1986 (12) TMI 361 - HC - VAT and Sales Tax

Summary

Issues:
- Reduction of assessment by Sales Tax Tribunal instead of remanding the case for further examination of seized accounts and cross-examination of witnesses.

Detailed Analysis:
1. The case involved a reference under section 24(1) of the Orissa Sales Tax Act, 1947, regarding the correctness of the Sales Tax Tribunal's decision to reduce the assessment to the returned figures without remanding the case for allowing the opponent to cross-examine witnesses or examine seized accounts.

2. The assessment was completed under section 12(4) of the Act due to the dealer's failure to furnish returns on time, with the assessing officer relying on suppression of purchases and sales based on a report by the Commercial Tax Officer. The dealer requested to examine seized accounts, which was not granted, leading to rejection of the books of accounts and an enhancement of turnover by 5% of the returned figure.

3. The Tribunal allowed the appeal and reduced the turnover to the returned figures, citing a lack of opportunity for the dealer to examine seized accounts as a violation of natural justice. However, the High Court highlighted the distinction between assessment based on accounts and assessment to the best of judgment, emphasizing the burden on the dealer to prove assertions regarding transactions.

4. The judgment emphasized that assessment to the best of judgment involves some estimation, which may include overestimates or underestimates. In this case, the estimation was based on the reputation of the dealer and the length of business period, with a 5% increase in turnover deemed reasonable. The Court found no arbitrariness or capriciousness in the assessing officer's judgment.

5. Ultimately, the Court ruled in favor of the department, stating that the Tribunal erred in reducing the assessment without sufficient grounds. The Member of the Sales Tax Tribunal could have estimated the turnover based on available materials, making remand unnecessary for further cross-examination or examination of seized accounts. The reference was answered in the negative, with no costs awarded.

6. The judgment was delivered by two judges, with both concurring on the decision to reject the reference and uphold the department's assessment. The legal principles of natural justice, burden of proof, and the assessing officer's discretion in best judgment assessment were crucial in determining the outcome of the case.