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Issues: (i) whether the liability to pay sales tax could be fixed from 1 April 1980 without reliable material supporting the estimated daily sales for the relevant assessment years; (ii) whether the findings of the taxing authorities were sustainable in the absence of evidentiary support.
Issue (i): whether the liability to pay sales tax could be fixed from 1 April 1980 without reliable material supporting the estimated daily sales for the relevant assessment years.
Analysis: The assessee's statement indicated the approximate commencement of business, and the starting point of business was not left undetermined. The real controversy was whether the authorities could project the disclosed material backward so as to fix liability from 1 April 1980. In a best judgment assessment, some guess-work is permissible, but any backward or forward projection of material must rest on relevant evidence showing its applicability to the period assessed. Mere presumption cannot justify the estimation of turnover for another year. On the record, no adequate material was shown to support the particular daily sales figures adopted for the assessment years in question.
Conclusion: The fixation of liability from 1 April 1980 was not sustainable and was answered in favour of the assessee.
Issue (ii): whether the findings of the taxing authorities were sustainable in the absence of evidentiary support.
Analysis: The authorities relied principally on the assessee's admission recorded in 1982, but that statement alone did not provide a sufficient basis for the estimates adopted for earlier assessment years. The date of discovery of material was not decisive; what mattered was whether the material was shown to be relevant to the particular assessment period. As no such relevance was established, the findings on estimated turnover lacked the necessary evidentiary foundation.
Conclusion: The findings of the taxing authorities could not be sustained and this issue was also answered in favour of the assessee.
Final Conclusion: The reference was answered by holding that the assessment could not be supported on the basis adopted by the authorities, and the assessee succeeded on the substantive questions referred.
Ratio Decidendi: In a best judgment assessment, estimated turnover for a different assessment year cannot be founded on presumed backward projection of material unless the assessing authority establishes a relevant evidentiary nexus between that material and the period assessed.
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