1987 (5) TMI 360 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the enhancement of the gross turnover by Rs. 1,50,000 was arbitrary, perverse, and without material?

Analysis:
The case involved a reference under section 33(2) of the Bihar Sales Tax Act, 1959, regarding the arbitrary enhancement of the gross turnover by Rs. 1,50,000. The Sales Tax Officer added this amount to the turnover returned by the assessee based on an inspection where two bags of maize and one bag of gram were found without a cash memo. The Assistant Superintendent's report mentioned the details of the inspection, including the explanation provided by the assessee that the sale was not completed, hence no cash memo was issued at that time. The Sales Tax Officer concluded that the assessee engaged in clandestine business and increased the turnover by Rs. 2,00,000. The appellate authority reduced the enhancement to Rs. 1,50,000, which was further challenged by the assessee, leading to a reference to the High Court.

Upon examination, the High Court found that the enhancement was unjustified. The Court emphasized that the mere absence of a cash memo at the time of inspection did not indicate any wrongdoing. The Court highlighted that the Assistant Superintendent did not doubt the correctness of the assessee's explanation and that the delay in issuing a cash memo after weighment was not uncommon in business practices. The Court concluded that the purza, which formed the basis of the enhancement, was insufficient evidence, especially when the assessing officer did not question the assessee's version. The Court held that there was no other material to support the enhancement, deeming it arbitrary, perverse, and lacking substance.

In the absence of concrete evidence supporting the enhancement, the High Court ruled in favor of the assessee, holding that the enhancement of the gross turnover by Rs. 1,50,000 was unwarranted. The Court directed the Revenue to pay costs to the assessee and ordered the transmission of the judgment to the Commercial Taxes Tribunal, Patna. The reference was answered in the affirmative in favor of the assessee.