TMI Blog1966 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose the papers may be placed before the learned Chief Justice. In pursuance of the aforesaid order of reference the writ appeals came on for hearing before the Full Bench: K. Rajah Aiyar for M/s. Subbaraya Aiyar, Sethuraman, Padmanabhan and V. Rajagopalan, for the appellant. The Special Government Pleader, for the respondent. JUDGMENT The judgment of the Court was delivered by VEERASWAMI, J.-These writ appeals are placed before us on a reference by a Division Bench of which two of us happened to be members. The question we are called upon to decide is whether section 16 of the Madras General Sales Tax Act, 1959, includes the power to assess by best judgment escaped turnover. The appellant was assessed to sales tax for the assessment years 1961-62 and 1962-63 by orders dated 5th October, 1962, and 29th August, 1963. In July, 1964, there was a surprise inspection of the residence of one K. Pichaimuthu which resulted in discovery of 29 slips of which eight were alleged to refer to the appellant. Some time later there was another inspection of the business premises of Messrs. R. Perumal and M. Palaniandi Chettiar under whom K. Pichaimuthu was working as an accountant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided. The writ appeals from those orders raised a question of jurisdiction and in view of a conflict of decisions on the scope of section 16 of the Madras General Sales Tax Act, 1959, and parallel provisions in like enactments in other States, the appeals were directed to be placed before us. Two learned Judges of this Court, Ramakrishnan and Ramamurti, JJ., in D. Srinivasappa v. State of Madras[1964] 15 S.T.C. 784., were of opinion that though section 16 did not expressly include the power to assess by best judgment escaped turnover, still it was implicit in the section. A Division Bench of the High Court of Andhra Pradesh in State of Andhra Pradesh v. Ravuri Narasimloo[1965] 16 S.T.C. 54., however, expressed a different view and held that section 14(4) of the Andhra Pradesh General Sales Tax Act, 1957, was confined to escapement of turnover which was difinitely established. That Court was inclined to think that the words in section 14(4) "which has escaped assessment" would only imply turnover which was definitely proved to have escaped and did not include turnover which might have escaped assessment. Commissioner of Sales Tax v. Kunte Brothers[1962] 13 S.T.C. 366., a decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to wilful non-disclosure of assessable turnover by the dealer, direct the dealer to pay, in addition to the tax assessed under sub-section (1), a penalty not exceeding one and a half times the tax so assessed: Provided that no penalty under sub-section (2) shall be imposed unless the dealer affected has had a reasonable opportunity of showing cause against such imposition. (3) The powers under sub-section (1) may be exercised by the assessing authority even though the original order of assessment, if any, passed in the matter has been the subject-matter of an appeal or revision. (4) In computing the period of limitation for assessment of the escaped turnover under this section, the time during which proceedings for assessment remained stayed under the orders of a Civil Court or other competent authority shall be excluded." Sub-section (1) of the section is concerned with two kinds of escapement: (1) turnover escaping assessment and (2) turnover being assessed at a rate lower than the rate at which it is assessable. In the second category of cases, there is, of course, no question of best judgment, but in dealing with the first category, the question arises whether the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (1) of rule 17 was more or less in the same terms as we find the present section 16(1) in the Act of 1959. But by a G.O. No. 2204, Revenue, dated 21st August, 1951, the rule was amended by including the words "determine to the best of his judgment the turnover which has escaped assessment". Tax rule 17 as amended thus incorporated the power for the Assessing Authority to assess escaped turnover by best judgment. It is clear from those provisions in the 1939 Act and the rules made thereunder as amended as aforesaid as well as sections 12 and 13 of the 1959 Act that whenever the State Legislature or the rule-making authority intended that the Assessing Authority should have the power to assess by best judgment in certain circumstances, it conferred the power by express words. The amendments show not only the need therefor to take the particular power but also the distinction made between the ordinary powers of assessment based on actual material and an assessment by best judgment. It seems to us, therefore, that when section 16 omitted the words "determine the turnover by best judgment" which were found in Tax rule 17, the predecessor of section 16(1), the omission was deliber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in the nature of things, best judgment may involve a certain amount of guess. But that does not mean that the guess can be capricious or unreasonable or totally without a basis. It may be seen, therefore, that assessment by best judgment is a distinct procedure sanctioned by tax laws whenever it is intended. Evidently the framers of section 16, as it stands today, intended that such a power need not be given to the Assessing Authority and that is why, as we are inclined to think, the words in Tax rule 17 under Act 1939, which, as we said, is the predecessor of section 16, namely "determine the turnover by best judgment", have been omitted in section 16(1). The Andhra Pradesh High Court rested its judgment on a comparison of the provisions relating to submission of no return or incomplete or incorrect returns in relation to the procedure for assessment with the provision for assessment of escaped turnover and came to the conclusion that in view of the difference in the phraseology employed by the relative sections, it was reasonable to conclude that the power under sub-section (4) of section 14 was limited to assessment of turnover which was definitely established. With respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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