2008 (1) TMI 832 - HC - VAT and Sales Tax

Whether on the facts and in the circumstances of the case the Tribunal for A/Y 1981-82/ 1980-81 is legally justified in confirming the estimate of the taxable turnover at 3, 10, 250 / 2, 46, 400 relating to bricks coal and sand? Whether there is any material to hold that the applicant has done any activity of Pathai Bharai sale of bricks during the year under consideration? Whether the estimate of the firing period at 68 days and production at 11, 40, 000 bricks are based on any material and are legally correct? Whether the estimate of the average selling rate at 225/Rs. 160 per thousand bricks is based on any material while in a number of kilns much less selling rate has been estimated inasmuch as the applicant s kiln is situated in a village? Held that - The order for assessment for the assessment year 1980-81 is based purely on assumption and on surveys not relevant to the assessment year. Thus the assessment for the assessment year 1980-81 cannot be sustained and the revision deserves to be allowed on the question No. (ii). It is accordingly set aside and the dealer is held to be not liable to pay any tax for the said year. Tax if any deposited may be refunded. For the assessment year 1981-82 the assessment has been made after rejecting the account books on the ground that the dealer had declared that he closed the brick kiln with effect from May 1 1981 for which intimation was given after about a year in March 1982. The brick kiln was found to be functional on April 15 1981 at the time of survey and the closure aspect having been found to be bogus account books have been rightly rejected. Further at the time of survey sufficient quantity of coal was also found along with manufactured bricks and the work of Pathai and Bharai were also found to be going on and therefore the finding recorded is based upon survey report and disbelieving the stand taken by the dealer appears to be correct and does not call for any interference in revisional jurisdiction. Thus the revision with regard to assessment year 1981-82 being devoid of merit is liable to be dismissed. It is accordingly dismissed.

Summary

Issues:
1. Assessment year 1980-81: Legality of estimating production of bricks and taxable turnover.
2. Assessment year 1980-81: Existence of material evidence for production and sales of bricks.
3. Assessment year 1980-81: Legality of estimating selling rate.
4. Assessment year 1981-82: Justification of estimating taxable turnover for bricks, coal, and sand.
5. Assessment year 1981-82: Accuracy of production and firing period estimates.
6. Assessment year 1981-82: Evidence of Pathai, Bharai, and brick sales activity.
7. Assessment year 1981-82: Justification of average selling rate estimation.
8. Assessment year 1980-81: Relevance of survey reports for assessment.
9. Assessment year 1980-81: Legality of assessment based on presumptions.
10. Assessment year 1981-82: Rejection of account books and suspicion of brick kiln closure.
11. Assessment year 1981-82: Presence of coal and ongoing activities at the brick kiln.
12. Assessment year 1981-82: Justification of rejecting dealer's stand and reliance on survey reports.

Analysis:
1. For the assessment year 1980-81, the dealer contested the assessment based on survey reports not pertaining to that year. The court found the assessment solely relied on assumptions without concrete evidence of sales during the relevant period. Consequently, the assessment for 1980-81 was deemed unsustainable, and the dealer was held not liable for tax, warranting a refund if any tax was paid.

2. Regarding the assessment year 1981-82, the dealer's claim of closing the brick kiln was doubted due to suspicious circumstances, leading to the rejection of account books. Survey reports indicated ongoing activities at the kiln, contradicting the dealer's assertions. The court upheld the authorities' decision to dismiss the dealer's claims, as the evidence supported the existence of manufacturing activities and sales, thus justifying the assessment for 1981-82.

3. The court emphasized the importance of concrete evidence and relevance of survey reports in making accurate tax assessments. In the absence of substantial proof, assessments based on presumptions were deemed invalid. Conversely, when supported by factual findings and survey reports, authorities were justified in rejecting claims and upholding tax liabilities. The judgments highlighted the significance of verifiable data in tax assessments to ensure fairness and accuracy in determining tax obligations.