Andhra HC (Pre-Telangana)
Vineet Enterprises vs State Of Andhra Pradesh on 4 September, 1995
Equivalent citations: [1996]101STC426(AP)
Author: V. Rajagopala Reddy
Bench: V. Rajagopala Reddy
JUDGMENT S. Parvatha Rao, J.
1. This tax revision case under section 22 of the Andhra Pradesh General Sales Tax Act, 1957 ("the Act", for short), is directed against the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, dated September 29, 1987, partly dismissing Tribunal Appeal No. 986 of 1987 preferred by the petitioner herein and partly confirming the order of the Appellate Deputy Commissioner, Hyderabad-I Division, dated July 25, 1987, in Appeal No. 729/86-87 which in turn confirmed the order of the Commercial Tax Officer, General Bazar Circle, Secunderabad, in GI. No. 28054/82-83 dated December 5, 1986. The assessee is a proprietory concern of one Smt. Kusum Latha. She questions the best judgment assessment made by the Commercial Tax Officer as confirmed by the Tribunal in respect of the purchases of photographic goods made by her from Bombay of the value of Rs. 8,38,631.18.
2. The facts in brief are as follows :
The assessment relates to the assessment year 1982-83 under the Act. She was a registered dealer under the Act at the relevant time and the goods in respect of which she was shown as a dealer was cement. For the business she did in cement, for the assessment year 1982-83, she filed a return showing a turnover of Rs. 36,000 and claimed exemption. Her claim was accepted and assessment order was made on September 8, 1984, which was received by her on September 8, 1984 itself. On July 9, 1985, a search of her business and residential premises was conducted during which it was found that during the period January 4, 1982 to March 31, 1983, she made purchases of photographic goods from one M/s. Keshoram Surendranath of Bombay to the tune of Rs. 8,38,631.18 and that she issued form C declarations in respect of the said purchase. The concerned Commercial Tax Officer, in exercise of his powers under sub-section (4) of section 14 of the Act, issued notice dated May 13, 1986, to her to show cause why a turnover of Rs. 10,90,220 should not be brought to tax as suppressed turnover of sales that figure was arrived at by adding to the purchase price 30 per cent estimated profit on that price of Rs. 8,38,631.18. In spite of several opportunities given to the petitioner herein, she did not give a reply to the show cause notice by herself or through her advocate who filed his appearance on July 3, 1986. The Commercial Tax Officer finally made his order dated December 5, 1986, holding that the petitioner herein wilfully suppressed the sales of photographic goods relating to suppressed purchases of the said goods worth Rs. 8,38,631.18 and that turnover of Rs. 10,90,220, escaped assessment for the year 1982-83, and brought that to tax and assessed the tax payable thereon at Rs. 1,49,905. The said order was served on the petitioner on January 27, 1987. According to the petitioner, she sent her objections on January 15, 1987 to the Commercial Tax officer before she received the said order.
3. The petitioner appealed to the Appellate Deputy Commissioner of Commercial Taxes against the said order. The petitioner also filed Writ Petition No. 3341 of 1987 before this Court seeking directions to the sales tax authorities not to take coercive steps for the recovery of the amount demanded on the basis of the said order of the Commercial Tax Officer and that writ petition was disposed of on March 17, 1987, with a direction to the Appellate Deputy Commissioner for expeditious disposal of the appeal of the petitioner hereinbefore him and directing the authorities concerned not to take coercive steps during the pendency of the said appeal. In spite of several opportunities given by the Appellate Deputy Commissioner thereafter, the petitioner herein sought adjournments from time to time and the appeal was posted for hearing to July 25, 1987. The petitioner herein by letter dated July 24, 1987, sought adjournment once again on the ground that her daughter was going to be operated, even though she was represented by an advocate. The Appellate Deputy Commissioner considered the contentions of the petitioner herein as raised in the grounds of appeal and dismissed the appeal on merits holding as follows :
"Secondly it was contended that the assessing authority made wild guess-work without looking into the details. I observe this point also to be untenable for the reason that the assessing authority has computed only such of the purchases effected by issue of 'C' form and none else; and there is no estimation also. What all the assessing authority has computed is based on facts and figures and no guess-work is involved. At point Nos. 9 and 10 of the grounds of appeal, it was urged that the purchased goods were fully used to meet the laboratory work in making ordered specific photos, to its customers. This is again an interesting point. The appellant is a registered dealer in cement and the assessment was completed on nil turnovers by the Assistant Commercial Tax Officer, General Bazar, Secunderabad and it is not known as to how these purchased goods were used in the laboratory for making photos when the appellant is a dealer in cement. The act of non-vouching for of the transactions in the books of accounts; and the use of the 'C' forms for purchase of goods in which the appellant is not a dealer clearly establish the mens rea of the assessee in suppression of turnovers and thereby to evade legitimate taxes due to the States exchequer. More so the indiligent attitude of the appellant in getting the case disposed also lends support to this view."
