1973 (4) TMI 104 - HC - VAT and Sales Tax

High Court: Best judgment assessment under Orissa Sales Tax Act doesn't require specifying escapement

State of Orissa Versus Chandra Kanta Moda

The High Court clarified that a best judgment assessment under section 12(8) of the Orissa Sales Tax Act can be made without specifying escapement. It ... - Issues:1. Interpretation of section 12(8) of the Orissa Sales Tax Act regarding the requirement to specify escapement for proceeding.2. Burden of proof on the opponent to establish the period related to undated entries in seized books of account.Analysis:1. The case involved a reference regarding the interpretation of section 12(8) of the Orissa Sales Tax Act. The Tribunal held that it was necessary for the department to specify the escapement to justify a proceeding under this section. However, the High Court disagreed, emphasizing that a best judgment assessment can be made even without exact suppression or escapement being specified. The Court clarified that a best judgment assessment is based on estimates and material justifying the estimate, not solely on the exact amount of escapement. The Tribunal's misconception that only escaped turnover can be taxed under section 12(8) was corrected by the High Court, stating that suppression need not be explicitly proven for such assessments.2. The second issue raised was whether the burden lies on the opponent to prove the period related to undated entries in seized books of account. The High Court found this question irrelevant in the present case. The Court noted that the business commenced during the assessment year in question, and the seized accounts were related to that period. Therefore, there was no need for the revenue to establish the correlation between the seized books and the relevant period. The Court declined to answer this question as it did not arise from the facts of the case.3. Once the questions were answered, the High Court clarified that its advisory jurisdiction ended, and it could not direct the Tribunal on further proceedings. The Court highlighted that a copy of the judgment would be sent to the Tribunal for appropriate action. Additionally, the Court noted that the Tribunal should reconsider the appeal in light of the legal interpretations provided in the judgment. The Court concluded the reference by stating that no costs were to be awarded in the matter.This comprehensive analysis of the judgment from the Orissa High Court provides a detailed understanding of the legal issues surrounding the interpretation of the Orissa Sales Tax Act and the burden of proof in tax assessments.