2016 (4) TMI 5 - HC - VAT and Sales Tax

Enhancement of turnover to 40 times - Suppression of gross turnover - Dealer in grocery articles - Stock of materials goods with reference to the books of accounts not found in order - Held that - the enhancement of the figure by the Tribunal on the conclusion of facts for which refrained from reference on question of law. There is no discussion of any fact showing nexus of enhancement of 40 times to the facts of the case. Had there been the discussion to prove the enhancement of the turnover 40 times correcting the finding of the assessing authority, the conclusion of the Tribunal by following the decision of Ranital Rice Mill 1993 (11) TMI 215 - ORISSA HIGH COURT (Orissa) could have been appropriate. So the conclusion of the learned Tribunal following the authority is based on no evidence. On the other hand the learned Tribunal has not followed the aforesaid authority properly, but under the veil of such decision has decided the case arbitrarily against the petitioner. So the conclusion arrived at by the learned Tribunal about suppression of the turnover and multiplying it 40 times is based on no factual aspects. Hence the order of the Tribunal is vulnerable, illegal and perverse. - Petition disposed of

Summary

Issues:
1. Assessment of tax dues based on alleged suppression of turnover.
2. Appeal against the order of the assessing authority.
3. Appeal before the first appellate authority.
4. Second appeal before the Tribunal.
5. Increase in suppression of turnover by the Tribunal.
6. Challenge to the Tribunal's order.

Assessment of Tax Dues:
The petitioner, a dealer in grocery articles, was assessed by the Orissa Sales Tax Tribunal for the year 1995-96. The assessing authority found discrepancies in the stock of goods and computed the gross turnover, resulting in a tax demand of &8377; 77,527.50. The first appellate authority reduced the turnover enhancement but still demanded tax. The Tribunal further increased the suppression of turnover to 40 times, leading to a remand for recomputation of tax dues.

Appeals Process:
The petitioner challenged the assessing authority's order before the first appellate authority, which reduced the turnover enhancement. Subsequently, both the petitioner and the Revenue filed second appeals before the Tribunal. The Tribunal dismissed the petitioner's appeal, allowed the Revenue's appeal in part, and remitted the case for tax recomputation.

Increase in Suppression by Tribunal:
The Tribunal increased the suppression of turnover to 40 times based on two occasions of suppression, citing a previous decision. The Tribunal's decision was challenged as arbitrary and lacking factual basis, with the petitioner arguing a violation of natural justice.

Challenge to Tribunal's Order:
The petitioner contended that the Tribunal's order was perverse and illegal, emphasizing the lack of basis for the 40 times suppression calculation. The Revenue supported the Tribunal's decision, asserting that the enhancement was justified due to alleged suppression of taxable items by the petitioner. The High Court found the Tribunal's order to be vulnerable, illegal, and arbitrary, setting it aside and remitting the matter back for reconsideration.

The High Court's judgment highlighted the importance of factual analysis and legal reasoning in tax assessment matters, emphasizing the need for decisions to be based on evidence and relevant aspects. The case serves as a reminder of the significance of procedural fairness and adherence to legal principles in tax disputes, ensuring that assessments are conducted objectively and in accordance with the law.