4. Before the Tribunal the two points urged by the petitioner herein and which arose for consideration were firstly whether the petitioner herein was denied reasonable opportunity before the Commercial Tax Officer and the Appellate Deputy Commissioner, and secondly whether the assessment of a turnover of Rs. 10,90,220 as suppressed sales was arbitrary, excessive and unreasonable. On the first point, the Tribunal, after considering all aspects of the matter, held that the petitioner herein was given reasonable opportunity but had not availed of the same and that therefore the orders of the authorities below could not be set aside on that ground. On the second point, the Tribunal found that the petitioner herein admitted the purchases of photographic goods for Rs. 8,38,631.18 from Bombay and that they were not disclosed in the books of accounts or in the returns filed by her and that she issued 'C' forms for the said purchases though she was admittedly not dealing in those goods. In fact, the Tribunal observed that it was also found by the lower authorities that the appellant issued "C" declaration forms in respect of the said purchases of photographic goods and that the said "C" forms were not issued to the appellant herein by the department. The Tribunal observed that when once the petitioner herein admitted the purchase of photographic goods which were not disclosed earlier, it was for her to adduce evidence and prove how the goods were disposed of. It was contended before the Tribunal on behalf of the petitioner herein that her husband had been running a photo studio and that the photographic goods purchased by her were utilised by her husband in the studio in his profession of photography and that taking of photographs and supplying prints to the customers was a contract of work and labour and was not a sale and that therefore she had not returned any income relating to the occupation of photography. The Tribunal rejected the said contention observing as follows :
"But the appellant has not been carrying on the occupation of photographer. The appellant purchased photographic goods from outside the State and issued 'C' declaration forms. There was therefore a duty cast on the appellant to explain how the goods were disposed of. It was not done. If her husband has been carrying on the profession of photography, the proprietrix has to explain how the transfer was effected. There is no evidence adduced in this regard. Having regard to the circumstances, the Commercial Tax Officer rightly concluded that the appellant could have sold away the photographic goods purchased from outside the State. It is only because the appellant has no intention of explaining how the goods were disposed of, it has not accounted for the purchases, as otherwise there was no need to suppress from disclosure the purchases made. It is not possible to accept the contention that the Commercial Tax Officer's assessment was a wild guess."
5. The Tribunal however, reduced the estimated profit from 30 per cent to 15 per cent and on that basis arrived at the sale value of the said photographic goods as Rs. 9,64,425 and allowed the appeal to the extent of limiting the estimated turnover to that figure and upheld the assessment on that turnover.
6. On the first point, the learned counsel for the petitioner contends before us also that the orders of the Commercial Tax Officer and the Appellate Deputy Commissioner are liable to be set aside on the ground that no reasonable opportunity was given to her. We are unable to find any substance in this contention. The fats disclose that adequate opportunity was given to the petitioner herein by the said authorities but that the petitioner did not avail of that opportunity and was trying somehow or other to avoid appearing before the said authorities and giving an explanation. The petitioner does not dispute that she was served with the show cause notice dated May 13, 1986 on May 14, 1986 and in that notice she was requested to file her objections if any, to the proposed revision within 15 days from the date of receipt of the said notice and she was also requested to peruse the detected records with the department. On May 29, 1986, a letter was filed on behalf of the petitioner herein stating that the proprietrix was out of station and that she was expected back around June 15, 1986 and that she would attend to the matter thereafter. However, even after that there was no response. A second notice dated June 20, 1986, was issued to the petitioner herein that the matter was posted to July 3, 1986 and that if this opportunity was not availed of, order would be passed as indicated in the show case notice and that no further adjournment would be granted. This notice was received by the petitioner on June 27, 1986 and that is not disputed by the petitioner. On July 3, 1986, authorisation appointing and retaining Sri A. V. S. Ramakrishnaiah - the learned counsel appearing before us now - and another advocate, was filed. However, no written objections to the proposed reassessment was filed. The Commercial Tax Officer in his order dated December 5, 1986 states :
"No time was also sought to file objections nor the advocates appeared so far."
7. The learned counsel for the petitioner disputes that statement and draws our attention to grounds of appeal filed before the Appellate Deputy Commissioner and particularly to ground No. 2 wherein it is stated as follows :
"On our request the two cases stood posted, as per notice served on us, to July 3, 1986. On this date, two vakalats of our advocates were filed and time was requested. The officer receiving the two vakalats informed, date would be informed as per office notice, as previously intimated. No further notice of posting at all for hearing this was served on assessee. We went to the office, enquired three times, each month August, September and October, 1986, but, the same reply from office was received."
8. All this was not stated in the so-called preliminary objections filed on January 15, 1987, before the Commercial Tax Officer. Only in the reference portion it was stated :
"Show cause notices two for the two years (1982-83 and 1983-84) - Two vakalats filed - Requested time for filing objections - No date of hearing fixed and intimated - Preliminary objections hereby filed."
