1990 (8) TMI 385 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the Tribunal was justified in relying on electricity consumption to estimate turnover of groundnut oil and oil-cake.

Analysis:
The case involved a sales tax revision petition where the assessing authority rejected the books of accounts and invoices produced by the petitioner for the assessment year 1972-1973. The authority conducted an investigation which revealed discrepancies in the purchases made by the petitioner from agriculturists. Consequently, the authority made a best judgment assessment based on the electrical energy consumed by the oil crusher at the petitioner's mill. The assessment led to the imposition of tax under the Karnataka Sales Tax Act and a penalty. The first appellate court confirmed the order, but the penalty was set aside. The petitioner then approached the Karnataka Appellate Tribunal, which upheld the first appellate authority's decision, prompting the revision petition before the High Court.

The High Court noted that the petitioner owned an oil mill with a crusher operated by electrical energy, which was not disputed. The petitioner argued that the consumption of electrical energy was not a reliable basis for estimating costs, mentioning that his brother also used electrical energy. However, the brother denied using the electricity supplied to the petitioner's mill. The Court observed that the consumption of electrical energy correlates with the output of the end-product, indicating that a higher consumption leads to increased production. The Court found no error or arbitrariness in using electrical energy consumption as a basis for estimation.

The petitioner relied on a decision of the Andhra Pradesh High Court, which ruled that the absence of tests in the petitioner's case compared to other mill owners led to arbitrary assessment. However, the High Court distinguished the present case, emphasizing that the rejection of books of accounts necessitated a best judgment assessment based on energy consumption. The Court concluded that the assessment was reasonable in the absence of contrary evidence from the petitioner. Ultimately, the High Court found no merit in the petition and dismissed it, upholding the Tribunal's decision.

In conclusion, the High Court upheld the Tribunal's decision to rely on electrical energy consumption for estimating the turnover of groundnut oil and oil-cake, emphasizing the correlation between energy consumption and production output. The Court rejected the petitioner's argument against this basis of estimation, highlighting the lack of evidence to refute the assessment method.