1991 (9) TMI 326 - HC - VAT and Sales Tax

Summary

Issues:
1. Determination of liability to pay tax without determining the date of start of business
2. Findings of taxing authorities based on no evidence and violation of principles of natural justice

Analysis:
1. The petitioner, engaged in the grocery business, was assessed for sales tax for the years 1979-80 and 1980-81. The liability was determined from April 1, 1979, based on daily sales estimates. The petitioner challenged the assessments, arguing lack of evidence for daily sales determination. The Tribunal upheld the assessments, considering the petitioner's statement about sales range. However, the liability was fixed from April 1, 1980, with transactions assumed on 313 days. The petitioner sought reference to the High Court, which was initially rejected but later directed for reference under section 24(2) of the Act.

2. The Tribunal found the petitioner started business in April 1979 based on his statement from February 1982. However, the issue was the sustainability of fixing liability from April 1, 1980. The authorities provided no material for estimating daily sales at Rs. 80 and Rs. 100 for the respective years. The Court emphasized the need for material to support such estimations. It was clarified that best judgment assessments require acceptable evidence, and enhancements can be made if accounts are unreliable. The Court highlighted the importance of relevant materials for assessments in different years and rejected the use of mere presumptions without proper justification.

3. The judgment addressed the projection of materials for assessments in different years, emphasizing the requirement for justifying projections with relevant evidence. The Court cited precedents to support its stance on the necessity of material relevance for assessments. In this case, the lack of indicated material to support daily sales estimations led to the unsustainability of fixing liability from April 1, 1980. The Court answered the questions raised by the petitioner accordingly, with no costs imposed.

4. Both judges, Pasayat A. and Mohanty S.K., concurred on the decision, and the reference was answered in favor of the petitioner. The judgment highlighted the importance of evidence-based assessments and the inadmissibility of assessments based on mere presumptions without supporting materials.