2004 (3) TMI 735 - HC - VAT and Sales Tax

Summary

Issues: Assessment of taxable turnover, rejection of books of account, cross-examination of third party, powers of Sales Tax Officer under Rule 75 of U.P. Sales Tax Rules, remand of the case.

Assessment of Taxable Turnover:
The applicant, a partnership firm, disclosed taxable sales and purchases for the assessment year 1982-83. The Sales Tax Officer determined a higher taxable turnover than disclosed by the applicant, based on a survey at another dealer's place and the loss of a form. The first appellate authority and the Tribunal confirmed this order with slight modifications, maintaining the rejection of books of account but reducing the turnover.

Rejection of Books of Account:
The applicant contended that its books of account were wrongly rejected, arguing that entries found in a diary at a third party's place should not be considered without the opportunity for cross-examination. The Tribunal found that the third party did not appear for cross-examination despite being served a notice, leading to a view that the third party had colluded with the applicant. The Tribunal upheld the rejection of the books of account based on these findings.

Cross-Examination of Third Party:
The Tribunal's decision was based on Rule 75 of the U.P. Sales Tax Rules, which grants powers to summon witnesses, including compelling attendance and examining on oath. The Sales Tax Officer failed to invoke the provisions for compelling the attendance of the third party, as required under Order XVI of the Code of Civil Procedure. Due to this failure, the Court decided to remand the case to provide the applicant with a proper opportunity for a hearing and to compel the attendance of the third party for cross-examination.

Powers of Sales Tax Officer under Rule 75 of U.P. Sales Tax Rules:
The Court emphasized that the Sales Tax Officer has similar powers to a court under the Code of Civil Procedure for enforcing attendance and examining witnesses on oath. The failure to exercise these powers in compelling the attendance of the third party led to the decision to remand the case for proper proceedings.

Remand of the Case:
In conclusion, the Court allowed the revision in part, setting aside the Tribunal's order and remanding the matter for reconsideration. The Tribunal was directed to either exercise the powers under Order XVI of the Code of Civil Procedure or remand the matter to the Sales Tax Officer for further action, ensuring the proper opportunity for the applicant and the cross-examination of the third party.