Appellate competence and best judgment assessment sustain sales tax appeals where accounts are unreliable and stock aids turnover estimation.
Where the statutory rules permit appointment of more than one appellate authority, a duly appointed Additional Judge (Appeals) is competent to hear sales tax appeals, and a jurisdictional objection on that ground fails. In best judgment assessment, if the assessee does not produce correct accounts or reliable material, the value of closing stock may be used to estimate turnover; a commercial connection between stock and turnover supports application of a turnover multiple, and the estimate will be sustained unless shown to be arbitrary or excessive. The reference was answered against the assessee and the revenue's position was upheld on both questions.
Issues: (i) Whether an Additional Judge (Appeals) was competent to hear the sales tax appeals; (ii) Whether the assessment based on the value of closing stock and the selected turnover multiple was justified in the absence of proper accounts.
Issue (i): Whether an Additional Judge (Appeals) was competent to hear the sales tax appeals.
Analysis: Under the statutory scheme, appeal lay to the authority prescribed by the State Government, and the relevant rules defined the appellate authority as a person appointed as such. The mere description of the officer as an Additional Judge (Appeals) did not show want of appointment. The rule permitted the State Government to authorise more than one person to function as appellate authority, and any such appointed person could hear appeals.
Conclusion: The objection to jurisdiction failed and the appeals were validly heard.
Issue (ii): Whether the assessment based on the value of closing stock and the selected turnover multiple was justified in the absence of proper accounts.
Analysis: Where the assessee failed to produce correct accounts or reliable material, the value of closing stock could be used as evidence for estimating turnover. The existence of a commercial connection between stock and turnover justified the use of a multiple, and the multiple adopted was not shown to be arbitrary or excessive so as to render the estimate unreasonable.
Conclusion: The assessment was upheld as justified.
Final Conclusion: The reference was answered against the assessee and the revenue's stand was sustained on both referred questions.
Ratio Decidendi: Where the statutory rules permit appointment of more than one appellate authority, a duly appointed Additional Judge (Appeals) is competent to hear appeals, and in a best judgment assessment the value of closing stock may reasonably be used to estimate turnover when the assessee's accounts are unreliable.
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