1994 (11) TMI 394 - HC - VAT and Sales Tax

Summary

Issues involved: Scope of power of assessing authority u/s 14(4) of A.P. General Sales Tax Act, 1957.

Summary:
The judgment discusses the scope of power of the assessing authority under section 14(4) of the A.P. General Sales Tax Act, 1957. The provision allows the authority to take various actions if any part of a dealer's turnover has escaped assessment or has been under-assessed. These actions include determining the turnover that has escaped assessment, assessing the correct amount of tax, assessing at the correct rate, and levying fees that may have been incorrectly calculated. Before exercising this power, the authority must issue a notice to the dealer and conduct a necessary inquiry. The purpose of this provision is to prevent tax evasion while ensuring that dealers are not harassed.

To prevent tax evasion, the Act includes provisions like the revisional power under section 20, which can be exercised by higher-ranking authorities based on the material on record. The judgment emphasizes that the assessing authority should only use the power under section 14(4) when there is fresh material justifying the revision, such as amendments in law or court judgments. Lack of diligence by the authority is not a sufficient reason to invoke this power; there must be new material outside the existing record.

The judgment rejects the argument that lack of diligence by the authority justifies invoking section 14(4). It clarifies that the authority must rely on material outside the record that came to light after the assessment, not on existing records. The Tribunal's decision to set aside the order under revision is upheld, emphasizing that the assessing authority did not consider crucial aspects during the initial assessment. Consequently, the Tribunal's decision is affirmed, and the Tax Revision Case is allowed with no costs incurred.