9. The learned counsel for the petitioner has no explanation whatsoever for not filing these objections for five months even after appearance of the counsel was filed on July 3, 1986. Admittedly, in the show cause notice dated May 13, 1986, the petitioner was asked to file her objections within 15 days from the date of receipt of the notice - she received the notice on May 14, 1986 - and she was also requested to peruse the detected records with the department; that time expired on May 29, 1986. On that last day a letter was filed on behalf of the petitioner stating that she was expected to be back by June 15, 1986. In the second notice dated June 20, 1986, while stating that the matter was posted to July 3, 1986, the petitioner was told unequivocally that no further adjournment would be granted. Therefore, the petitioner had no excuse whatsoever for not filing her objections by July 3, 1986. In fact, she has not come forward with any explanation for not filing her objections by July 3, 1986 when the original time granted was 15 days from May 14, 1986, i.e., up to May 29, 1986. She cannot just have vakalats filed and wait for a notice for "hearing" - obviously there could be no hearing without her even filing her objections. We are not inclined to believe the petitioner when she states that the Commissioner held out that he would give further notices. It is not her case that she wanted to submit her objections at any time before January, 1987 and the Commercial Tax Officer refused to receive the same. Nothing prevented the petitioner from sending her objections by post after waiting for a reasonable time from July 3, 1986 for the notice, if really the Commercial Tax Officer stated that he would send the notice. We are not inclined to disagree with the observations of the Tribunal that when the Commercial Tax Officer had noted that the authorisation (appointing advocates) was received in tappals it was not possible to believe that the vakalat was filed in person, and that the Commercial Tax Officer had also made a note that no adjournment was asked for filing objections. Moreover, these are findings of fact which cannot be gone into in this tax revision case. We also agree with the following observations of the Tribunal :
"It is beyond one's comprehension as to how the appellant (petitioner herein) could think that it could take seven months time to file objections after receiving notice and the assessing authority would wait indefinitely for the appellant to file its objections. Having regard to the attitude adopted by the appellant, the Commercial Tax Officer had rightly concluded that she had no objections to file. We do not therefore agree that the appellant was not given reasonable opportunity to file objections and represent her case before the Commercial Tax Officer."
10. The petitioner can only complain if the opportunity given to her is not reasonable. What is reasonable depends on the facts of each case. In Fedco (P) Ltd. v. S. N. Bilgrami AIR 1960 SCC 415, a five Judge Bench of the Supreme Court observed as follows :
"The requirement that a reasonable opportunity of being heard must be given has two elements. The first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable. Both these matters are justiciable and it is for the court to decide whether an opportunity has been given and whether that opportunity has been reasonable......
There can be no invariable standard for 'reasonableness' in such matters except that the court's conscience must be satisfied, that the person against whom an action is proposed has had a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non-existent or even if they exist they do not justify the proposed action. The decision of this question will necessarily depend upon the peculiar facts and circumstances of each case, including the nature of the action proposed, the grounds on which the action is proposed, the material on which the allegations are based, the attitude of the party against whom the action is proposed in showing cause against such proposed action, the nature of the plea raised by him in reply, the requests for further opportunity that may be made, his admissions by conduct or otherwise of some or all the allegations and all other matters which help the mind in coming to a fair conclusion on the question."
11. In Govinda Chandra Mohanty v. Commissioner of Sales Tax [1990] 77 STC 209 (Orissa), the petitioner in a writ petition alleged that he was not afforded adequate opportunity for presenting his case before the Assistant Commissioner of Sales Tax because he was directed to appear before him on February 22, 1977, by a notice which was received by the petitioner in that case about two hours earlier and that when he applied for an adjournment the matter was posted to February 28, 1977, which according to the petitioner, was not sufficient for getting ready in the matter. A Division Bench of the Orissa High Court held that there was no justification for such a contention when the petitioner was granted one week's time. In the present case the petitioner, though initially was granted 15 days time, i.e., up to May 29, 1986, on her request time was granted up to July 3, 1986. As observed by Megarry, V.C., in MC. Innes v. Onslow Fane [1978] 3 All ER 211, "the concepts of natural justice and the duty to be fair must not be allowed to discredit themselves by making unreasonable requirements and imposing undue burdens". When the petitioner had not come forward by filing her objections to the proposed action, it does not lie in her mouth to say that no further hearing of notice was given. There is nothing to show that she or her counsel approached the Commercial Tax Officer seeking further time on July 3, 1986 or at any time thereafter for filing objections and seeking a hearing, when she was made known clearly in the notice dated June 20, 1986 that no further time would be granted. No explanation is given for not filing the objections by July 3, 1986. On the facts of the present case, we are of the view that it cannot be said that the petitioner did not have reasonable and adequate opportunity. In this connection we have also to observe that it cannot be lost sight of that what sub-section (4) of section 14 of the Act requires before making best judgment assessment is : (i) a notice to the dealer, and (ii) making such enquiry as the assessing authority may consider necessary. Once adequate and reasonable notice was given, it is for the assessee to avail of the opportunity given; when for no good reason opportunity is not taken, the assessee cannot complain that principles of natural justice are violated.
