Independent enquiry required before escaped turnover tax is reassessed on the basis of excise findings.

Escaped turnover tax cannot be reassessed merely by relying on excise department findings. The assessing authority must conduct an independent enquiry, furnish the material relied upon to the assessee, and comply with natural justice before fastening liability. Findings under excise law cannot be mechanically transplanted into turnover tax proceedings because excise concerns manufacture, while turnover tax concerns the sale transaction. The burden remains on the department to prove understatement of taxable sales and the resulting tax liability through the statutory process. On this reasoning, the reassessment and consequential levy were treated as unsustainable.

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Issues: Whether escaped turnover tax could be fastened merely on the basis of findings recorded by the excise department, without an independent enquiry, supply of the material relied upon, and compliance with natural justice.

Analysis: The department sought to reopen the turnover tax assessment on the basis of information that the excise department had found alleged evasion of excise duty. The material showed no independent enquiry by the assessing authority to establish under-reporting of turnover, and the underlying information was not furnished to the assessee. The burden to prove a taxable sale transaction and consequent liability under the turnover tax law lay on the department. Findings under excise law could not be mechanically extrapolated for sales or turnover tax, because excise duty is levied on manufacture while turnover tax is levied on the sale transaction. The Rajasthan sales tax regime was to be worked out through its own statutory process, and any reassessment required proper inquiry and observance of natural justice.

Conclusion: The reassessment and consequential levy were unsustainable, and the revision petition failed.

Final Conclusion: Liability for escaped turnover tax could not be imposed merely by borrowing conclusions from excise proceedings, and the departmental challenge to the appellate order was rejected.

Ratio Decidendi: Reassessment of turnover tax must rest on independent proof of understatement of taxable sales and cannot be sustained on a mechanical adoption of excise findings without enquiry and compliance with natural justice.

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