1996 (4) TMI 426 - SC - VAT and Sales Tax

Supreme Court Overturns High Court Decision on Tax Revision Cases

State of Andhra Pradesh Versus Pusulluri Satyanarayanamurthy

The Supreme Court allowed the State of Andhra Pradesh's Civil Appeals, overturning the High Court's decision in tax revision cases. The Court upheld the ... Whether the levy of penalty under section 14(3) of the Act is sustainable in the facts of this case or not? Held that:- With respect to the assessment year 1973-74, the High Court has dismissed the tax revision case filed by the assessee on the ground that the assessment in that case was a best judgment assessment inasmuch as the Commercial Tax Officer had added a sum of rupees three thousand and odd to figure disclosed in the return. We see no reason to differ from the opinion of the High Court in the facts and circumstances of the case to the extent of the said assessment year. Issues:Levy of penalty under section 14(3) of the Andhra Pradesh General Sales Tax Act - Whether sustainable in the given case or not.Detailed Analysis:The judgment involves Civil Appeals filed by the State of Andhra Pradesh against the High Court's decision allowing tax revision cases by the assessee. The matter pertains to the Andhra Pradesh General Sales Tax Act and concerns assessment years from 1967-68 to 1973-74. The central issue is the sustainability of the penalty levied under section 14(3) of the Act.The assessee, engaged in paddy and chemical fertilizers trading, had not registered as a dealer or filed returns on time. An inspection conducted on the premises led to the discovery of materials, following which the assessee filed returns. The Commercial Tax Officer then made an assessment for all relevant years, focusing on the assessment year 1968-69 as an example.In the assessment, the turnover was determined based on the material found during inspection, which coincidentally matched the turnover disclosed in the late-filed return. Despite this coincidence, the assessment was not deemed an acceptance of the return by the High Court, a view not concurred with by the Supreme Court.The Court emphasized that the assessment was indeed a best judgment assessment as it relied on the discovered material, not solely on the return. The applicable section, 14(3) of the Act, allows for best judgment assessment and penalty imposition in cases where the dealer fails to submit returns on time or after inspection, as was the situation here.Regarding the assessment year 1973-74, the High Court's decision to uphold the best judgment assessment was supported by the Supreme Court, particularly in a situation where the Commercial Tax Officer had made additions to the return figure. Consequently, the Court allowed the State's Civil Appeals, setting aside the High Court's judgment and reinstating the Tribunal's order. The assessee's appeal was dismissed, with no costs awarded in the matter.In conclusion, the Supreme Court's judgment clarifies the legality of a best judgment assessment under section 14(3) of the Andhra Pradesh General Sales Tax Act and upholds the imposition of penalties in cases of delayed or post-inspection return submissions by dealers.