TaxTMI 
TaxTMI 
1999 (3) TMI 597
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....dition was mainly in respect of the following three heads: "The taxable turnover arrived at due to the over-valuation of closing stock as illustrated in detail at Sl. No. 1 of the proposition notice. The taxable turnover arrived at due to the under-valuation of raw materials consumed as illustrated in Sl. No. 2 of proposition notice. The taxable turnover of Rs. 30,82,744 arrived at in respect of the work-in-progress account, as illustrated at Sl. No. 8 of the proposition notice." Demand of Rs. 3,84,39,134 was created. A request was made to defer the assessment since declarations in form 37 were not received. It is also stated that the endorsement for the year 1997-98 have not been issued and assessment order creating huge liability was issued against the principles of natural justice. The order is stated to be arbitrary, vindictive, capricious and subjective in nature. 2.. Under section 12(3) of the KST Act read with rule 18(3) of the KST Rules, it is contended that the assessing authority has to issue a notice in form 31-A. Pro forma of the said notice has contemplated specification of gross and taxable turnover. The proposition notice which has been issued lacks mandatory r....
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....ounsel for the parties, we allow the appeal, set aside the assessment orders and penalty orders and direct fresh assessments to be made after reasonable opportunity is afforded to the appellant to adduce evidence and to be heard in the matter. It is pointed out by the learned counsel for the appellant that a sum of rupees five lakhs twenty-eight thousand has already been paid by the appellant to the Sales Tax Department towards the liability assessed hitherto, and it is prayed that an order be made releasing the bank accounts and other properties from attachment. We direct that the attachment will continue for a period of four months from today, during which period the Sales Tax Department should complete the fresh assessments. Liberty is granted, however, to the appellant to apply to the Sales Tax Department for release of the bank accounts from attachment. The appeal is disposed of accordingly. There will be no order as to costs. Appeal allowed." In Mysore Cements Limited v. Deputy Commissioner of Commercial Taxes [1994] 93 STC 464 (Kar) the order was found against the principles of natural justice or against the accepted rules of procedure it was held that such action is amen....
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.... the duty leviable thereon. Nor was there any complaint in this case that the order had been passed without an opportunity to the importer to be heard, so as to be in violation of the principles of natural justice. The learned Solicitor-General questioned the correctness of the reasoning of the learned Chief Justice in condoning the conduct of the respondent in not moving the Government in revision by taking into account the time that had elapsed between the date of the impugned order and that on which the appeal was heard. The submission was that if this were a proper test, the rule as to a petitioner under article 226 having to exhaust his remedies before he approached the court would be practically a dead letter because in most cases by the date the petition comes on for hearing, the time for appealing or for applying in revision to the departmental authorities would have lapsed. 9.. We see considerable force in the argument of the learned Solicitor- General. We must, however, point out that the rule that the party who applies for the issue of a high prerogative writ should, before he approaches the court, have exhausted other remedies open to him under the law, is not one whi....
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....xistence of other adequate legal remedies is not per se a bar to the issue of a writ of certiorari and if in a proper case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior court or Tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him and if the superior court can in a proper case exercise its jurisdiction in favour of a petitioner who has allowed the time to appeal to expire or has not perfected his appeal, e.g., by furnishing security required by the statute, it cannot then be laid down as an inflexible rule of law that the superior court must deny the writ when an inferior court or Tribunal by discarding all principles of natural justice and all accepted rules of procedure arrived at a conclusion which shocks the sense of justice and fair play merely because such decision has been upheld by another inferior court or Tribunal on appeal or revision." In the case of J.J. Spinners Ltd. v. Commissioner of Commercial Taxes, Orissa [1998] 109 STC 289 (Orissa) it was observed that where the statute provide a complete machinery for obtaini....
