1975 (9) TMI 177 - SC - VAT and Sales Tax

Summary

Issues involved: Sales tax assessments for the period 1964-65, challenge under Article 226 of the Constitution, re-assessment for the years in question, best-judgment assessments, plea of limitation, assessment proceedings for 1965-66 and 1966-67, materials for re-assessment, conditions for best-judgment assessment.

In the present case, the Supreme Court addressed the appeals concerning sales tax assessments for the period 1964-65. The assessments in question were best-judgment assessments, which were challenged in the High Court under Article 226 of the Constitution. The High Court set aside the assessments and allowed for the re-assessment for the years in question. The State did not appeal the assessment for the year 1963-64, leaving three years under consideration before the Supreme Court.

The Supreme Court found no reason to interfere with the High Court's order but provided certain clarifications. It directed that the re-assessment for 1964-65 should proceed without any plea of limitation, considering the amended provision under Section 21(2) of the U.P. Sales Tax Act. The Court emphasized that the re-assessment officer should carefully consider the materials presented, with the option to accept or reject them for valid reasons. If the conditions for a best-judgment assessment are met, it should be based on a reasonable estimate rather than speculative grounds, ensuring an intelligent and well-grounded decision-making process.

Regarding the assessment proceedings for 1965-66 and 1966-67, which had already been completed and appealed, the Supreme Court stated that it was not concerned with those outcomes. The Court highlighted the importance of making informed estimates in best-judgment assessments, emphasizing the need for a well-grounded approach rather than relying on pure surmises. Ultimately, the appeals were dismissed with the specified directions, and no costs were awarded in this matter.