12. Nor can the Appellate Deputy Commissioner be faulted on the ground that he violated principles of natural justice. Admittedly, the petitioner herein approached this Court by way of Writ Petition No. 3341 of 1987 and on March 17, 1987 itself, this Court directed the Appellate Deputy Commissioner to dispose of the appeal before him expeditiously and that no coercive steps should be taken for the recovery of the amount assessed. In view of that order, one would expect the petitioner herein to co-operate with the Appellate Deputy Commissioner in hearing and disposing of the appeal before him without delaying and procrastinating the matter. After receiving the order of this Court in Writ Petition No. 3341 of 1987, the Appellate Deputy Commissioner posted the appeal of the petitioner herein for hearing on March 31, 1987 and then adjourned to April 9, 1987 to effect proper service of the date of hearing on the petitioner herein. It is not in dispute that the appeal was preferred on behalf of the petitioner herein by her counsel, i.e., Sri A. V. S. Ramakrishnaiah who is appearing before us now. In spite of that, an employee of the proprietrix filed a petition on April 9, 1987, seeking adjournment by two weeks before the Appellate Deputy Commissioner and the appeal was adjourned to April 23, 1987. As the notice could not be served, the matter was once again posted to July 9, 1987. On July 9, 1987, the advocate of the petitioner herein appeared and asked for adjournment and the appeal was adjourned to July 25, 1987 and the notice fixing the date of adjournment was served on the petitioner herein on July 16, 1987. On July 24, 1987, the petitioner herein filed a letter seeking further adjournment on the ground that her daughter was going to be operated the next day and that she had to be admitted one day in advance. There is no explanation whatsoever why her counsel did not appear and argue the matter or seek a short adjournment if that was necessary. It was under those circumstances that the Appellate Deputy Commissioner disposed of the appeal by his order dated July 25, 1987.
13. Sri A. V. S. Ramakrishnaiah contends that when an application was made by the petitioner on July 24, 1985 seeking adjournment, it was incumbent on the Appellate Deputy Commissioner to consider the same and pass appropriate order thereon and to communicate the said order to the petitioner, and that in the absence of such an order the petitioner and her counsel could conclude or act on the assumption that adjournment was granted. We cannot agree and we have to observe that if they so conclude and do not appear on the date to which the matter was posted on the assumption that adjournment was granted, they would be running the risk of being set ex parte and the matter being disposed of ex parte. A party cannot frustrate the hearing and disposal of a matter by seeking adjournments from time to time without any good reason or by addressing letters for adjournments a day before the dates of hearing without leaving any time for communicating the orders of refusal. If the contention of the learned counsel for the petitioner is to be accepted, then every time such a letter for adjournment is addressed a day before the date of hearing or even on the date of hearing, by such unilateral action of the party the matter would be inevitably get adjourned because communication of the order on such application cannot be effected before the date and time of hearing already fixed. As observed by Paul Jackson in his illuminating book on "Natural Justice" (second edition), there is no doubt that "the opportunity to present an effective answer or defence may necessitate seeking an adjournment of proceedings; 'Sometimes, if justice is to be done, adjournments are essential'; Hanson v. Church Commissioners for England (1978) QB 823, 838, per Roskill L.J." But the learned author also observes :
"A party who has had lengthy notice of proceedings cannot expect to obtain an adjournment as of right by producing at the very last moment an excuse such as an objection, based on religious grounds, to attending a hearing on a particular day......
Nor can a party claim an adjournment, as of right, if he would not have required the delay had he taken the trouble to observe the appropriate rules of procedure of the Tribunal or other body in question......."
14. In Pawan Steel Corporation v. Commissioner of Commercial Taxes [1991] 83 STC 148 (WBTT) the Commercial Tax Officer granted several adjournments earlier and when he did not allow the verbal prayer for adjournment on a day finally fixed for hearing and completed the assessment presumably because there was only one month left for completing the assessment, that was questioned before the West Bengal Commercial Taxes Tribunal. That Tribunal upheld the assessment. On the question whether that Tribunal was right in holding that reasonable opportunity of being heard had been allowed to the assessee before making the assessment to the best of his judgment by the Commercial Tax Officer, the West Bengal Taxation Tribunal held as follows :
"......There is nothing perverse in the view of the Tribunal that when further time was not allowed on October 3, 1970, the applicant should have at least made a prayer for adjournment for one day to enable him to produce books of account and declaration. No such prayer was also made before the learned Commercial Tax Officer. In the circumstances, we find nothing perverse in the order of the West Bengal Commercial Taxes Tribunal, while dealing with the question of non-granting of adjournment by the Commercial Tax Officer on the verbal prayer of the applicant on October 3, 1970."
