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1988 (3) TMI 413

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..... rs that the final assessments are proposed to be completed as indicated in the said notices. The objections of the petitioners were invited to the proposal. The petitioners filed the O.P. before this Court and assailed exhibits P7, P8 and P9 notices and also prayed for a declaration that section 19B of the Kerala General Sales Tax Act is unconstitutional and void. Fathima Beevi, J., held that section 19B of the Act is well within the competence of the legislature and cannot be struck down as invalid for the reasons stated by the petitioners. It was further held that the petitioners have been served only with notices in accordance with the statutory provisions and that the Revenue is entitled to proceed in pursuance to the said notices and t .....

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..... should accordingly be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. It is settled law that in the case of taxing statutes the ancillary or subsidiary matters will extend to the making of effective and meaningful provisions for the prevention of evasion of tax. The legislature having power to impose the tax has also the power to prescribe the means by which the tax shall be collected. This will take in the power to enact measures to ensure proper realisation of the taxes due. Measures can also be made to prevent evasion of tax. This is a machinery provision which should be construed liberally. These propositions of law cannot be open to any doubt in determining the validity of a .....

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..... assessing authority is answered by the section itself which provides the safeguards in exercising the power arbitrarily. Before initiating the action the authority has to be satisfied that there had been attempt to evade payment of tax by manipulation of accounts and that satisfaction has necessarily to be on an objective approach. Before making the reassessment the authority has to make an estimate not on surmises but on the basis of the prevailing market price. In all cases where there had been bona fide transactions below the market price it would be open to the authority to hear the assessee in the matter and proceed accordingly. The authority is bound to give the assessee an effective opportunity of being heard. It is only by proceed .....

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..... section 19B of the Act does not suffer from any infirmity, as contended by the appellants. It should be stated that the power to estimate is vested in very responsible officers of the department. The fact that the power vested in the assessing authority is discretionary cannot ipso facto lead to the conclusion that it is discriminatory. There are in-built safeguards in section 19B of the Act. It is only when the sale or purchase price is shown lower than the prevailing market price, as a "device" to evade the payment of tax, and the assessing authority is "satisfied" about the same, on the basis of "materials", then resort may be made to section 19B of the Act. In this view, it cannot be said, that section 19B of the Act vests arbitrary .....

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