1988 (7) TMI 392 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the appellate authority's power to set aside the assessment.
2. Justification for setting aside the assessment based on specific grounds.
3. Examination of the Sales Tax Tribunal's decision to sustain the remand order.
4. Adequacy of the evidence on record to decide the appeal without further investigation.

Issue-wise Detailed Analysis:

1. Validity of the appellate authority's power to set aside the assessment:
The power of the appellate authority to set aside an assessment is not in dispute. The Sales Tax Tribunal, Saharanpur Bench, confirmed the order of the Assistant Commissioner (Judicial), Sales Tax, which set aside the assessment order for the assessment year 1980-81 and directed a de novo assessment by the Sales Tax Officer. The Tribunal referenced various case laws on the scope of remand and the power of the Assistant Commissioner under section 9 of the U.P. Sales Tax Act, 1948. Section 9(3) of the Act confers broad powers on the appellate authority, including the ability to make further inquiries and call for reports from the Sales Tax Officer. The appellate authority can also vary the assessment order by reducing or enhancing the assessment amount.

2. Justification for setting aside the assessment based on specific grounds:
The Assistant Commissioner (Judicial) set aside the assessment due to several points requiring further investigation:
- Non-production of account books during the survey on 14th February 1981: The account books were not produced before the Surveying Officer, warranting their rejection.
- Discrepancy in the operational period of the brick-kiln: The operational period shown by the assessee did not match the findings of the survey dated 23rd March 1981.
- Production of bricks based on fuel consumption: The production shown by the assessee was not consistent with the fuel consumed.
- Average selling rate of bricks: The average selling rate according to cash memos and bills was higher than the rate adopted by the Sales Tax Officer.
- Non-consideration of opening stock in determining turnover: The opening stock of bricks was not considered in the assessment.

3. Examination of the Sales Tax Tribunal's decision to sustain the remand order:
The Sales Tax Tribunal upheld the remand order, observing that the Assistant Commissioner (Judicial) provided another opportunity for the assessee to explain its case before the assessing authority. The Tribunal noted that the Assistant Commissioner could have issued a show cause notice but chose to remand the case to allow the assessing authority to make further inquiries. However, the Tribunal's decision was scrutinized for whether the remand was justified based on the findings recorded by the Assistant Commissioner.

4. Adequacy of the evidence on record to decide the appeal without further investigation:
The High Court found that the remand was not justified on several grounds:
- Rejection of account books: The account books were already rejected by the Sales Tax Officer, so no further investigation was necessary.
- Production of bricks: The Sales Tax Officer had already estimated the production of bricks based on fuel consumption, making further investigation redundant.
- Operational period: The operational period shown by the assessee was discarded by the Sales Tax Officer, negating the need for further inquiry.
- Selling rate and opening stock: The average selling rate and opening stock did not require further investigation as they were already on record.

The High Court emphasized that the appellate authority's power to remand should be exercised judiciously and not arbitrarily. The remand should only be ordered if the evidence on record is insufficient to decide the appeal without further investigation. The High Court concluded that the appellate authorities exceeded their jurisdiction in making the remand order and directed the Sales Tax Tribunal to pass an order as required under section 11(8) of the Act. The revision was allowed with costs, and the petition was granted.