1974 (11) TMI 85 - HC - VAT and Sales Tax

Court rules turnover increase illegal, exempts specific sales from tax under Madhya Pradesh GST Act. Remanded for further action.

The court held that the enhancement of the gross turnover from Rs. 5,02,456 to Rs. 5,18,755 was illegal and unjustified due to lack of material support. ... - Issues Involved:1. Legality of enhancing the gross turnover from Rs. 5,02,456 to Rs. 5,18,755.2. Taxability of sales of batasa, sugar-candy, and chironjidana as sugar under entry No. 41 of Schedule I to the Madhya Pradesh General Sales Tax Act, 1958.Issue-Wise Detailed Analysis:1. Legality of Enhancing the Gross Turnover:The court examined whether there was any material to justify the enhancement of the gross turnover from Rs. 5,02,456 to Rs. 5,18,755. The petitioner argued that the enhancement was unwarranted and without basis. The Sales Tax Officer had increased the gross turnover based on the assumption that the petitioner's accounts were unreliable. However, the court noted that the assessing authority did not reject the accounts outright but only doubted them on the hypothesis that they did not fully explain the utilization of 62 bags of sugar. The court cited the Supreme Court's distinction between best judgment assessment and assessment based on accounts, emphasizing that there must be some material to justify rejecting the accounts as incorrect. The court concluded that there was no material to support the enhancement, deeming it illegal and unjustified.2. Taxability of Batasa, Sugar-Candy, and Chironjidana:The court analyzed whether the sales of batasa, sugar-candy, and chironjidana could be regarded as sales of sugar within the meaning of entry No. 41 of Schedule I to the Madhya Pradesh General Sales Tax Act, 1958. The petitioner contended that these items, being forms of sugar, should be exempt from tax under entry No. 41. The court reviewed previous decisions and statutory provisions, including the Central Excises and Salt Act, 1944, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, and the Central Sales Tax Act, 1956. The court noted that the term 'sugar' in entry No. 41 was intended to include all forms of sugar, as affirmed by the Supreme Court in State of Gujarat v. Sakarwala Brothers. The court concluded that batasa, sugar-candy, and chironjidana, being pure forms of sugar, should be included within the meaning of 'sugar' under entry No. 41, and thus exempt from tax for the relevant period.Conclusion:The court answered the two questions as follows:1. There was no material to enhance the gross turnover from Rs. 5,02,456 to Rs. 5,18,755, and the enhancement was not legal.2. The sales of batasa, chironjidana, and sugar-candy should be regarded as sales of sugar within the meaning of entry No. 41 of Schedule I to the Madhya Pradesh General Sales Tax Act, 1958, according to the law as it stood in the years 1960 to 1962.The case was returned to the Board of Revenue for orders in light of these answers, with parties bearing their own costs.