2008 (7) TMI 905 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of orders passed by Sales Tax Appellate Tribunal.
2. Assessment based on best judgment.
3. Modification of assessment by Appellate Tribunal.
4. Justification of addition to suppressed turnover.
5. Legality of best judgment assessment.

Analysis:
1. The revision petition challenged the orders passed by the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A. No. 414 of 2002 and Cross Objection No. 37 of 2003 dated 23rd March, 2004. The Tribunal partly allowed the Revenue's appeal and modified the additions made by the assessing authority, which were based on the check-post declarations for the assessment year 1999-2000.

2. The assessing authority had initially made additions to the conceded taxable turnover of the dealer, considering actual suppression and further addition equal to two times thereof for probable omission and suppression. The first appellate authority modified this by directing the assessing authority to accept a lump sum towards the probable omission and suppression. However, the Appellate Tribunal further modified this, stating that the addition of two times the suppressed turnover was excessive and directed the assessing authority to modify the assessment accordingly.

3. The Appellate Tribunal justified its decision by considering the nature and volume of business run by the dealer and the discrepancies found. It quashed the first appellate authority's order and directed the assessing authority to reduce the further addition equal to the suppressed turnover (including gross profit). The Tribunal's decision was based on estimation and factual findings, and it was neither arbitrary nor perverse.

4. The Tribunal's basis for best judgment assessment was the check-post declarations, and it was deemed justified in directing the assessing authority to make an addition equal to the suppressed turnover towards probable omission and suppression in the taxable turnover of the dealer. The quantification of tax was done on an estimation basis, and the Tribunal's modification of the assessing authority's best judgment assessment was considered appropriate.

5. The High Court upheld the Tribunal's decision, stating that the best judgment assessment passed by the assessing authority was modified with appropriate reasons and was not arbitrary. The Court emphasized that replacing this best judgment assessment with another one was impermissible, and the questions of law framed by the assessee were answered against the assessee and in favor of the Revenue. Consequently, the revision petition was rejected.