1990 (7) TMI 319 - HC - VAT and Sales Tax

Summary

Issues:
1. Computation of profit at different rates for taxable goods.
2. Justification of turnover enhancement by taxing authorities.
3. Legality of bifurcation of goods for taxation at different rates.

Analysis:
1. The case involved a dealer engaged in the supply of motor parts, lubricants, batteries, nuts, and bolts, registered under the Orissa Sales Tax Act, 1947. The dealer's assessment was completed under section 12(4) of the Act to the best judgment of the Sales Tax Officer due to a delayed return submission. The Sales Tax Officer increased the turnover percentages for hardware, motor parts, and lubricants beyond the dealer's estimates. The Assistant Commissioner later reduced these percentages, leading to a second appeal by the dealer before the Tribunal. The Tribunal upheld the Assistant Commissioner's decision, prompting the dealer to seek a statement of the case in the High Court.

2. The dealer's counsel argued that the turnover enhancement lacked basis and was arbitrary, citing acceptance of 10% profit rates by the Income-tax Officer for similar dealers. However, the court held that once a dealer triggers assessment under section 12(4) due to late filing, the authorities must rely on best judgment rather than the dealer's accounts. The court emphasized that statutory liability precludes complaints about assessment methods and allows for reasonable estimations based on various factors. In this case, the enhancement was deemed reasonable given the available materials and the dealer's initial profit estimate.

3. The court addressed the issue of bifurcation for taxation purposes, noting that when assessing authorities confirmed the dealer's dealings with goods taxed at different rates, varying the enhancement percentages for different commodities was justified. The court emphasized that in a reference under section 24, appellate powers are restricted, and the court cannot alter the enhancement decision. Ultimately, the court found the enhancement and bifurcation of goods for taxation to be reasonable and ruled in favor of the taxing authorities.