STATE OF KERALA versus K. T. SHADULI YUSUFF ETC.

Citation: [1977] 3 S.C.R. 233 · Decided: 15-03-1977 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed

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Judgment (excerpt)

233 
STATE OF KERALA 
A 
v. 
K. T. SHADULI YUSUFF ETC. 
March 15, 1977 
[P. N. BHAGWATI, R. S. SARKARIA AND S. MURTAZA FAZAL Au, JJ.,] 
B 
Kera/a General Safes Tax Act, 1963-S. 17(3)-Scope of-Best judgment 
.assessn1ent 1nade relying 011 entries in account books of other dealers-Assessee 
-If e11titlcd to cross-exan1ine the dealers. 
Natural iustice-Scope in tax matters-Best 
Judgment assessnient 
made 
relyuig on en/lies in account books of other 
dealers-Cross-examination 
of 
dealers-If par/ of pruiciples of 11atr11al Justice. 
Section 17(3) of the Kerala General Sales Tax Act 1963 provides that if 
the return submitted by an assessee appears to be incorrect or incomplete, the 
assessing authority may assess the dealer to the best of its judgment. 
The 
oroviso to the sub-section enacts that before taking action under the sub-~cc­
iion, the dealer shall be given a reasonable 
opportuniry of being heard aud, 
Yihere a return has been submitted, to prove the correctness of completeness of 
~uch return. 
Relying on the evidence furnished by entries in the books of acc9unt 
of 
5ome olher dealers, the Sales Tax Officer disbelieved the assessee's 
a~(..OUnts 
and came to the conclusion that the return field by hin:1 was incorrect and in-
complete and made a 
best judgment 
assessment 
under 
s. 17(3). 
fhe 
asses~ee's request to cross-examine the dealers in regard to the correctne:-.s of 
their accounts was rejected by the Sales Tax Officer. Jn revision the 
High 
Court quashed the order of the Sales Tax Officer. 
Dismissing the State's appeal, 
(Per Bhagwati and Sarkaria, JJ} 
HELD . 
The assessee was entitled to cross-examine the dealers under thi.: 
second part of the proviso to s. 17(3). 
The Sales Tax Officer's 
refi.,_~al to 
summon the dealers for cross-examination by the· assessee constituted infraction 
c 
D 
E 
of ti1e right conferred on the assessee by the second part of the prov1su 
and 
F 
that vitiated the order of assessment made against him. [239 F] 
(I) The rule which requires an opportunity to be heard to be given ro a 
person likely to be affected by a decision is not an inflexible rule having a fixed 
connotation. 
It has a variable co:i;iten_t ~epending on the. na.ture of the .inquiry, 
the framework of the law under which 1t rs held, the const1tutton of the at~thority 
hoiciing the inquiry, the nature and character of the right affected and tne coH-
sequences :flo\ving from the decision. 
The rule of audi alterem partc1n does not 
require in every case a specified procedure to be followed. 
In a given case, 
G 
the rule of audi alterem parte1n may import a requirement that witnesses, wilo5e 
statemenls are sought to be relied upon by the authority holding the inquiry, 
should be permitted to be cross-examined by the party affected while in s0me 
other cases it mav not. The procedure required to be adopted for giving an 
opiJortunity to a person to be heard must necessarily depend on the facts and 
circumstances of each case. rz37 B-Dl 
(2) (a) It is only on the existence of one of two conditions, namely, that 
H 
n.J return is submitted by the assessee or the return submitted appears to be 
incorrect ·or incomplete that the Sales Tax Officer gets the jurisdiction to make 
a be'St judgn1ent assessment. [237 H] 
A 
B 
c 
D 
E 
.F 
G 
.II 
234 
SUPREME COURT REPORTS 
(1977]3 S.C.R. 
----
(b) The second. part of the proviso lays down that ~·here a return has been 
. submitted, the assessee should be given a reasonable opportunity to pro,•e, the 
correctness or completeness of such return. ..To prove"' means to establish the 
correctness or. completeness of the return by any mode permissible under taw. 
The Oppor_tun1ty to prove would, !herefore, necessarily carry with it the right to 
CxaDllne w1~esses and that would include equally the right to cross-exarniae w~t­
nesses examined by the Sales Tax Officer. [238 G-HJ 
Jn the instant case, the assessee could prove the correctness and completnes~ 
of his return only by showing that the entries in the books of account of the 
dealers on ·which the Sales ·Tax O_fficer relied, were false, bogus or manipulated 
and that bis return should not be disbelieved on the basis of· such entries. 'I his 
could not be done unless an "opportunity to: cross exan1ine the dealers was given. 
[239 BJ 
· · 
, 
.-.I 
.i.-turlimohan Prabhudayal v. State of Orissa~ 2~ S.T.C. 22 and 1.1. Appukutry 
v. Stt:t_e of Kera/a~ 14 S.T.C. 489 approved, 
Fazal Ali, J. (concurring). 
Secti

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