1989 (8) TMI 312 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Reasonable opportunity to adduce evidence.
2. Justification of turnover estimation without material evidence.

Summary:

Issue 1: Reasonable Opportunity to Adduce Evidence
The petitioner, a registered dealer under the Tripura Sales Tax Act, 1976, submitted returns for the years ending March 31, 1980, and March 31, 1981. The Superintendent of Taxes issued notices u/s 9(2) of the Act, requiring the petitioner to produce accounts and documents. The petitioner requested additional time to furnish certain statements due to the complexity of assessments for four years being taken up simultaneously. This request was denied, and the Superintendent rejected the returns, noting defects in the accounts and construing the petitioner's failure to furnish information as a "tendency of evasion of taxes." The Court held that the petitioner was denied reasonable opportunity to adduce evidence, which is a violation of the principles of natural justice.

Issue 2: Justification of Turnover Estimation Without Material Evidence
The Superintendent of Taxes estimated the petitioner's turnover for the years ending March 31, 1980, and March 31, 1981, at Rs. 2,00,000 and Rs. 1,50,000 respectively, "to the best of his judgment" without providing any material evidence to justify these figures. The Court emphasized that an assessment must be based on some evidence or material on record and cannot be arbitrary or based on pure guesswork. The assessment orders were found to be based on surmises and conjectures, lacking any reference to evidence or material, thus violating the legal requirement for a well-grounded estimate.

Legal Principles:
- The assessing officer must observe principles of natural justice, including providing a reasonable opportunity to the assessee to present evidence.
- Assessments must be based on some evidence or material and not on mere suspicion or guesswork.
- The rule of audi alteram partem requires that no person should be condemned unheard, and the assessee must be given an opportunity to meet the case made out against them.
- The assessment order must disclose the reasons for rejecting the return and the basis on which the assessment is made.

Conclusion:
The Court set aside the orders of assessment for the years ending March 31, 1980, and March 31, 1981, due to the denial of reasonable opportunity to the petitioner and the arbitrary nature of the turnover estimation. Both writ petitions were allowed with no order as to costs.