15. And then there is the decision of the privy Council in Commissioner of income-tax v. Laxminarain Badridas [1937] 5 ITR 170. In that case an assessee under the Income-tax Act, 1922, received notice under sub-section (2) of section 22 of that Act and he filed a return which was unsatisfactory and incomplete. The Income-tax Officer thereupon served upon the assessee a notice under sub-section (4) of section 22 of that Act requiring him to produce or cause to be produced at his office the accounts for three years and any evidence on which the assessee might rely upon in support of his return, by September 14, 1931. The assessee obtained an adjournment until October 19, 1931 and on that day, i.e., October 19, 1931, he applied in writing for a further adjournment alleging that he had been ill. The Income-tax Officer refused to grant any further adjournment and made assessment to the best of his judgment on that very day under sub-section (4) of section 23 of that Act. One of the questions referred for the opinion of the Judicial Commissioner's Court of Central Provinces in a case stated under section 66(2) of that Act was whether the assessee could not under law claim cancellation of ex parte assessment order dated October 19, 1931 in view of, among others, the undisputed fact that the assessee was ill and "the further admitted fact that the Income-tax Officer did not pass or communicate to the assessee's servant or to the assessee any order for immediate production of account books or any other fair order" presumably on the refusal of the adjournment sought on October 19, 1931. The Judicial Commissioners held in favour of the assessee on that question observing that "no previous intimation had been given of the intention of the officer to refuse a further adjournment on October 19, 1931, which they characterised as a failure to observe an elementary rule" and that the assessee had shown sufficient cause being sick. Disagreeing with that view, Lord Russell of Killowen, delivering the judgment of the Board, observed :
"......And their Lordships are unaware of any rule by which the officer was bound or ought to announce beforehand how he proposes to deal with an application for an adjournment. The respondent (assessee) had already obtained one adjournment from September 14, 1931, until October 19, 1931. It was his duty if he desired a further adjournment to apply at a date sufficiently early to enable him, in the case of a refusal, to be prepared to proceed on the appointed day. In fact the respondent delayed his application for a further adjournment until the very day appointed for compliance with the order. Even if this could be said to be a case of exercising a judicial discretion, their Lordships can see no ground on the facts of this case for suggesting that it was wrongfully exercised."
16. In the present case, the Appellate Deputy Commissioner (CT) adjourned the appeal preferred by the petitioner herein twice earlier after it was posted for hearing on April 9, 1987 - once on April 9, 1987 and again on July 9, 1987 - it was then posted to July 24, 1987. In his order dated July 25, 1987, the Appellate Deputy Commissioner observed as follows :
"On July 24, 1987, the appellant filed a letter enclosing a photo copy of medical certificate therein to the effect that her daughter is going to be operated on Sunday and that she is to be admitted one day in advance. In view of the High Court's direction for expeditious disposal of the appeal, wherein stay was granted till the disposal of the case, and in view of the indiligent attitude of the appellant in getting the case disposed, I dispose of the case on merits ex parte."
17. On the facts of the present case, we are of the view that the Tribunal was right in observing that there was no reason why the petitioner's advocate did not appear and argue the appeal or seek for a short adjournment if it was inevitable, and that the petitioner herein was given reasonable opportunity but had not availed of the same. The Tribunal also found that sufficient time was given to the petitioner by the Appellate Deputy Commissioner to get ready for arguments in the appeal and that the case was adjourned from time to time for a period of three months after the directions of this Court in Writ Petition No. 3341 of 1987. On an earlier occasion, i.e., on July 9, 1987, the counsel for the petitioner herein himself appeared and sought adjournment before the Appellate Deputy Commissioner. The petitioner's presence was not really necessary in the hearing of her appeal when she was represented by her counsel. It is not the case of the petitioner that her counsel was not available to argue her appeal on July 25, 1987. In the circumstances, we do not see how we can interfere with the finding of the Appellate Tribunal that the petitioner herein was given reasonable opportunity.
18. As regards the second point, the main contention advanced by the learned counsel for the petitioner is that there was no material whatsoever for the authorities to proceed on the basis that photographic goods purchased by her were sold. He submits that unless the authorities concerned were justified in concluding that the photographic material purchased by the assessee was sold, there could be no turnover that escaped assessment. The learned counsel contends that the burden was on the department to establish that there were sales of the photographic material purchased by the petitioner and that that burden was not discharged in the present case and that therefore the impugned best judgment assessment has to be set aside. We are not inclined to agree. On the facts of the present case, it is clearly on the petitioner to establish what she did with her photographic goods purchased from Bombay availing "C" forms and to produce material to establish her case. The petitioner merely stated that the photographic goods were utilised by her husband in his studio in his profession of photography, as she had no studio of her own and that she was doing the business of photography undertaking contracts in that regard. But the mere ipse dixit of the petitioner would not suffice. Even before the Tribunal, the petitioner had not produced any material for substantiating her case in a convincing manner.
19. The learned counsel for the petitioner relies on the judgment of the Supreme Court in Assistant Sales Tax Officer v. B. C. Kame [1977] 39 STC 237, wherein it has been held that when a photographer undertakes to take a photograph, develop the negative, or do other photographic work and thereafter supplies the prints to his client, he cannot be said to enter into a contract for sale of goods, and that the contract on the contrary is for the use of skill and labour by the photographer to bring about a desired result, and that the occupation of a photographer, except in so far as he sells the goods purchased, would be essentially one of skill and labour. But, in the present case, the finding of the Tribunal is that the petitioner was not carrying the occupation of photography. That is a finding of fact by the Tribunal and that is not really disputed by the petitioner. That finding cannot be questioned by her as perverse. The fact that her husband was a photographer did not make her a photographer. It is not her case that she was a photographer at the relevant time or that she was having a photography studio of her own. In the circumstances, that finding of fact by the Tribunal cannot be interfered with by us in exercise of the revisional jurisdiction under section 22 of the Act.
