BHAGWAN MOTOR COMPANY Vs. THE GOVERNMENT OF MADRAS REPRESENTED BY THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) THE petitioners herein are dealers in hardware and pipes. They had dismantled the tramlines within the City of Madras, stocked them and sold the rails. For the assessment year 1961 -62 they were originally assessed on 25th June, 1962 on a turnover of Rs. 1,09,980.27. Later, the petitioners' place of business had been inspected by the authorities on 30th January, 1965 and certain account books and documents had been recovered. On a comparison of those seized records with the regular accounts of the petitioners it was found that the dealings referred to in the seized records had not been accounted for in their regular accounts. In particular, it was found from those seized records that the petitioners had effected sales of tram rails to a dealer in Calcutta to the extent of Rs. 2,13,386.33 from August, 1961 to March, 1962 but that the said turnover had not been shown either in their accounts or in their monthly returns. It was also found that the petitioners had sold tram rails to two other parties for about Rs. 40,000 during the year 1961 -1962. The assessing authority therefore revised the original assessment by including a turnover of Rs. 2,53,378.07 in the turnover already determined as sales suppressions. It also imposed a penalty of Rs. 7,600 under Section 16 (2) of the Madras General Sales Tax Act, 1959, for failure to disclose the suppressed turnover in their monthly returns.

(2.) THE petitioners' appeals against the said addition before the Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal were unsuccessful. Though various contentions were raised before the authorities below, before us the learned Counsel for the petitioners confined his attack on the revised assessment only on one point. His contention was that the sales of rails effected by the petitioners to the various parties during the assessment year are only second sales and hence they are not taxable under the Act. According to the learned Counsel the petitioners purchased the rails in question from Messrs. S.P. Kuppuswami Naicker and Sons who should be taken to be the first sellers of the rails within the State and as such they are liable to be taxed on their sales to the petitioners. It is urged by Mr. M.R.M. Abdul Karim learned Counsel for the petitioners that Messrs. Kuppuswami Naicker and Sons purchased the tram rails from the Madras Electric Tramways Ltd., and subsequently sold the same to the petitioners, and that if really the petitioners are not the first sellers of the tram rails (iron scrap), they cannot be made liable to tax as iron scrap is liable to a single point levy on the first sale within the State. Therefore, the only question to be decided in this case is whether the petitioners are the first sellers as urged by the Revenue or whether the said Messrs. Kuppuswami Naicker and Sons are the first sellers as urged by the petitioners.

(3.) THE petitioners' learned Counsel referred to the proceedings in O.P.No 419 of 1953 on the file of the High Court and the various orders passed by this Court regarding the sale of the tram rails and submitted that the sale of tram rails ordered by the High Court was only in favour of the said Messrs. Kuppuswami Naicker and Sons and it is from them the petitioners had subsequently purchased the goods. What in substance the learned Counsel submits is that the property in the tram rails had in fact passed to Messrs. Kuppuswami Naicker and Sons and that thereafter the said Messrs. Kuppuswami Naicker and Sons sold the goods to the petitioners. In the light of the above submission, the facts of the case have to be looked at.