2001 (8) TMI 1355 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the best judgment assessment framed under section 11(4) of the Punjab General Sales Tax Act, 1948, was barred by limitation.
2. Whether the estimate of the gross turnover at Rs. 60 lacs was arbitrary and without any basis.

Issue-wise Detailed Analysis:

1. Limitation of Best Judgment Assessment:

The petitioner challenged the assessment order dated January 31, 1983, claiming it was barred by limitation as the Assessing Authority did not proceed within five years from the end of the period for which the assessment was to be framed. The petitioner argued that the notice dated October 5, 1978, merely required the petitioner to furnish information and could not be considered as the initiation of action for best judgment assessment under section 11(4) of the Act. The petitioner relied on the Supreme Court judgment in Indian Aluminium Cables Ltd. v. Excise and Taxation Officer, which emphasized that an effective step indicating the intention to proceed with the best judgment assessment must be taken within five years.

The respondents contended that the notice on form ST-XIV dated October 5, 1978, explicitly mentioned that failure to comply would result in a best judgment assessment under section 11 of the Act. This notice, issued within five years from the end of the assessment period, indicated the Assessing Authority's intention to proceed with the best judgment assessment.

The court held that the notice dated October 5, 1978, indicated the Assessing Authority's intention to proceed with the best judgment assessment and was issued within the limitation period. Therefore, the assessment was not barred by limitation.

2. Arbitrariness of Gross Turnover Estimate:

The petitioner argued that the estimate of Rs. 60 lacs was arbitrary and without any basis, as they were never confronted with the material supporting this estimate. The petitioner cited the decision in S. Sant Singh v. Assessing Authority, Amritsar, which emphasized the necessity of confronting the dealer with the basis of the estimate in a best judgment assessment.

The respondents clarified that the gross turnover declared by the petitioner was Rs. 53,90,378.94, not Rs. 38,36,976.05, as claimed. The turnover for the preceding year was Rs. 58,17,686, and the estimate of Rs. 60 lacs was based on this figure, which was not excessive. The memorandum dated January 25, 1983, notified the petitioner of the proposed estimate, but the petitioner did not respond or produce the required accounts.

The court found that the estimate of Rs. 60 lacs was reasonable, given the turnover of the preceding year. The Assessing Authority had provided the petitioner with an opportunity to produce the accounts and respond to the estimate, which the petitioner failed to do. Therefore, the estimate could not be considered arbitrary or without basis.

Conclusion:

The court dismissed the writ petition, holding that the best judgment assessment was not barred by limitation and the estimate of the gross turnover at Rs. 60 lacs was reasonable and based on the turnover of the preceding year. The parties were left to bear their own costs.