Case Law Details
Subham Marbles Vs State of Odisha (Orissa High Court)
Court has emphasized that there cannot be an automatic enhancement of taxable turnover on the basis of eye estimation by the Assessing Officer. In other words, relying on the decision in Mahabir Rice Mill v. State of Orissa 1983 54 STC 218 (Ori), it was held that in the absence of any material to establish the goods found short have been sold, it is not possible to the Department to simply enhance the taxable turnover on the basis of ‘eye estimation’. Accordingly, the question framed is answered in negative i.e. in favour of the dealer and against the Department.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
05. 1. While admitting the revision petition which arises from an order dated 6th December, 2017 of the Odisha Sales Tax Tribunal, Cuttack in SA No. 425(VAT) of 2015-16, the following question of law was framed by this Court by the order dated 18th June, 2016:
“Whether in the fact and circumstances, the learned Division Bench, Odisha Sales Tax Tribunal is right in law to hold the petitioner was involved in suppression of purchase and sales, due to discrepancy of stock, when the stock taking was made approximately on eye estimation, without having any other iota of evidence of suppression of purchase and sales, on the basis of a confessional statement, which has been retracted subsequently at the stage of assessment?”
2. Learned counsel for the Department drew the attention of the Court to the observation in the assessment order which reads ‘while verified physical stocks from different items with the books of accounts…..’ and submitted that the Assessing Officer had actually undertaken a physical verification of stocks. The Court is unable to agree with the above submission. It is not clear from the above statement, if there was only an eye estimation of the stocks or actual physical verification. In its order dated 22nd March, 2022 in STREV No.2 of 2008 (M/s. Gupta Distributors, Cuttack v. State of Orissa) as also order dated 6th December, 2022 in STREV No.60 of 2013 (M/s. Prusty & Prusty, Puri v. State of Orissa), this Court has emphasized that there cannot be an automatic enhancement of taxable turnover on the basis of eye estimation by the Assessing Officer. In other words, relying on the decision in Mahabir Rice Mill v. State of Orissa 1983 54 STC 218 (Ori), it was held that in the absence of any material to establish the goods found short have been sold, it is not possible to the Department to simply enhance the taxable turnover on the basis of ‘eye estimation’.
3. In the present case also, the Court is not satisfied with the Department which has been able to show the materials on the basis of which it could conclude that there has been suppression of purchase and sales leading to enhancement of the taxable turnover of the Petitioner-dealer.
4. Accordingly, the question framed is answered in negative i.e. in favour of the dealer and against the Department. The impugned order of the Tribunal and the corresponding to the orders of the 1st Appellate Authority and Assessing Officer are accordingly set aside.
5. The revision petition is disposed of in the above terms.
