1988 (4) TMI 427 - HC - VAT and Sales Tax

Issues Involved:
1. Reassessment of turnover for the assessment year 1973-74.
2. Addition of turnover based on patties and slips provided by a third party.
3. Examination of additional evidence and opportunity for cross-examination.
4. Addition of specific amounts based on inspections and third-party information for the assessment year 1975-76.
5. Exemption claim for sales of chemical fertilizers.
6. Levy of penalty for the assessment year 1973-74.

Issue-wise Detailed Analysis:

1. Reassessment of turnover for the assessment year 1973-74:
The reassessment proceedings were initiated based on incriminating material found during a search by the Income-tax Department and additional information provided by a third party. The Commercial Tax Officer added a further turnover of Rs. 1,24,428, which was partially upheld by the Tribunal. The Tribunal confirmed the addition of Rs. 52,906.92 and reduced the assessable turnover by Rs. 29,109.70. The High Court upheld the Tribunal's finding, stating it was based on ample evidence and could not be interfered with.

2. Addition of turnover based on patties and slips provided by a third party:
The Tribunal added Rs. 52,906.92 to the turnover based on patties sent by Sri Satti Suri Reddy. The assessee contended that some transactions covered by genuine patties were duly accounted for, and the Tribunal should have remanded the matter for verification. The High Court rejected this contention, stating the Tribunal's finding was based on circumstantial evidence, including the letterheads and signatures on the patties, which matched those in the assessee's accounts.

3. Examination of additional evidence and opportunity for cross-examination:
The assessee argued that they were denied an opportunity to cross-examine Sri Satti Suri Reddy, who had died before the show cause notice was issued. The High Court held that the statement of the deceased was admissible as evidence and that the assessee had the opportunity to rebut it but failed to do so. The Court also found no violation of natural justice principles.

4. Addition of specific amounts based on inspections and third-party information for the assessment year 1975-76:
The Tribunal upheld the addition of Rs. 72,528.96, which included amounts based on an inspection and slips provided by Sri Satti Suri Reddy and the Income-tax Department. The High Court found the Tribunal's findings to be supported by evidence and rejected the assessee's contentions. The Court also upheld the addition of Rs. 14,014 based on an inspection, noting that the assessee had compounded the offence and admitted the transactions.

5. Exemption claim for sales of chemical fertilizers:
The assessee claimed exemption for Rs. 2,28,687, arguing that the Fertiliser Corporation of India (FCI) was the first seller in the State. The Tribunal found that the transactions were inter-State sales, with FCI collecting Central sales tax from the assessee. The High Court agreed, stating that the documents of title were endorsed in favor of the assessee, making them the first seller in the State.

6. Levy of penalty for the assessment year 1973-74:
The penalty was initially set at Rs. 32,485 but was reduced to Rs. 12,994 by the Assistant Commissioner and further to Rs. 4,970 by the Tribunal. The High Court upheld the penalty, stating it was justified based on the suppression of turnover found by the Tribunal.

Conclusion:
The High Court dismissed all three tax revision cases filed by the assessee, upholding the Tribunal's findings and confirming the reassessment of turnover, additions based on patties and slips, denial of exemption for chemical fertilizers, and the levy of penalty. The Court found no errors of law or violations of natural justice principles in the Tribunal's decisions.

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