2008 (7) TMI 933 - HC - VAT and Sales Tax

Summary

Issues: Challenge to order of Trade Tax Tribunal in Second Appeal No. 195 of 1991 for assessment year 1983-84 regarding acceptance of disclosed firing period for brick kiln.

Detailed Analysis:

The dealer-applicant, engaged in manufacturing and selling bricks, faced a discrepancy in the acceptance of disclosed firing period for the brick kiln between the first and second seasons. The authorities rejected the disclosed firing period for the first season based on a survey report dated June 4, 1983, which indicated that the brick kiln was fired on June 5, 1983, contrary to the disclosed period. The assessing authority extended the firing period until June 30, 1983, based on this survey, a decision upheld by the Tribunal. The revision primarily focused on whether this rejection and estimation were justified.

Upon review, the High Court noted that the survey report revealed the brick kiln was closed due to a chimney fault, with an expectation of firing after repairs. The authorities presumed firing on June 5, 1983, adding 11 days to the period. The dealer argued that the presumption was unfounded, as the actual firing occurred on June 16, 1983, not June 5, 1983. The court emphasized that the inference drawn by the authorities lacked justification, especially since no discrepancies were found in the account books, a crucial aspect for a best judgment assessment under the U.P. Trade Tax Act.

The court highlighted that the rejection of the disclosed firing period was based on presumption and assumption, without concrete evidence of incorrectness or incompleteness in the dealer's accounts. Referring to the proviso of section 7(3) of the Act, the court emphasized that resorting to best judgment assessment is only warranted in case of incorrect or incomplete returns. As the Tribunal failed to provide any material justifying the rejection of the disclosed firing period, the court ruled in favor of the dealer-applicant, accepting the disclosed firing period for both seasons.

In conclusion, the High Court allowed the revision, answering the key question in favor of the dealer-applicant. The court held that there was insufficient material before the Tribunal to reject the disclosed firing period, emphasizing the importance of concrete evidence in tax assessments. No costs were awarded in this judgment.