1986 (3) TMI 323 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Best judgment assessment under section 12 of the Rajasthan Sales Tax Act for periods prior to the amendment by Act No. 11 of 1969.
2. Imposition of penalties under section 16(1)(e) of the Rajasthan Sales Tax Act.

Detailed Analysis:

Best Judgment Assessment Under Section 12:
The primary issue was whether reassessment could be made under section 12 of the Rajasthan Sales Tax Act for the assessment years 1961-62 to 1965-66, prior to the insertion of the explanation by Act No. 11 of 1969, effective from May 2, 1969. The explanation stated: "Nothing in this section shall be deemed to prevent the assessing authority from making an assessment to the best of his judgment."

The reassessments for these years were made on December 30, 1967, before the explanation was added. The Division Bench of the Board of Revenue had previously held that best judgment reassessment was not permissible for periods before the amendment, following the larger Bench decision in State of Rajasthan v. Tarachand Gupta 1973 RRD 357. However, this view was contrary to the Supreme Court's ruling in Commissioner of Sales Tax, M.P. v. H.M. Esufali H.M. Abdulali [1973] 32 STC 77 (SC), which held that reassessment is a fresh assessment and can be made on a best judgment basis.

The High Court concluded that the larger Bench of the Board had incorrectly decided the issue and that best judgment reassessment was permissible even for periods before the amendment. The Court emphasized that the explanation added in 1969 was merely clarificatory and not a substantive change in the law.

Imposition of Penalties Under Section 16(1)(e):
The second issue was whether penalties could be imposed under section 16(1)(e) of the Act. The Deputy Commissioner (Appeals) and the Board had set aside the penalties, reasoning that best judgment reassessment was not permissible before the 1969 amendment. The High Court disagreed, stating that penalties are contingent on the determination of the escaped turnover, which can be assessed on a best judgment basis.

The Court did not make a categorical finding on the imposition of penalties, leaving it to the assessing authority to decide after conducting the best judgment assessment.

Conclusion:
1. The common order dated November 30, 1973, of the Division Bench of the Board in the special appeals under section 14(4A) of the Amendment Act was set aside.
2. The Sales Tax Tribunal was directed to dispose of the cases in accordance with the law, considering the observations made by the High Court.
3. It was left to the Sales Tax Tribunal to determine whether penalties under section 16(1)(e) should be imposed and, if so, the amount, for the assessment years 1961-62 to 1965-66.

The High Court clarified that the Sales Tax Tribunal could make a best judgment assessment for the assessment years in question, provided the conditions under section 12 were met. The parties were ordered to bear their own costs.