1991 (7) TMI 318 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Invocation and exercise of suo motu revision powers by the Assistant Commissioner of Sales Tax.
2. Legality and propriety of the pro rata method adopted by the Assistant Commissioner for estimating the breach of declarations in form 19.
3. Burden of proof under section 16(4) of the Gujarat Sales Tax Act, 1969.

Issue-wise Detailed Analysis:

1. Invocation and Exercise of Suo Motu Revision Powers by the Assistant Commissioner of Sales Tax:

The revisional powers are conferred upon the Commissioner of Sales Tax and the Tribunal under section 67 of the Gujarat Sales Tax Act. The Commissioner can delegate these powers to the Assistant Commissioner. The Assistant Commissioner, in this case, exercised his power under section 59 by issuing notice in form 45 to call for certain materials from the dealer. This was followed by a notice in form 49 to show cause for revising the Sales Tax Officer's order. The dealer argued that the Assistant Commissioner looked into new material not part of the assessment record. However, it was established that the material considered was the same as before the Sales Tax Officer. The Tribunal found no basis for the dealer's argument that the Assistant Commissioner wrongly invoked his revisional powers. The High Court affirmed that the revisional powers were rightly invoked and exercised by the Assistant Commissioner.

2. Legality and Propriety of the Pro Rata Method Adopted by the Assistant Commissioner:

The Assistant Commissioner adopted a pro rata method to determine the breach of declarations in form 19 for levying purchase tax. The dealer contended that the method was improper and that the production register maintained by them should be accepted. The Assistant Commissioner and the Tribunal found the production register to be notional and unreliable. The pro rata method was deemed the only reasonable method for calculating the use of goods purchased against form 19 declarations. The Tribunal relied on a similar case from the Bombay High Court (Commissioner of Sales Tax v. Berar Oil Industries), which upheld the pro rata method as a rational formula. The High Court agreed with the Tribunal's finding that the pro rata method was legal and proper.

3. Burden of Proof Under Section 16(4) of the Gujarat Sales Tax Act, 1969:

The dealer had the burden to prove that the purchase price of goods bought against form 19 declarations was not liable to be included in the turnover of purchases. The Assistant Commissioner and the Tribunal found that the dealer did not maintain credible records to prove this. The production register was found to be a figment of imagination and not reflective of actual usage. The High Court held that the dealer failed to discharge the burden of proof under section 16(4) of the Act.

Conclusion:

The High Court answered all three questions in the affirmative, in favor of the Revenue and against the assessee. The invocation and exercise of suo motu revision powers by the Assistant Commissioner were deemed proper. The pro rata method adopted for estimating the breach of declarations in form 19 was upheld as legal and proper. The dealer failed to discharge the burden of proof under section 16(4) of the Gujarat Sales Tax Act, 1969. The reference was answered accordingly, with no order as to costs.