1993 (8) TMI 275 - HC - VAT and Sales Tax

Summary

Issues:
1. Rejection of accounts and best judgment assessments for multiple years
2. Assessment of taxable turnover based on stock variations and best judgment
3. Application of Circular No. C1.18180/90/TX in assessment proceedings

Analysis:
1. The petitioner, a jeweler, had their accounts rejected for the assessment years 1980-81, 1982-83, 1983-84, 1985-86, and 1987-88, leading to best judgment assessments by the assessing authority. The rejection was based on stock variations found during surprise inspections, indicating irregularities in maintaining accounts. The first appellate authority and Sales Tax Appellate Tribunal upheld the rejection, emphasizing the importance of accurate record-keeping. The High Court concurred, stating that even minor variations below 1% do not justify rejecting the accounts. The Tribunal's decision to reject the accounts was deemed valid, with no error of law found.

2. Following the rejection of accounts, the assessing authority estimated the taxable turnover using the multiple of running stock method, adding three times the running stock for four years and four times for one year. However, the Appellate Tribunal reviewed the evidence and reduced the estimate to two times the running stock for all years, providing relief to the petitioner. The High Court upheld the Tribunal's decision, emphasizing its authority to determine estimates based on individual case facts. The Tribunal's assessment was considered valid and not erroneous.

3. The petitioner argued the applicability of Circular No. C1.18180/90/TX, which provided guidelines for inspections at gold merchants' business places and specified tolerance levels for stock variations. However, the High Court dismissed this argument, noting that the circular was not raised before statutory authorities, applicable only to penal actions, and not in force during the assessment years. The Court highlighted that such administrative matters should be addressed to the Board of Revenue for consideration, refraining from substituting its opinion. The plea based on the circular was rejected, and the revisions were dismissed.

In conclusion, the High Court upheld the rejection of accounts and best judgment assessments, supported the Tribunal's estimation of taxable turnover, and dismissed the petitioner's reliance on Circular No. C1.18180/90/TX, emphasizing the need for administrative considerations to be directed to the appropriate authorities.