2014 (8) TMI 371 - HC - VAT and Sales Tax

Estimation of interstate sale Inter state sale taking the one day average - Assessee claims that respondent has proposed to treat the local sales effected by the petitioner as an inter-state sale - Held that - taking the one day average for estimation is not a scientific method sanctioned by law. It is only a crude method which has no substance. At least in order to arrive at one day sales, either the assessing authority or the Enforcement Wing Officers should have made surveys every month taking into consideration the normal day, auspicious day and inauspicious day. - Following the decision in the case of New Kamaliya Hotel 2006 (3) TMI 689 - MADRAS HIGH COURT the order set aside - matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenge to order treating local sales as inter-state sales without proof of movement of goods; Incorrect assessment based on one day sale; Failure to reply to show cause notice.

Analysis:
The petitioner challenged an order by the respondent proposing to treat local sales as inter-state sales due to lack of furnished sale bills. The petitioner argued that there was no proof of inter-state movement of goods, and the respondent wrongly assessed inter-state sales for six months based on a single day's sales, which is prohibited by law. The Assessing Officer found the petitioner's business closed but still assessed a substantial tax amount, which the petitioner contended was incorrect. Reference was made to a Division Bench judgment stating that estimating sales based on one day is not a valid method. The Additional Government Pleader admitted that fixing sales for six months based on one day's sales without basis was incorrect, but noted the petitioner's failure to respond to the show cause notice.

The Division Bench judgment emphasized that estimating sales solely based on one day is not a valid approach, as sales can vary due to different factors like auspicious or inauspicious days, festivals, and natural calamities. The Tribunal held that the assessing officer erred in estimating additions based on one day's sales. The judgment dismissed the tax case, affirming the Tribunal's decision. In light of this judgment, the High Court set aside the impugned order and allowed the writ petition. The petitioner was directed to file objections to the show cause notice within 15 days, and the respondent was instructed to provide a personal hearing and pass appropriate orders based on the objections and the law. No costs were awarded, and the connected miscellaneous petition was closed.