1987 (11) TMI 398 - HC - VAT and Sales Tax

Summary

Issues:
Assessment based on rejected account books, estimation of turnover, burden of proof on revenue, rejection of certificate, assessment to best judgment, necessity of evidence for estimation.

Analysis:
The judgment dealt with the assessment of sales tax for a brick manufacturing business based on rejected account books. The Sales-tax Tribunal rejected the account books due to various deficiencies, including the absence of a separate register for pathai, lack of vouchers for coal and firewood purchases, and discrepancies in turnover. The Tribunal upheld the rejection of the accounts, citing non-compliance with Section 12(2) of the Act. The court affirmed that for such non-compliance, account books are liable to be rejected, as previously held in several decisions. This rejection was deemed valid by the court.

Regarding the estimation of turnover, the assessee argued that the Tribunal's estimation was excessive and arbitrary. The assessee claimed non-operation of the brick kiln during the relevant period, supported by a certificate and oral statement. However, the court found no material to prove the operation of the kiln. The court emphasized the distinction between rejecting accounts and assessing to best judgment, stating that the latter requires some evidential basis. Quoting a Supreme Court ruling, the court highlighted the necessity of evidence or material to support any estimate made during assessment.

The court criticized the rejection of the certificate provided by the assessee and the lack of scrutiny of the explanation for non-operation of the kiln due to coal shortage. The findings of the Sales Tax Tribunal were deemed unsubstantiated and lacking in relevant material. As a result, the court directed the matter to be referred back to the Sales Tax Tribunal for a fresh determination of turnover for the separate seasons. The Sales Tax Tribunal was instructed to reconsider the appeals in light of the court's observations and in accordance with the law.

In conclusion, the revisions were partially allowed, and the Sales Tax Tribunal was directed to re-examine the assessments, considering the issues raised in the judgment and ensuring a proper determination of turnover based on the available evidence.