1995 (12) TMI 377 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of business transactions between two entities.
2. Existence of intention to evade tax.
3. Right of cross-examination in assessment proceedings.
4. Applicability of extraordinary and exceptional jurisdiction under Article 226 of the Constitution of India.

Analysis:
1. The judgment revolves around the assessment of business transactions between two entities, namely the present petitioners and M/s. Sakthi & Company. Both the assessing authority and the appellate authority conducted detailed inquiries and concluded that the two entities were not different from each other in terms of transactions and were operating from the same business place. The assessing authority noted that the transactions in question were completed by the present petitioners from the same business place under the name of M/s. Sakthi & Company, indicating an intention to evade tax.

2. The authorities considered the factual details and found that the business transactions in the name of M/s. Sakthi & Company were carried out from the business place of the present petitioners. The appellate authority also confirmed that the registration of M/s. Sakthi & Company was obtained in the petitioners' business premises, further supporting the conclusion of an attempt to evade tax through these transactions.

3. The issue of the right of cross-examination in the assessment proceedings was raised by the present petitioners. However, both the assessing authority and the appellate authority denied this right, citing the nature of the proceedings and the legal position. The authorities emphasized that the right of cross-examination is not an absolute requirement under the Kerala General Sales Tax Act or natural justice principles.

4. The judgment also addressed the potential invocation of extraordinary and exceptional jurisdiction under Article 226 of the Constitution of India. The court declined to exercise this jurisdiction, noting that the conduct of the petitioners to evade tax was clearly established by the factual findings of the two authorities. Consequently, the petition was dismissed at the admission stage based on the established record of tax evasion through the business transactions.

In conclusion, the judgment highlights the importance of factual inquiries in assessing business transactions, the implications of tax evasion intentions, the limitations on the right of cross-examination in assessment proceedings, and the threshold for invoking extraordinary jurisdiction under the Constitution of India.