1992 (1) TMI 326 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether maintaining an annual account of stock of goods purchased and sold by a registered dealer as per section 15(2) of the Orissa Sales Tax Act, 1947 is mandatory?
2. Whether the assessing officer can resort to best judgment assessment and enhance turnover in the absence of stock account?

Analysis:
1. The case involved a registered dealer who did not produce an annual account of stock of goods purchased and sold, leading to a best judgment assessment by the assessing officer. The Assistant Commissioner held that rejection of books of accounts for non-maintenance of stock account was unjustified if the correctness of accounts could be verified from other documents. The Tribunal also supported this view, emphasizing that no suppression was detected. The Revenue challenged this decision, leading to the reference of two questions to the High Court.

2. The High Court analyzed the provisions of section 15 of the Act, emphasizing the importance of maintaining true and correct books of accounts for tax assessment purposes. It clarified that non-maintenance of the annual stock account alone cannot justify rejecting the books of accounts or returned turnovers. The Court highlighted that the assessing officer must provide positive evidence to show that the accounts do not reflect the true position of goods bought and sold. In this case, both the Assistant Commissioner and the Tribunal had found that the accounts were maintained in the ordinary course of business and were verifiable, with no evidence of suppression.

3. The Court concluded that the question of whether the books of accounts are true and correct is a factual determination. It held that the non-maintenance of the annual stock account, in this case, did not warrant a conclusion that the books of accounts were inaccurate. Therefore, the High Court disposed of the reference, stating that no question of law arose from the Tribunal's order. The judgment highlighted the importance of factual findings in assessing the correctness of books of accounts for tax purposes.

This judgment clarifies the mandatory requirements for maintaining stock accounts under the Orissa Sales Tax Act and emphasizes the need for assessing officers to provide concrete evidence before rejecting books of accounts based on non-maintenance of specific records.