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2002 Supreme(SC) 82
IN THE SUPREME COURT OF INDIA
S. P. Bharucha, CJI., Bisheshwar Prasad Singh, Shivaraj V. Patil, JJ.
KATHYAYINI HOTELS PVT. LTD.
Versus
ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES AND ANOTHER.
Civil Appeal No. 546 of 2002 (Appeal by special leave from the judgment and order dt. March 8, 2001, of the Karnataka High Court in S.T.A. No. 2 of 2001)
Decided On: Decided On : 18-01-2002
M. Rama Jois - Appellant.
Shambu Prasad Singh, N. Ganapathy - Respondents.
A best judgment assessment by tax authorities must be reasonable and cannot be based on mere surmises or conjectures.
Headnote:(A) Tax Law - Best Judgment Assessment - Requirement of reasonableness - Even a best judgment assessment must be reasonably made and not based on surmises.
Facts of the case:
An appeal was filed challenging an order passed by tax authorities. The matter had previously been decided by the High Court in a sales tax application, and the aggrieved party approached the Supreme Court via a special leave petition seeking to set aside that order and restore the application for a hearing on its merits.
Findings of Court:
The Court found it appropriate to set aside the order under appeal and restore the sales tax application to the High Court to be disposed of on merits, directing the High Court to examine whether the impugned assessment order was based on reasonable grounds.
Issues: Whether a best judgment assessment can be based on surmises and whether the High Court's order should be set aside to allow the matter to be decided on merits.
Ratio Decidendi: The court held that a best judgment assessment must be reasonably made and cannot be based on surmises.
Result: Appeal allowed.
Legal Category Hierarchy
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tax law
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sales tax
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assessment
- best judgment assessment
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assessment
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sales tax
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practice and procedure
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appeals
- restoration of application
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appeals
ORDER
Leave granted.
The notice on the special leave petition stated that the matter might be disposed of at this stage by setting aside the order under challenge and restoring the sales tax application to the file of the High Court to be heard and disposed of on merits.
We have heard learned counsel and we think that that is the appropriate order to pass. Even a best judgment assessment must be reasonably made and not on surmises. It is in that light that the High Court will look at the order of the Additional Commissioner that is impugned before it. We do not say more because we do not wish to prejudice the case on either side.
Accordingly, the civil appeal is allowed. The order under appeal is set aside. The sales tax application (No. 2 of 2001) is restored to the file of the High Court to be heard and disposed of on merits, bearing in mind what has been stated above.
No order as to costs.
Appeal allowed.
