1994 (7) TMI 326 - HC - VAT and Sales Tax

Summary

Issues:
- Application under section 44(2) of the Madhya Pradesh General Sales Tax Act, 1958 seeking direction to the Board of Revenue to state the case and refer questions of law to the High Court.
- Dispute regarding turnover not accounted for in books of accounts.
- Validity of best judgment assessment by Sales Tax Officer.
- Imposition of penalty under section 17(3) and rule 69A.

Analysis:

1. The application was filed by the assessee under section 44(2) of the Madhya Pradesh General Sales Tax Act, 1958, requesting the Board of Revenue to refer questions of law to the High Court. The main issues raised were related to the turnover not accounted for in the books of accounts, the validity of the best judgment assessment made by the Sales Tax Officer, and the imposition of penalties under section 17(3) and rule 69A.

2. The accounting year in question was from Diwali 1977 to Diwali 1978, during which the petitioner, a manufacturer and seller of pulses, conducted sales through brokers. The Sales Tax Department conducted a raid and found vouchers showing payment of brokerage amount not reflected in the accounts. The Sales Tax Officer added Rs. 1,80,000 to the total turnover based on the alleged suppression of transactions. The petitioner's appeals were dismissed, leading to the application seeking reference to the High Court.

3. The petitioner's explanation that the unaccounted transactions did not go through due to cancelled contracts was not accepted by the authorities. The petitioner argued that the best judgment assessment lacked a rational basis, citing a Supreme Court decision in Esufali's case where a similar issue was discussed.

4. The learned counsel for the petitioner contended that the Sales Tax Officer's assessment was arbitrary, considering the value of unaccounted transactions in the preceding period. Referring to the Esufali case, it was argued that the assessing authority must base its judgment on relevant information and circumstances, even if it leads to an estimate without concrete proof.

5. The Court analyzed the facts in light of the Esufali case principles and concluded that the Sales Tax Officer's judgment was based on a relevant basis. The burden was on the assessee to demonstrate that the transactions during the remaining period were not similar to those covered by the brokerage vouchers. The Court found no legal question for consideration and dismissed the application without costs, upholding the Sales Tax Officer's assessment.

6. In conclusion, the Court dismissed the application, emphasizing the relevance of the basis adopted by the Sales Tax Officer in making the best judgment assessment. The decision highlighted the importance of providing truthful information to the assessing authority and upheld the authority's right to estimate turnover based on available facts and circumstances.