1996 (2) TMI 492 - HC - VAT and Sales Tax

Summary

Issues:
Resort to best judgment assessment under section 41 of the Kerala General Sales Tax Act, 1963.

Analysis:
The petitioner, a dealer in diesel and petrol, approached the Kerala High Court challenging the best judgment assessment by the assessing authority under section 41 of the Kerala General Sales Tax Act, 1963. The Court emphasized that the assessing authority is the best judge of the situation, and its best judgment should be free from bias, caprice, and vindictiveness. The Court noted that some guesswork is inevitable in best judgment assessments, and the authority must act on a rational basis without any malice. If the best judgment is not arbitrary and has a reasonable nexus with the facts, it is not subject to scrutiny under the Act.

The assessing authority conducted a surprise visit to the petitioner's business premises and found discrepancies in the accounts. The authority detected unaccounted transactions of high-speed diesel and motor spirit, leading to the rejection of the petitioner's accounts and reassessment. The authority estimated the suppressed turnover for the period based on the discrepancies found during the surprise visit. The petitioner challenged the estimation before the appellate authority, arguing against the multiplier used for the estimation.

The appellate authority confirmed the findings of the assessing authority regarding the discrepancies in the accounts and the suppression of turnover. However, the appellate authority considered the petitioner's argument and reduced the estimated addition to five times the actual suppression. The Tribunal upheld the appellate authority's decision, finding no substance in the petitioner's contentions.

The High Court, while acknowledging the assessing authority's best judgment, independently examined the case and found a reasonable nexus between the facts discovered during the surprise visit and the estimation made. The Court noted the absence of bias, lack of fairness, or reasonableness in the assessment process. Considering the appellate authority's careful consideration and modification of the order, the High Court concluded that there was no error in the resort to best judgment assessment. Consequently, the tax revision case was dismissed, and the petition was rejected.