STATE OF ORISSA Vs. DURGADUTTA MODA
HIGH COURT OF ORISSA
STATE OF ORISSA
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R.N.MISRA, J. -
(1.) THIS is a reference made under section 24 (1) of the Orissa Sales Tax Act (hereinafter referred to as the Act) by the Member, Sales Tax Tribunal, on the following two questions of law for determination of this court :
" (i) Whether on the facts and in the circumstances of the case, the Member is right in holding that a duty is cast on the revenue to fix the actual amount of escapement in a reassessment proceeding ? (ii) Whether on the facts and in the circumstances of the case, the Member is right in holding that assessment under section 12 (8) of the Orissa Sales Tax Act should be confined to the turnover escaped or under-assessed ?"
(2.) THE assessee, a registered dealer under the Act, deals in aluminium goods. He had been assessed to sales tax under the Act for the year 1962-63. On a discovery of certain dealings of the assessee with other dealers, which had not come to light during the assessment proceedings, action was taken under section 12 (8) of the Act. In the accounts of the third party, the following transactions of the assessee were found :
Date Amount 13-4-62 Rs. 504. 27 P. " " 426. 46 " 9-5-62 " 1,361. 94 " 10-5-62 " 142. 16 " 12-5-62 " 508. 40 " " " 176. 10 " 22-5-62 " 815. 27 " --------- 3,934. 60 ---------
On verification of the assessee's accounts, the Sales Tax Officer did not find corresponding entries. The Sales Tax Officer accepted the entries in the third party's accounts to be correct and came to the conclusion that there were suppressions in the assessee's books of account. Though the total suppressions came to Rs. 3,934. 60, the Sales Tax Office made an estimate of the suppressed turnover of sales at Rs. 12,000 and demanded additional tax along with penalty of Rs. 100 from the assessee.
The appeal filed by the assessee failed. In second appeal by the assessee, the Tribunal came to hold :
" Certain pleas were taken by the Advocate for the appellant which were advanced in the forums below also, but they have been rightly rejected as unsustainable. The only point now for me to consider is, is Rs. 12,000 enhancement justified. This is a 12 (8) proceeding with an imposition of penalty of Rs. 100. It was the duty of the department to fix the actual amount of escapement. They have not done so. The total escapement is Rs. 3,934. 60. There is another sum of Rs. 2,603. 95 but that is not an escapement. Thus in round figures the escapement is Rs. 4,000 Accordingly, I reduce the enhancement to Rs. 4,000 only. "
Learned standing counsel contends that the approach of the Tribunal to the matter has been vitiated and the Tribunal is wrong in its view that in an assessment under section 12 (8) of the Act what can actually be added is the escaped turnover. Mr. Mohanty appearing for the assessee supports the view of the Tribunal and contends that there was no scope for making a best judgment assessment in a proceeding under section 12 (8) of the Act and what the assessing officer was entitled to add was the exact escapement only.
(3.) THE two questions which have been referred to us seem to be not very appropriate. What exactly arose from the Tribunal's order in second appeal and is canvassed by learned standing counsel is that in an assessment under section 12 (8) of the Act, the assessing officer is entitled to make a best judgment assessment and he need not confine his assessment to the exact escaped turnover. A distinction has got to be maintained between escapement and under-assessment. In the case of under-assessment there is no scope for estimate, because the turnover would remain the same, while a lower rate has been applied on the earlier occasion, the appropriate rate has only to be applied. The case of escapement, however, has a completely different basis. We would accordingly recast the questions keeping in view the actual dispute to the following effect :
" (i) Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that it was the duty of the department to fix the actual amount of escapement; and (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment in question had to be confined to the escaped turnover. " ;
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