account books based on survey findings and lack of medical evidence.
2. Classification of "jharu" as a taxable item under sales tax law.

Analysis:

The judgment involves a revision against an order passed by the Sales Tax Tribunal regarding the rejection of account books during the assessment year 1981-82. The Sales Tax Officer rejected the book version of the turnover based on adverse survey findings and made a best judgment assessment, which was affirmed by both the authorities below. The appellant challenged this decision, arguing that the Tribunal erred in affirming the rejection of accounts. The Tribunal disbelieved the explanation provided by the assessee regarding illness as no medical certificate or affidavit was submitted to support the claim of inability to update the records. Another ground for rejecting the account books was the absence of transactions related to ex-U.P. chatai in the business records. The High Court found no error of law in the Tribunal's decision to reject the account books based on these grounds.

Regarding the classification of "jharu" for tax purposes, the dealer contended that jharu, composed of "seenk," should be considered a classified item under a specific notification. The Sales Tax Officer and appellate authorities treated jharus as unclassified items, leading to a tax liability. The High Court analyzed the relevant notification and opined that if loose seenk is bundled as jharu, it should still be considered "seenk" and covered by the notification. The Court found an error in the Tribunal's classification of jharus as unclassified items and directed a reevaluation of the taxability of jharu. The Court instructed the Tribunal to consider the nature of jharus sold by the dealer, such as whether they are made only of seenks, in determining their classification for tax purposes.

In conclusion, the High Court partially allowed the revision, upholding the rejection of the book version of turnover but directing the Tribunal to reassess the taxability of jharu based on the observations made. The Tribunal was instructed to consider cash memos and other relevant materials in the reassessment process.