2012 (7) TMI 1078 - HC - Indian Laws

Turnover Tax - determination of compounded rate of tax - comparable parameters - Section 7 of the KGST Act - HELD THAT - the tax paid would necessarily include the tax assessed and the payment of tax at compound rate in Section 7 applicable to the case of the assessee would definitely enable the Assessing officer to arrive the highest turnover tax payable for any of the previous three consecutive years; taking into account the assessed tax, as modified in appeal, revision or other proceedings. The question raised by the assessee in STRs 59 61 of 2012, has to be answered in favour of the Revenue and against the assessee. However, since the assessment of the earlier year 2008-09 is remanded, the determination of the highest turnover tax for the purpose of granting facility of payment of tax at compound rates would also depend on such assessment proceedings directed to be de-novo completed. In the above circumstance, we answer the question of law in favour of the Revenue and against the assessee, but all the same remand the assessment to the Assessing Officer for de novo consideration in accordance with law. The Sales Tax Revisions are ordered as above.

Summary

Issues:
1. Challenge to assessments for the years 2008-09, 2009-10, and 2010-11 by a Bar hotel.
2. Best judgment assessment made for the year 2008-09.
3. Computation of amounts for compounding under Section 7 of the KGST Act for the subsequent years.

Best Judgment Assessment for 2008-09:
The High Court considered the challenge to the best judgment assessment made for the year 2008-09 by a Bar hotel. The court noted that the assessing authority did not independently consider the issue while estimating gross profit. The court emphasized the need for a thorough evaluation of the books of accounts and sales invoices. It was highlighted that the materials found during inspection and relied upon by the Intelligence Officer must be independently assessed by the Assessing Officer. The court held in favor of the assessee, allowing the revision and remanding the assessment back to the Assessing Officer for a reevaluation within three months.

Computation of Amounts for Compounding under Section 7 of KGST Act:
Regarding the subsequent years, the issue revolved around the computation of amounts for compounding under Section 7 of the KGST Act. The Assessing Officer had determined the highest turnover tax based on the best judgment assessment made in 2008-09. The court analyzed the relevant provisions and compared them with a previous judgment. It was concluded that the tax paid would include the tax assessed, and the payment of tax at compound rates would enable the Assessing Officer to determine the highest turnover tax for the previous three years, considering any modifications in appeal or revision. The court ruled in favor of the Revenue, but due to the remand of the 2008-09 assessment, directed the Assessing Officer to reconsider the assessment in accordance with the law.

In summary, the High Court addressed the challenges to assessments by a Bar hotel for the years 2008-09, 2009-10, and 2010-11. The judgment focused on the best judgment assessment for 2008-09, emphasizing the need for an independent evaluation of materials found during inspection. The court ruled in favor of the assessee, remanding the assessment for reevaluation. Additionally, the court analyzed the computation of amounts for compounding under Section 7 of the KGST Act for subsequent years, determining that tax paid would include assessed tax. The court ruled in favor of the Revenue but directed a reconsideration of the assessment due to the remand of the 2008-09 assessment.