20. Admittedly the petitioner used "C" forms for the inter-State purchases of the photographic material from Bombay and got the benefit of lower rate of tax. Admittedly also the petitioner was not registered as a dealer in respect of photographic goods at the relevant time. In this connection the learned Government Pleader has drawn our attention to clause (b) of sub-section (1) and clause (b) of sub-section (3) and clause (a) of sub-section (4) of section 8 of the Central Sales Tax Act, 1956 ("The Central Act", for short). Under section 8(1)(b) every dealer, who in the course of inter-State trade or commerce "sells to a registered dealer other than the Government goods of the description referred to in sub-section (3), shall be liable to pay tax under this Act, which shall be four per cent of his turnover". Under section 8(3)(b) the goods referred to in section 8(1)(b), to the extent relevant for the present case, "are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale...." Under section 8(4)(a) the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner "(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority". That form is prescribed under sub-rule (1) of rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 and is called form "C". Form "C" is issued in triplicate - counterfoil, duplicate and original; the counterfoil is to be retained by the purchasing dealer. The "C" form provides for a declaration as follows :
"Certified that the goods....[Strike out whichever is not applicable."] ordered for in our purchase order No......dated......and supplied as per bill/cash memo/challan No......dated.....as stated below purchased from you as per bill/cash memo/challan No......dated......as stated below supplied under your challan No......dated.....are for [Strike out whichever is not applicable."] resale/use in manufacture/processing of goods for sale/use in mining/use in generation/distribution of power/packing of goods for sale/resale and are covered by my/our registration certificate No........dated........issued under the Central Sales Tax Act, 1956.
It is further certified that I/we am/are not registered under section 7 of the said Act in the State of.......in which the goods covered by this form are/will be delivered.
Name and address of the purchasing dealer in full.............
Date...........
The above statements are true to the best of my knowledge and belief.
(Signature).............................
(Name of the person signing the declaration).
(Status of the person signing the declaration in relation to the dealer).
21. It is not the case of the petitioner that she was registered then as a dealer under the Central Act in respect of the photographic goods or that she then had a certificate of registration showing the photographic goods as being intended for use by her for her alleged business in photography. There was no explanation by her for not registering herself as a dealer in respect of photographic goods for use in photographic business if really she was doing photographic business. Indeed, the learned counsel for the petitioner accepts that issuance of "C" forms by her for the purchases of photographic goods in question from Bombay was improper and contrary to section 8 of the Central Act and rule 12 referred to above. On the facts admitted therefore it follows that the burden is on the petitioner to establish that the goods purchased by her were not sold and that the transfers made by her in respect of the same were not sales.
22. The learned counsel for the petitioner relies on the decision of a Division Bench of this Court in Satyanarayana Murthy & Sons v. State of A.P. [1984] 57 STC 274 in support of his contention that the burden is on the department to establish that the goods were in fact sold. In that case the assessee made a voluntary disclosure of income of Rs. 25,000 to the Income-tax department at the fag end of the assessment year 1975-76 under the Voluntary Disclosure of Income and Wealth Act, 1976 (Central Act No. 8 of 1976). According to the assessee this was done by crediting the capital account simultaneously debiting the goods account. This Court held that even assuming that the addition formed part of the actual stock of goods, unless there was evidence to show that the stock said to have been purchased had been actually sold during the assessment year as the goods in question attracted tax at the point of first sale, the same could not be reckoned as forming part of the turnover; and that the said disclosure in order to attract the sales tax, the department was obligated to establish by evidence that it pertained to the sales of the goods purchased and that too during that assessment year and as that was not established it would not be within the purview of the Revenue to add the disclosed income to the total turnover of the assessee. In holding so, this Court relied on the decision of the Supreme Court in Girdhari Lal Nannelal v. Sales Tax Commissioner [1977] 39 STC 30. That case arose under the Madhya Pradesh General Sales Tax Act, 1958. The appellant before the Supreme Court was a dealer under that Act. While determining the taxable turnover of the appellant for the accounting year 1950-51, the assessing authority took into account a sum of Rs. 10,000 in respect of which there was a cash credit entry in the account books of the appellant in the name of the wife of a partner of the appellant, treating the said sum as income of the appellant out of concealed sales. Adopting ten per cent as the rate of profit, the turnover in this regard was determined by the assessing authority to be Rs. 1,00,000 and he added that to the turnover in computing the gross turnover of the appellant, rejecting the plea of the assessee that the sum of Rs. 10,000 represented the amount gifted by that partner to his wife before marriage in 1941. The Supreme Court held that the cash credit of Rs. 10,000 standing in the name of the wife of the partner of the assessee could not be added as profit or income out of concealed sales in the absence of any material whatsoever solely on the ground that the burden was on the assessee and that the plea of the assessee that it represented the amount gifted by the partner to his wife was not accepted, observing as follows :
"The approach which may be permissible for imposing liability for payment of income-tax in respect of the unexplained acquisition of money may not hold good in sales tax cases. For the purpose of income-tax it may in appropriate cases be permissible to treat unexplained acquisition of money by the assessee to be the assessee's income from undisclosed sources and assess him as such. As against that, for the purpose of levy of sales tax it would be necessary not only to show that the source of money has not been explained but also to show the existence of some material to indicate that the acquisition of money by the assessee has resulted from transactions liable to sales tax and not from other sources. Further, whereas in a case like the present a credit entry in respect of Rs. 10,000 stands in the name of the wife of the partner, no presumption arises that the said amount represents the income of the firm and not of the partner or his wife. The fact that neither the assessee-firm nor its partner or his wife adduced satisfactory material to show the source of that money would not, in the absence of anything more, lead to the inference that the said sum represents the income of the firm accruing from undisclosed sale transactions. It was, in our opinion, necessary to produce more material in order to connect the amount of Rs. 10,000 with the income of the assessee-firm as a result of sales. In the absence of such material, the mere absence of explanation regarding the source of Rs. 10,000 would not justify the conclusion that the sum in dispute represents profits of the firm derived from undisclosed sales."
