Allahabad High Court
Shambhu Iron Stores vs Commissioner Of Sales Tax on 13 January, 1988
Equivalent citations: [1988]70STC18(ALL)
JUDGMENT R.K. Gulati, J.
1. This sales tax revision relates to assessment year 1981-82. M/s. Shambhu Iron Stores during that year were dealing in hardware and machinery parts. The assessee did not admit any taxable turnover although it declared a gross turnover of Rs. 4,04,972.42. The assessment was, however, made on best judgment on a taxable turnover of Rs. 1,50,000 which on second appeal was reduced to Rs. 1,00,000 by the Sales Tax Tribunal. Against the order of the Sales Tax Tribunal this revision has been filed.
2. I have heard the learned counsel for the parties.
3. Only two points were canvassed before me by the learned counsel for the assessee, namely, whether there was any material on record to reject the account version of the assessee and resort to best judgment assessment. The second contention was whether the Tribunal was justified in saddling the assessee with the burden to prove that it had not imported any goods outside Uttar Pradesh.
4. Taking the first contention, the account books of the assessee were rejected on very substantial grounds. The assessee's business premises were surveyed several times during the year when the account books were found defective and not being maintained in regular course of business. On survey dated 12th May, 1981 full accounts were not available and the sale copy was incomplete after 6th February, 1981. On 6th August, 1981 cash memos were not found issued for all sales and the daily diary maintained for sales was also not found regular. On survey dated 17th December, 1981 again cash memos were not found issued for all the sales and this was accepted before the Tribunal. From a bill book, described as exhibit No. 2, duplicates of serial Nos. 1 to 22 were found missing. Serial No. 23 started from 10th July, 1981. No plausible explanation was given for this discrepancy before the tax authorities. Exhibit No. 4 contained certain loose papers. Paper No. 1 revealed a sale of Rs. 592.60 to one Surjeet Singh which could not be verified from account. Paper No. 2 also represented a sale of Rs. 697 and this was also not proved. Paper No. 6 depicted purchase out of books.
5. There are number of other similar instances narrated in the order of the Sales Tax Tribunal which go to prove that the assessee was carrying on business outside the account books. The Tribunal finally observed :
At the top of it, no rokar or khata were kept and a very perfunctory type of daily sales book was kept which was hardly adequate for a business which ran into over Rs. 4,00,000. Under these circumstances their declared version was rightly rejected.
6. It is evident that the assessee was not keeping correct account and was carrying on business outside its regular books by omitting to record all its sales and purchases made during the year. Section 12(1) of the Act requires that every assessee shall keep and maintain a true and correct account showing the value of the goods sold and bought by him, and in case the accounts maintained in the ordinary course, do not show the same an intelligible form, he shall maintain true and correct account in such form as may be prescribed in this behalf. Under the said provision, therefore, the assessee was required to maintain a true account showing the value of goods sold and purchases made by him. The object of Section 12(1) is that perusal of accounts should give true picture of assessee's business affairs to facilitate assessment of taxable turnover by the assessing officer. If the accounts are defective and not susceptible to verification and there are circumstances to show that the assessee had not correctly recorded his turnover, such accounts are liable to be rejected and to make a proper estimate of the turnover.
7. It has been seen earlier that on several occasions the assessee's books were checked and a number of discrepancies were noticed. The learned counsel for the assessee could not advance any convincing argument to enable this Court to take a different view on rejection of account books than the one taken by the Sales Tax Tribunal. The account books were, therefore, rightly rejected by the tax authorities. Once the account books were rejected on the ground that the assessee was indulging in suppression of its sales and purchases, the sales tax authorities had no option except to determine the taxable turnover on estimate. The first contention of the assessee is, therefore, rejected.
8. Now coming to the second contention, the learned counsel urged that all goods were locally purchased and there was no evidence on record to establish that the assessee had imported any goods, therefore, the assessee was not liable to any tax. It appears, sales of hardware and machinery parts were liable to tax in the hands of importer or manufacturer. Rejecting this very contention, the Sales Tax Tribunal relied upon a decision of this Court in Ambala Tobacco House v. Commissioner of Sales Tax, U.P. 1984 UPTC 982, where it was observed :
...there is no reason for the to keep the transactions of non-taxable goods outside the books and since the transactions were outside the books, it has to be held that purchases had been made outside Uttar Pradesh. I find this reasoning more logical and correct. Had the assessee purchased non-taxable goods, then there would be no reason for keeping transactions thereof outside the books. The very fact that the transactions have been kept outside the books, goes to show that the purchases had been made from outside Uttar Pradesh.
9. In view of the above decision, the second argument advanced by the learned counsel for the assessee cannot be accepted.
10. This revision has no force and is accordingly dismissed with costs.