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2018 (12) TMI 481 - HC - VAT and Sales TaxDeletion of penalty - Jurisdiction - power of Appellate Authority to delete penalty - Estimation of taxable turnover on the basis of electricity consumed - First Appellate Authority deleted the estimation made finding that penalty has been imposed merely on technical reason of non-production of books of accounts - whether deletion of penalty on this ground is sustainable? Held that:- An Intelligence Officer invoking his power under Section 45 A of the KGST Act or Section 67 of the KVAT Act (in pari materia provisions) has been held to have no power to carry out an estimation. Estimation is a reasonable and rational reckoning of taxable turnover; which necessarily is a guess work based on various factors, aspects and activity of the concerned dealer, arriving at a probabilistic approximate determination of the taxable turnover; on the best of judgment of the taxation officer. There could be no estimation carried out in penalty proceedings and the evasion attempted has to be based on the clear materials or particulars, revealed at an inspection or offence detected otherwise. If the taxable turnover sought to be evaded cannot be clearly determined and quantified going by the provision, there can be only an imposition of penalty of ₹ 10,000/-. However, that would not preclude the Assessing Officer from proceeding for best judgment assessment based on any of these factors relevant to the activity of the dealer; on there being no production of books of accounts or even when there is production; by rejection of the same. In that event, the Assessing Officer could make an estimation which is the power and authority conferred by the statute for best judgment. On detection of an offence or any other defect on inspection or otherwise where the tax or other amounts sought to be evaded is not practicable of quantification; the Intelligence Officers should immediately transfer the files to the Assessing Officer after imposing a penalty not exceeding ₹ 10,000/-. When that is not done it is a clear reflection of the lack of team work insofar as the functioning of the Department. The questions of law framed is answered in favour of the assessees and against the revenue.
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