23. We are of the view that these decisions are not attracted to the facts of the present case. What we are concerned with in the present case is not a cash credit or suppressed income. The question in the present case is as to how the petitioner dealt with the photographic goods, admittedly purchased by her from Bombay misusing the "C" forms. She claimed that she used them for her photographic business, which was not disclosed by her earlier and in respect of which she did not register herself under the Act. She did not produce any material whatsoever to establish that she was having any photographic business even before the Tribunal. When she had failed to establish that plea, the only other conclusion that could be drawn is that she sold the said goods and suppressed the sales and the turnover relating to the said sales. There is no other third possibility on the facts of the present case. That conclusion gains support from the fact that she misused the "C" forms for the purchases of the photographic material in question without registering herself in respect of the said goods under the Central Act, clearly stating that the goods were to be used for her business of photography - nothing prevented her from doing so.
24. The question of burden as regards the facts in the knowledge of the dealer has been dealt with by the Supreme Court in Commissioner of Sales Tax v. H. M. Esufali H. M. Abdulali [1973] 32 STC 77. In that case a bill book for the period September 1, 1960 to September 19, 1960 was discovered by the flying squad of the Sales Tax Department which inspected the business premises of the assessee and that bill book showed that the assessee, who was a dealer in iron and steel, had effected sales of iron and steel during that period of the value of Rs. 31,171.28. The said sales had not been entered in the account books maintained by the assessee. The assessee gave an explanation denying that the bill book pertained to his dealings; but later he conceded that the bill book was his and the entries related to his dealings. The assessee questioned the best judgment assessment made on the basis of the suppressed turnover so discovered. The Supreme Court observed as follows :
".........It is now proved as well as admitted that his dealings outside his accounts during a period of 19 days were of the value of Rs. 31,171.28. From this circumstance, it was open to the Sales Tax Officer to infer that the assessee had large scale dealings outside his accounts. The assessee has neither pleaded nor established any justifiable reason for not entering in his accounts the dealings noted in the bill book seized. It is obvious that he was maintaining false accounts to evade payment of sales tax. In such a situation, it was not possible for the Sales Tax Officer to find out precisely the turnover suppressed. He could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him is not arbitrary and has nexus with facts discovered, the same cannot be questioned. In the very nature of things the estimate made may be an over-estimate or an under-estimate. But that is no ground for interfering with his 'best judgment'. It is true that the basis adopted by the officer should be relevant to the estimate made. The High Court was wrong in assuming that the assessing authority must have material before it to prove the exact turnover suppressed. If that is true, there is no question of 'best judgment' assessment. The assessee cannot be permitted to take advantage of his own illegal acts. It was his duty to place all facts truthfully before the assessing authority. If he fails to do his duty, he cannot be allowed to call upon the assessing authority to prove conclusively what turnover he had suppressed. That fact must be within his personal knowledge. Hence the burden of proving that fact is on him......... The task of the assessing authority in finding out the escaped turnover was by no means easy. In estimating any escaped turnover, it is inevitable that there is some guess-work. The assessing authority while making the 'best judgment' assessment, no doubt, should arrive at its conclusion without any bias and on rational basis. That authority should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his 'best judgment' and not of anyone else. The High Court could not substitute its 'best judgment' for that of the assessing authority."
25. In this connection we may also note the observations of Lord Russel of Killowen in Laxminarain Badridas's case [1937] 5 ITR 170 (PC) that "the officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information". It was K. Subba Rao, J., who observed in State of Kerala v. C Velukutty , while dealing with the provision relating to best judgment assessment in Travancore-Cochin General Sales Tax Act - section 12(2)(b) - that the expression "to the best of his judgment" was "presumably borrowed from section 23(4) of the Income-tax Act, 1922". After referring to how those words were considered by the Privy Council in Laxminarain Badridas's case [1937] 5 ITR 170, the learned Judge further observed as follows :
"Under section 12(2)(b) of the Act, power is conferred on the assessing authority in the circumstances mentioned thereunder to assess the dealer to the best of his judgment. The limits of the power are implicit in the expression 'best of his judgment'. Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a 'best judgment assessment', it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. Though sub-section (2) of section 12 of the Act provides for a summary method because of the default of the assessee, it does not enable the assessing authority to function capriciously without regard for the available material."
