M K THOMAS Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE revision cases raise the question whether the right of cross-examination is an essential ingredient of the "reasonable opportunity" to be afforded to an assessee in order to prove the correctness and completeness of his return or before completing a best of judgment assessment under section 17 (3) of the Kerala General Sales Tax Act, 1963. The two tax revision case by the same petitioner relate to different periods, T. R. C. No. 45 of 1975 to the assessment year 1965-66, and T. R. C. No. 46 of 1975 to the assessment year 1966-67. The assessee-petitioner was a forest coupe contractor and was also running a rice mill. We are not concerned in these tax revision cases with the assessment of turnover derived as coupe contractor. The petitioner had not filed any return for the years in question. His case before the assessing authority was that the mill was idle during the first half of the assessment year 1965-66, that thereafter the control of the mill had been given to one Pappachan as lessee, and that the petitioner had no turnover from the mill for the years in question. The assessing authority issued a pre-assessment notice dated 22nd April, 1967, fixing the turnover at Rs. 1,10,400 at four times the bid amount, of the coupes, of which, Rs. 33,500 was to be taxed as turnover of timber and Rs. 22,000 as turnover of firewood for the year 1965-66, and the balance left out of Rs. 1,10,400. 00 was to be treated as the turnover for the year 1966-67. To this notice the assessee replied with an objection dated 27th November, 1967, that the turnover was excessive and the estimate should be only at two and a half times the bid amount. Meanwhile, the Intelligence Officer, Ernakulam, inspected the petitioner's rice mill on 24th May, 1967, and seized some records and also recorded a statement from Pappachan. These were sent over to the assessing officer. These disclosed that the assessee was doing business in rice also. Pappachan, the alleged lessee, denied the lease and submitted that he was working only as an employee of the petitioner. The assessing officer therefore issued two revised preassessment notices dated 27th June, 1968, estimating the turnover at Rs. 8,08,000. 00 for 1965-66 and Rs. 8,28,210. 50 for 1966-67. The petitioner filed objections which were overruled and the assessment was finalised as proposed in the notices. An appeal against the order was dismissed by the Appellate Assistant Commissioner and a further appeal to the Tribunal also proved unsuccessful.

(2.) BEFORE the Sales Tax Officer, Alwaye (assessing authority), as seen from the order, no contention was raised either that the petitioner was denied the right to cross-examine Pappachan or that he was entitled to cross-examine him as part of his reasonable opportunity before the best of judgment assessment was completed under section 17 of the Act. On appeal to the Appellate Assistant Commissioner, it is seen from the order that the petitioner complained that the conclusion that Pappachan was an employee of the petitioner was a mere guess-work, and that no opportunity was given to him to cross-examine Pappachan. The Appellate Assistant Commissioner referred to the decision of the Gujarat High Court in Jayantilal Thakordas v. State of Gujarat [[1969] 23 S. T. C. 11], and held that any evidence which has some probative value could be used for the purpose of assessment and that the Sales Tax Officer was not bound by nice rules of evidence. On further appeal to the Tribunal, it was objected that the assessing officer was not justified in acting upon the seized records, without direct evidence connecting them with the appellant. There was a further objection that the statement of Pappachan recorded without giving notice to the appellant and without giving him an opportunity to cross-examine him, cannot be used against him. The Tribunal met this by stating that the appellant's definite case was that the mill had been leased to Pappachan, who was doing business therein, and when the alleged lease was denied by Pappachan, who stated that he was an employee of the petitioner, there was no scope for any further enquiry.

(3.) THE real question for our consideration is whether K. T. Shaduli v. State of Kerala [[1972] 29 S. T. C. 44; 1971 K. L. T. 630] can be said to have laid down the law correctly, and whether, on the facts and in the light of settled principles, it can be stated that a right of cross-examination is inherent in the right of reasonable opportunity as known to the principles of natural justice or as embodied in section 17 of the Act. On the facts of this case, the question does not seem to us to admit of much difficulty. Section 17 (3) of the General Sales Tax Act reads : " 17. Procedure to be followed by the assessing authority.- (1) and (2 ). . . . . (3) If no return is submitted by the dealer under sub-section (1) within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment : Provided that before taking action under this sub-section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return. " Counsel for the petitioners also invited our attention to section 53 of the Act, which is in these terms : " 53. Power to summon witnesses and cause production of documents.- An assessing authority or an appellate or revision authority (including the Appellate Tribunal) small, for the purposes of this Act, have all the powers conferred on a court by the Code of Civil Procedure, 1908 (Central Act 5 of 1908), in respect of the following matters, namely : (a) summoning and enforcing the attendance of any person and examining him on oath or affirmation; and (b) compelling the production of any document. " It was contended that the insistence on a right of cross-examination of Pappachan may be modulated and regarded as a reminder to the statutory authorities under the Sales Tax Act to exercise their powers under the above section to summon Pappachan and make him available for cross-examination. No request or application to summon Pappachan was made to any of the authorities. We cannot, therefore, accept the submission based on section 53 of the Act.