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GAUHATI HIGH COURT
J.M.Srivastava, B.P.Saraf, JJ.
Dwijendra Kumar Bhattacharjee -Appellant
Versus
Superintendent of Taxes, Government of Tripura -Respondent
Civil Rule Nos. 193 and 194 of 1982
Decided On : 16-08-1989
TRIPURA SALES TAX ACT, 1976 - SECTION 9(3) - ASSESSMENT - POWERS AND DUTIES OF SUPERINTENDENT OF TAXES - PRINCIPLES OF NATURAL JUSTICE - REASONABLE OPPORTUNITY OF HEARING - BASIS FOR ASSESSMENT - ARBITRARY ASSESSMENT - JUDICIAL REVIEW: 1. The Superintendent of Taxes, while making an assessment under section 9(3) of the Tripura Sales Tax Act, 1976, discharges quasi-judicial functions and is bound to observe the principles of natural justice. 2. The assessee has a right to be heard and to inspect relevant documents before being called upon to lead evidence in rebuttal. 3. The opportunity of hearing must be real and reasonable, and the assessee's prayer for further time to furnish particulars or explanations should be considered judiciously. 4. The assessment must have reference to some evidence or material on record, and the assessment order must disclose the reasons for rejecting the return and accounts as well as the basis for the assessment. 5. An assessment based on pure guess and surmises, without reference to any evidence or materials, is arbitrary and cannot be sustained.
Fact of the Case:
The petitioner, a proprietor of a business dealing in electrical goods, radios, and parts thereof, was registered as a dealer under the Tripura Sales Tax Act, 1976. He submitted returns of turnover from time to time and paid the sales tax due thereon. The Superintendent of Taxes issued notices under section 9(2) of the Act asking the petitioner to appear and produce accounts and documents in support of the returns for four years. The petitioner produced the accounts and documents, but the Superintendent of Taxes rejected the returns, noted defects in the accounts, and estimated the turnover for the relevant years to the best of his judgment. The petitioner challenged the assessment orders, contending that he was denied a reasonable opportunity to adduce evidence and that the assessment was based on pure guess and surmises.
Finding of the Court:
The Court held that the Superintendent of Taxes violated the principles of natural justice by denying the petitioner a reasonable opportunity to be heard and by making an assessment based on pure guess and surmises without reference to any evidence or materials. The Court set aside the impugned assessment orders.
Issues: 1. Whether the Superintendent of Taxes violated the principles of natural justice by denying the petitioner a reasonable opportunity to be heard? 2. Whether the assessment was based on pure guess and surmises without reference to any evidence or materials?
Ratio Decidendi: 1. The Court held that the Superintendent of Taxes is bound to observe the principles of natural justice while making an assessment under section 9(3) of the Tripura Sales Tax Act, 1976. 2. The Court held that the assessee has a right to be heard and to inspect relevant documents before being called upon to lead evidence in rebuttal. 3. The Court held that the opportunity of hearing must be real and reasonable, and the assessee's prayer for further time to furnish particulars or explanations should be considered judiciously. 4. The Court held that the assessment must have reference to some evidence or material on record, and the assessment order must disclose the reasons for rejecting the return and accounts as well as the basis for the assessment. 5. The Court held that an assessment based on pure guess and surmises, without reference to any evidence or materials, is arbitrary and cannot be sustained.
Final Decision: The Court set aside the impugned assessment orders.
In these two writ petitions the important question of law that arises for consideration relates to the nature, scope and ambit of the powers and duties of the Superintendent of Taxes in the matter of making an assessment under section 9(3) of the Tripura Sales Tax Act. 1976. As the facts and questions of law involved iii both the petitions are identical they are taken up together.
2. The petitioner is the proprietor of a business run under the name and style of M/s Bijli House at Agartala and carries on the business of selling and supplying electrical goods, radios and parts thereof. He also undertakes works contracts. In respect of the aforesaid business, he is registered as a dealer under the Tripura Sales Tax Act, 1976 (shortly 'the Act'). The petitioner submitted his returns of turnover from time to time showing turnover for each quarter and paid the sales tax due on the basis thereof. Returns were so submitted for the years ending 31.3.78, 31.3.79, 31.3.80 and 31.3.81. The years relevant for the present petitions are years ending 31.3.80 and 31.3.81. The Superintendent of Taxes did not take any action on the said returns submitted by the petitioner from time to time till 25.8.81 when he issued notices under section 9(2) of the Act asking the petitioner to appear and produce accounts and documents in support of the returns for all the four years. The date was extended to 15.10.81. The petitioner produced the accounts and documents which were examined by the Superintendent of Taxes. He, however wanted the petitioner to furnish certain statements on 21.10.81 but as the assessments for four years were taken up together and it was difficult to prepare furnish the same in such a short time, the petitioner prayed for time. The Superintendent of Taxes; did not allow the same, rejected the returns submitted by the petitioner, noted few defects in the accounts and held that he was not inclined to accept the accounts and the returns as correct and complete. He specifically stated that he could not take any lenient view of the failure of the petitioner to furnish the informations asked for by him. He construed it "as tendency of evasion of taxes''. With the aforesaid observation the Superintendent of Taxes rejected the returns and determined the turnover of the petitioner "to the best of his judgment" for the years ending 31.3.78 and 31.3.79 at Rs. 50,000/-per year; and for the years coding 31.3.80 and 31.3.81 at Rs. 2,00,00/- and Rs. l,50,000/-respectively and computed the tax payable a ad completed the assessments accordingly. Being aggrieved by the said assessments the petitioner filed revision petitions before the Commissioner which were rejected. Review petitions against the same were also rejected. The petitioner finally moved this Court by filing the present writ petitions challenging the two orders of assessment for the years ending 31.3.80 and 31.3.81.
3. Mr. B. Das, the learned counsel for the petitioner, assails the impugned orders of assessment on the following grounds :- (i) That the orders were passed without affording reasonable opportunity to the petitioner to adduce evidence required by the Superintendent of Taxes ; (ii) That the Superintendent of Taxes was not justified in estimating the turnover of the petitioner at Rs. 2,00,000;-and Rs. 1,50,000/-, for the years ending 31.3.SO and 31.381 respectively without giving any material to justify the adoption of these figures. In other words, the contention of the learned counsel is that the estimation is based on no material or evidence and, as such, the impugned orders of assessment are liable to be quashed.
4. Section 9 of the Act deals with assessment. It reads :
"9. Assessment- (!) At the close of a year or at the closure of the business during that year, if the Commissioner is satisfied that the returns furnished under section 8 in respect of that year are correct and complete, he shall by an order in writing, assess the dealer and determine the tax pa
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