26. Earlier, in Raghubar Mandal Harihar Mandal v. State of Bihar , while dealing with a similar provision relating to best judgment assessment in the Bihar Sales Tax Act, 1944 - section 10(2)(b) - the Supreme Court applied to best judgment assessments under the Sales Tax Act the following principles laid down by a five-Judge Bench of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal [1954] 26 ITR 775 in respect of best judgment assessments under the provisions of Indian Income-tax Act, 1922 :
"As regards the second contention, we are in entire agreement with the learned Solicitor-General when he says that the Income-tax Officer is not fettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law, but there the agreement ends; because it is equally clear that in making the assessment under sub-section (3) of section 23 of the Act, the Income-tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all. There must be something more than bare suspicion to support the assessment under section 23(3)."
27. The application of those principles for the purposes of the present case is well illustrated by the decision of a Division Bench of this Court in Subbaiah v. State of A.P. [1980] 46 STC 492. In that case also, in the course of a search conducted by the authorities, ten account books and six bundles of account slips were recovered from the residence of the assessee. They disclosed the business dealings carried on by him during the assessment years 1963 to 1969; they related to transactions, which according to the assessing authorities, attracted tax under the Act. The assessee admitted before the assessing authority that the jottings in the account books and account slips recovered were in his hand-writing, but pleaded that those notes related to his dealings in respect of M/s. Sudarsan Oil Mills and Saibaba Ginning Factory at Tadpatri and that he was a broker of that factory and that there was no sale or purchase transaction by him. He did not let in any evidence whatsoever to establish the said claim. The assessing authority therefore rejected his plea and held that he was liable to pay sales tax and also penalty as he had faded to submit his return and get himself assessed. That was confirmed by the first appellate authority and also by the Tribunal. Before this Court it was contended on behalf of the assessee that the burden lay upon the department to show that the transactions were liable to tax under the Act and that the Tribunal erred in holding that the burden lay upon the assessee. This Court held as follows :
"........On the other hand, as observed by Sri Venkatarama Aiyar, J., in Govindarajulu Mudaliar Commissioner of Income-tax , it is well-settled that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. On the same analogy, the petitioner who came forward with a definite case that the transactions represented by the entries in the account slips and account books are the brokerage transactions, failed to establish his case. Even the principal, for whom the petitioner claims to have worked, does not say that the nothings in the account slips and account books represent such transactions. In such an event, the authorities were entitled to infer that the transactions amounted to sale and purchase, especially when it was admitted that the petitioner was dealing in such commodities."
28. This case, in our view, fully supports the conclusion we have reached on the facts of the present case.
29. We also gain support from the decision of a Division Bench of the Madras High Court in V. Ponnammal v. Sales Tax Officer [1971] 27 STC 123, relied upon by the learned Government Pleader for Commercial Taxes. The Bench observed, on the facts narrated in their own words, as follows :
"........This is not a case where the revenue was acting on mere surmises and bare assumptions. The facts disclose that the respondent was justified in raising a presumption that the petitioners sold goods in the State of Maharashtra and they were to be prima facie roped in as dealers within the meaning of section 2(11) of the Bombay Sales Tax Act, 1959. In fact, the petitioners admit that they imported the goods at the Bombay Port, but they claim that they have removed the goods from Bombay to their business place at Salem. This is a matter which has to be established by acceptable proof adduced by the petitioners. It may be that the quondam firm disposed of the other licences in a manner claimed by them. But in so far as the goods imported by them at Bombay are concerned, the onus is upon them to establish that they did not deal with the goods in Bombay and they removed the same for their own purposes to their business place in the district of Salem. Paragraph 5 of the affidavit in support of this writ petition clearly reflects on the conduct of the petitioners. They would admit that goods were despatched by lorry from Bombay to Salem and were covered by lorry receipts, etc. This has to be established with reference to their accounts and not by mere personal representations as was sought to be done by the petitioners. If a person has custody of goods in a place where the Sales Tax Act is in force, and if he claims that he did not sell such goods but removed them from the jurisdiction of such sales tax authorities, then it is for the person who sets up such a contention to prove the same."
30. In the result, we find that, on the facts and circumstances of the present case, the authorities were justified in inferring that the petitioner sold the photographic goods and suppressed the turnover relating to the same, and in estimating the turnover suppressed. The learned counsel for the petitioner has not questioned the estimate as reduced by the Tribunal. The said conclusion is clearly a finding of fact. See the decision of the Division Bench of this Court in New Dwaraka Lunch Home v. State of Andhra pradesh [1993] 91 STC 36.
31. We, therefore, do not find that the order of the Tribunal impugned before us warrants interference by this Court under section 22 of the Act. The tax revision case is therefore dismissed. No costs.
32. Petition dismissed.