1998 (5) TMI 419 - HC - VAT and Sales Tax

Summary

Issues:
1. Best judgment assessment based on lack of documentation
2. Imposition of penalty and interest under the Central Sales Tax Act
3. Judicial review of assessment orders

Analysis:
1. The petitioner, engaged in building bus bodies, faced a best judgment assessment for the 1983-84 period due to the non-production of cash books and purchase vouchers during assessment. The Assessing Officer rejected the reported sales figure and determined the total turnover at &8377; 1,25,00,000 based on the 1982-83 turnover of &8377; 98,52,500. A penalty of &8377; 5,000 and interest of &8377; 44,639 were imposed, leading to demands under the Delhi and Central Acts. Revision petitions and a review application were dismissed, prompting the petitioner to approach the High Court under Articles 226/227 of the Constitution of India.

2. The petitioner contested the best judgment assessment, arguing against arbitrary assessments and the charging of interest under the Central Sales Tax Act. The Court noted discrepancies in the assessment process, highlighting the lack of progress in proceedings until shortly before the time-barring date. Citing legal precedents, the Court emphasized that best judgment assessments must be based on rationality and relevant material, not arbitrary guesswork. The assessment was deemed arbitrary and set aside.

3. Regarding the interest charged under the Central Sales Tax Act, the petitioner relied on a Supreme Court decision to argue against its imposition. The Court, in line with the petitioner's argument, ruled that interest could not be charged in the absence of a substantive provision for it in the Central Sales Tax Act. Consequently, the impugned assessment orders under both the Delhi Sales Tax Act and the Central Sales Tax Act were set aside, along with the orders in revision and review. The Assessment Officer was directed to conduct a fresh assessment adhering to legal principles and providing the petitioner an opportunity to be heard.