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....cretionary power should be exercised or not. Since the assessee petitioner) has got an efficacious remedy from the provisional assessment orders, by way of revisions, before the statutory authority, we see no reason as to why this Court should, in the exercise of extraordinary jurisdiction under article 226 of the Constitution of India, scrutinise the legality of the provisional assessment orders. There are no extraordinary circumstances in this case. The respondent (assessee) has no case that the revisional authorities are incompetent in law to construe the impact of the notifications or that there was any denial of natural justice by the assessing authority before passing the provisional assessments. In such cases, the respondent (assessee) should pursue the statutory remedy by way of revision and was not justified in invoking the extraordinary discretionary jurisdiction of this Court under article 226 of the Constitution of India." In the case of State of West Bengal v. North Adjai Coal Co. Ltd. [1971] 27 STC 268 (SC) it was observed that in appropriate cases, the High Court can entertain a petition under article 226 of the Constitution of India and grant the relief even though....
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.... suffers from mistake apparent from law, this Court in appropriate cases could interfere. Even in a case where the alternative remedy is dilatory in giving the relief which the citizen is entitled, resulting in irreparable prejudice or lengthy proceedings or unnecessary harassment, this Court can interfere in its extraordinary jurisdiction which is not seriously disputed by the learned Government Advocate. The alternative remedy is onerous, may result in palpable injustice and inordinate delay. Therefore the arguments on merits were heard. 3.. On February 11, 1999, when the matter was heard, learned counsel for the respondent was directed to bring any specific instance of sale which is not recorded in the books of account. From the perusal of the assessment order it is evident that there is no such incidence cited. In Commissioner of Income-tax v. Simon Carves Ltd. [1976] 105 ITR 212 it was observed that the taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from an assessee should remain unrecovered, they must also at the same time no....
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....tock declared 519.624 MT Over-valuation of the entire Rs. 5,19.624 x 8,638 closing stock by 44,88,512 The over-valuation arrived at Rs. 44,88,512 is proposed to be added to the taxable turnover: Rs. Taxable turnover proposed to be increased due to over-valuation of closing stock by 44,88,512 Tax effect at 10% 4,48,851 2. Similarly at serial No. 3 of page 2, of the directors report, it is categorically stated as: .... However, profit has not increased proportionately due to increase in the cost of raw material and reduction in the selling prices. In the background of this revelation, a comparison of the rates of major raw materials consumed during the years 1996-97 and 1997-98 reveals the following details as per statements at page 25 of annual report. Raw materials consumed in manufacture: Sl. No Raw materials consumed 1997-98 1996-97 Rs. Rs. 1 Aluminium 68,764.35 PMT 65,399.04 PMT 2 Magnesium 1,18,158.10 PMT 1,55,859.48 PMT 3 Silicon 52,059.08 PMT 63,611.46 PMT 4 Average rate PMT of raw materials 79,660.51 PMT 94,956.66 PMT Even though it is declared that there has been an increase in the cost of raw material, the above details prove that the averag....
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....015,312 Units 421 units being required for production of one MT of aluminium extrusions, the total quantity of finished goods obtained from 8,015,312 units would work out as under: 8,015,312 units = 19,038,74 MT The production of the finished goods thus works out to 19038.74 MT as against the declared quantity of 18606.092 showing a short declaration of 432.653 MTs. (a) Sales of finished goods as worked out on the basis of units consumed 19038.745 MT (b) Sales turnover of finished goods declared at page 24 of the 29th annual report 18606.092 MT 432.653 Rs Price of finished goods at. 1,06,016.85 PMT Total value of finished goods short accounted 432.653 x106016.85 4,58,68,508 Tax effect at 4% on Rs. 4,58,68,508 18,34,740 It is proposed to add on the above short accounting of 432.653 MT of finished goods to the taxable turnover and effect the computation of. 8. Considering the fact that the 'work-in-progress' is reported to be valued at estimated cost vis-a-vis the stage of completion, there is a scope for error due to the assumption that all batches of the 'stock-in-process' are just at the middle point of their process period at the time of valuation. This will ....
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....al. Prima facie, the assessing authority is the best judge of the situation. It is his best judgment and not of any one else. (c) In State of Orissa v. Maharaja Shri B.P. Singh Deo [1970] 76 ITR 690 (SC) it was observed that "the mere fact the material placed by the assessee before the assessing authorities is unreliable does not empower those authorities to make an arbitrary order, it is an assessment on the basis of his best judgment. In other words, that assessment must be based on some relevant material. It is not a power that can be exercised under the sweet will and pleasure of the concerned authorities." (d) In State of Kerala v. Velukutty [1966] 17 STC 465 (SC); [1966] 60 ITR 239 (SC), it was observed that the limits of the power of the assessing officer are implicit in the expression "best of his judgment". Judgment is a faculty to decide matters with wisdom, truly and legally. Judgment does not depend on the arbitrary caprice of judge, but on settled and invariable principles of justice. Though there may be an element of guess-work in a best judgment assessment, it should not be wild one but should have a reasonable nexus to the available material and the circumstances ....
