1978 (5) TMI 109 - HC - VAT and Sales Tax

Court upholds turnover assessment for cloth dealer surpassing initial disclosure, supporting Sales Tax Officer's estimate.

The High Court of Allahabad upheld the assessment of a turnover of Rs. 1,12,437 for an assessee dealing in mill-made cloth, hessian, and iron hoops, ... Estimate of escaped turnover - rejection of accounts - use of isolated transactions as basis for annual estimate - suppressed inter-State salesEstimate of escaped turnover - rejection of accounts - use of isolated transactions as basis for annual estimate - Whether there was material on the record to support assessment of suppressed inter State sales at Rs. 1,12,437 after the assessee's account books were rejected. - HELD THAT: - The Court held that once the account books were rejected the Sales Tax Officer was obliged to make an estimate of turnover and that such estimate must be based on relevant material though it inevitably contains an element of judgment. The Sales Tax Officer relied on two bills discovered at survey showing suppressed sales of Rs. 6,045.76 in a single day and, on that basis, estimated the escaped turnover for the year. The Court found that an isolated finding of suppressed sales for a particular period can legitimately form the basis for an annual estimate and that the presence of the one day suppressed sales constituted material on the record to support the estimate. The Court relied on the view in Commissioner of Sales Tax, Madhya Pradesh v. H.M. Esufali H.M. Abdulali that suppressed sales of a particular period may serve as the basis for estimating turnover for the whole year, and applied that principle to affirm the estimate made by the authorities.There was material on the record to support the assessment of suppressed inter State sales at the figure determined; the question is answered in the affirmative for the department.Final Conclusion: The reference is answered in the affirmative; the estimate of escaped turnover made after rejection of accounts was supported by material and is upheld. Costs awarded to the department. The High Court of Allahabad upheld the assessment of a turnover of Rs. 1,12,437 for an assessee dealing in mill-made cloth, hessian, and iron hoops, despite the initial disclosure of Rs. 12,437. The Sales Tax Officer estimated suppressed turnover based on sales of Rs. 6,045.76 in one day, which was upheld by the appellate authority. The Court ruled that the estimate was supported by material on record, citing precedent. The question of law was answered in favor of the department, with costs assessed at Rs. 200.