2005 (7) TMI 625 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Reassessment of tax under section 18(1) of the Assam General Sales Tax Act, 1993.
2. Validity of reopening the assessment based on the report by the Accountant-General (Audit).
3. Determination of sale price and turnover for tax purposes.
4. Compliance with the statutory provisions and procedural requirements.
5. Jurisdiction and legality of the reassessment orders.

Issue-wise Detailed Analysis:

1. Reassessment of Tax under Section 18(1):
The common grievance in the writ petitions relates to the reassessment of tax under section 18(1) of the Assam General Sales Tax Act, 1993, due to the claimed escapement of turnover for the assessment year 1994-95. The petitioners argued that the reassessment was unwarranted as they had duly submitted their returns, and the original assessments were completed after verification of their books of accounts and relevant records. The reassessment was based on a report by the Accountant-General (Audit), which alleged that the sale price of onion shown in the assessment order was lower than the prevailing market price.

2. Validity of Reopening the Assessment:
The petitioners contended that the reopening of assessments was illegal and arbitrary, as it was based on an audit objection without any independent enquiry or corroborative evidence. The audit report relied on data from the Deputy Director of Agriculture and the Chambers of Commerce, which were not specific to the petitioners' transactions. The petitioners argued that the essential precondition for exercising power under section 18, i.e., tangible material indicating escapement of turnover, was absent.

3. Determination of Sale Price and Turnover:
The petitioners argued that the sale price of onion is influenced by various factors such as quality, size, moisture content, and market demand. They contended that the retail price cannot be taken as the basis for the average wholesale price. The report of the Accountant-General (Audit) was based on general surveys and not on actual transactions. The petitioners maintained that their transactions were supported by books of accounts and relevant records, and the average market price could not be used to presume escapement of turnover.

4. Compliance with Statutory Provisions and Procedural Requirements:
The court examined the relevant provisions of the Act and the Rules. Section 18 empowers the assessing officer to reassess tax if there is reason to believe that turnover has escaped assessment. The court noted that the original assessments were thorough, with the assessing officer verifying the books of accounts and being satisfied with the particulars furnished by the petitioners. The reassessment orders were based on the wholesale average minimum price, which the court found to be an incorrect method for determining the actual sales turnover.

5. Jurisdiction and Legality of the Reassessment Orders:
The court held that the reassessment orders lacked a rational connection between the average wholesale market price and the petitioners' actual sale transactions. The respondent authorities failed to justify the reassessment, and the orders were found to be vitiated by an incurable illegality. The court set aside the impugned reassessment orders and the orders of the statutory appellate authorities, concluding that they were in contravention of the Act and the Rules.

Conclusion:
The petitions were allowed, and the reassessment orders, as well as the orders of the statutory appellate authorities, were quashed for being unsustainable in law. The court emphasized that the reassessment process must strictly adhere to the statutory requirements and be based on concrete evidence rather than presumptive figures.