1999 (9) TMI 964 - HC - VAT and Sales Tax

Summary

Issues:
Assessment of taxable turnover and firing period for a brick manufacturer and dealer in the Assessment Year 1987-88.

Analysis:
In the case before the High Court, the revisionist, a brick manufacturer and dealer, had declared a firing period of 39 days, a capacity of 6 lacs, and a taxable turnover of Rs. 1,11,000 for the Assessment Year 1987-88. However, the assessing authority rejected the books of accounts due to lack of information about the closure of firing and insufficient details regarding coal and wood balances. Consequently, a best judgment assessment was made, increasing the firing period to 98 days, production of bricks to 28,42,000, and average selling rate to Rs. 380 per thousand.

Upon first appeal, the firing period was reduced to 54 days, production to 15 lacs, and average selling rate to Rs. 350 per thousand. Both the department and the dealer filed second appeals before the Tribunal, which restored the firing period to 98 days, fixed production at 22 lacs, and affirmed the average selling rate at Rs. 350 per thousand. This led to an increase in tax liability by Rs. 11,704, with the appeal filed by the dealer being dismissed.

The revisionist contended that without sufficient material, the authorities had unjustly increased the production and capacity of the brick kiln for the year under consideration. It was argued that the brick kiln was not operational in the second season, questioning the basis for extending the firing period to 98 days. The revisionist also highlighted discrepancies in the capacity and production assessments made by the authorities.

However, the Standing Counsel defended the Tribunal's decision, stating that the firing period and capacity were determined based on material found during surveys and disclosed by the Assessing Authority. The Standing Counsel maintained that the Tribunal's judgment was sound and free of errors.

Ultimately, the High Court partly allowed the revision, setting aside the Tribunal's judgment and remanding the case for the refixation of taxable turnover and tax liability. The Court emphasized the lack of evidence supporting the increased capacity and production assessments, directing the Tribunal to reconsider the matter based on the observations made during the proceedings.