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....Assistant Sales Tax Officer [1970] 26 STC 542 (MP). Since the objections to the proposition notices were filed the assessment order have been passed and there is no violation of principles of natural justice. Detailed objections are stated to have been filed on December 17, 1998 wherein request was made for issuance of another final proposition notice which is not contemplated under law. The explanation given by the assessee were duly considered and principles of natural justice have been complied and is not referable to fatness of stake but to the demands of the situation as held in Jain Exports (P.) Ltd. v. Union of India [1988] 71 STC 173 (SC). Details of tax evaded under inter-State sales beside the tit-bits published in Excise Law Times evasion of payment of excise duty as published in (1998) 99 ELT A125 have also been placed on record. 9.. It is stated that the cost of raw material are on lower side compared to value of the raw material in previous year and when there is increase in the cost of raw material it has resulted in under-valuing and decrease in sales turnover. Extracts from the book of Sri. C.R. Rao, "Balance sheet and Practical Methods of Window Dressing" has al....
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.... be considered to be evasion of tax and that too pertains to CST Act but under the KST Act either in this year or for any previous it has not been brought on record that the petitioner-company was indulging in evasion of tax. 12.. At this stage, it may also be observed that the news as published in "Statesman" or in Excise Law Times though used against the petitioner but his attention was not invited. News published cannot be considered to be an evidence as they are not proved in the eyes of law. It is an inadmissible document. Mind was effected on the basis of such news resulting in best judgment assessment which cannot be supported by law. It is against the principles of natural justice to use any material against the assessee of which opportunity has not been given. In the statement of objections even the best judgment assessment is sought to be justified on the basis of sale invoice issued by M/s. Fareed Sons Aluminium Pvt. Ltd., showing that the price according to the invoice issued by them was Rs. 73.50 per kg. This document prima facie is inadmissible. Because neither the petitioner was given any opportunity in the proposition notice and secondly the assessment order is not....
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....ich has been adopted of the previous year. The basis here mean the method/principles which are well-known in accountancy and not the sale value as that of previous year. Even otherwise if the selling price of finished products is similar in two years still the cost of closing stock can never be the same unless the purchase price is also similar. Even labour charges affect the valuation of closing stock. Assessing authority has not considered the purchase price and labour element while considering the under- valuation of raw material consumed. He himself has given the figures of purchase price of raw material of two years which shows that cost of raw material was more in 1997-98 as compared to previous year as such the closing stock is bound to be at more value than the previous year. No explanation has been given by the assessing authority in this regard. The addition is not sustainable, there is neither decrease of sales nor over-valuation of closing stock. Under-valuation of raw material consumed: Learned Government Pleader, admitted that a mistake has been committed in averaging the price of aluminium, magnesium and silicon. Component of aluminium is stated to be 95 per cent an....
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....e turnover without there being evidence of the sales being effected outside the books of account. It may also be observed that the burden to prove the sale is on the assessing authority. The assessment of sales though of best judgment assessment could be in set of circumstances but here it is a wild guess which has been made. Work-in-progress: On account of work-in-progress 20 per cent amount has been disallowed and added to the taxable turnover on the alleged gross under-valuation considering that there is a scope for error due to assumption that all batches of stock-in-process are just at the middle point of their process period at the time of valuation. This action is based on an assumption without any examination of books or material evidence on record or finding any mistake in the figures adopted in balance sheet. There was no justification in making the addition on this ground. In Schedule 16 of balance sheet figures of work- in-progress are given. Work-in-progress in 1996-97 was Rs. 1,54,13,720 while in 1997-98 it is taken as nil. The figures which the assessing authority has taken is of 1996-97 and not of 1997-98. Whatever the valuation was done in previous year would not ....