1993 (7) TMI 322 - HC - VAT and Sales Tax

Summary

Issues involved: Assessment under Kerala General Sales Tax Act, 1963 for the year 1987-88 based on discrepancies in stock, rejection of accounts and returns, appeal before Appellate Assistant Commissioner, appeal before Sales Tax Appellate Tribunal, setting aside of assessment order, and plea of estoppel based on compounding proceedings.

Assessment by Sales Tax Officer:
The petitioner, a business entity, filed returns for the assessment year 1987-88 declaring a total turnover of Rs. 4,74,985 and taxable turnover as "nil". However, discrepancies in stock were found during inspections leading to rejection of accounts. The assessing authority fixed total turnover at Rs. 8,74,639.62 and taxable turnover at Rs. 4,14,320, imposing tax and surcharge.

Appeal before Appellate Assistant Commissioner:
The Appellate Assistant Commissioner set aside the assessment order citing lack of evidence on correct stock position verification and ordered a remit for the assessee to present the case again.

Appeal before Sales Tax Appellate Tribunal:
The Tribunal overturned the Appellate Assistant Commissioner's decision, citing estoppel due to compounding of offence by the assessee and upheld the original assessment order based on discrepancies in stock and suppression.

High Court Judgement:
The High Court upheld the Tribunal's decision, emphasizing that the assessee failed to prove mistakes in inspection reports or compounding proceedings. The Court noted that the Appellate Assistant Commissioner's reliance on casual statements without proper evidence was unjustified, leading to dismissal of the revision.

Plea of Estoppel:
The Court clarified that compounding proceedings are distinct from assessment proceedings, and while relevant, they are not conclusive. The Court disagreed with a previous decision, stating that facts from compounding proceedings can be relevant but not conclusive in assessment proceedings.

In conclusion, the High Court dismissed the revision petition, affirming the Tribunal's decision based on the discrepancies in stock and the lack of evidence to discredit the inspection reports or compounding proceedings. The Court also clarified the distinction between compounding and assessment proceedings regarding the plea of estoppel.