2023 (11) TMI 883 - HC - VAT and Sales Tax

Enhancement of turnover - Best Judgement assessment - rejection of account books - no basis of fixing the turnover - enhancement of turnover under the Central Sales Tax Act merely on the basis of surmises and conjunctures - HELD THAT - Merely because books of account under local sales have been rejected the same will not necessary to led the ground for rejecting the books of account under Central Sales Tax Act also in the absence of any cogent material available on record - From perusal of the impugned order neither any reference nor any material have been brought on record sustaining the enhancement of disclosed turnover under Central Sales Tax Act. This Court in the case of M/s R.D. Gupta has held that the books of accounts and disclosed turnover under Central Sales Tax Act cannot be rejected merely because books of account under local tax have been rejected and it has been further observed that the enhancement of turnover cannot be justified - The case is in hand none of the authorities below have recorded any finding or disclosed any material which would necessarily led to the conclusion that the assessee had infact made any central sales. The enhancement of turnover made by the impugned order cannot be sustained in the eyes of law - revision allowed.

Summary

Issues involved:
The judgment involves a revision filed against the Commercial Tax Tribunal's order under Section 9(2) of Central Sales Tax Act, relating to the rejection of account books and the assessment of turnover.

Question A:
The Tribunal's rejection of account books and affirmation of best judgment assessment was challenged, arguing that the assessing authority provided no basis for fixing turnover, making the assessment whimsical and illegal.

Details: The revisionist, a registered dealer under the UP VAT Act, engaged in trading of ready-made garments. During a survey, documents from a previous assessment year, when the revisionist was not in possession, were found. It was contended that the disclosed turnover of Central Sales Tax should not be rejected solely based on the rejection of account books under UP VAT Act.

Question B:
The Tribunal partially allowed the appeal and estimated undisclosed Central Sale turnover at Rs. 10 Lakh based on an alleged entry unrelated to the applicant, leading to a challenge on the basis of lack of evidence and relevance to the applicant's business commencement.

Details: The Tribunal's estimation of turnover solely on the basis of an unrelated entry and without concrete evidence of suppression of Central Sales Tax was questioned.

Question C:
The Tribunal enhanced turnover under the Central Sales Tax Act without substantial evidence, leading to a challenge based on lack of material supporting the enhancement.

Details: The Tribunal's decision to enhance turnover based on surmises and conjunctures, without concrete evidence of suppression of Central Sales, was contested as unjustified in the absence of material.

Judgment Summary:
The Court reviewed the records and noted that the rejection of account books under UP VAT Act did not warrant the rejection of books under Central Sales Tax Act without cogent material. The Court referenced previous judgments to emphasize that rejection of local tax account books does not automatically justify rejection of Central Sales account books. In the absence of any material supporting enhancement of disclosed turnover under Central Sales Tax Act, the Court found the Tribunal's decision unsustainable in law. Consequently, the revision was allowed, the Tribunal's order was set aside, and the substantial questions of law were answered accordingly.