MADUGULA PAPAYYA Vs. PROVINCE OF MADRAS

JUDGEMENT

(1.) THE interpretation of Section 9 of the Madras General Sales Tax Act and rules 6, 8, 9 and 11 of the Turnover and Assessment Rules framed thereunder is involved in these two appeals. Since the controversy in both the appeals is the same, they can be disposed of together. A. S. No. 809 of 1950 arises out of O. S. No. 58 of 1948 on the file of the Sub-Court, Srikakulam, and A. S. No. 736 of 1950 out of O. S. No. 10 of 1949. These two suits were filed for refund of sales tax illegally and arbitrarily levied by the Deputy Commercial Tax Officer and paid by the plaintiffs under protest. The assessment year is 1946-47. To appreciate the conflicting contentions in these appeals, it is necessary to set out the salient facts of the cases.

(2.) THE plaintiffs in both the suits are dealers in groundnut, groundnut products and other commodities. In addition, the plaintiff in O. S. No. 58 of 1948 is the proprietor of Sri Krishna Vizaya Groundnut Oil Mills, Pondur. The plaintiff in O. S. No. 58 of 1948 submitted a return showing a turnover of Rs. 11,36,317-6-9 while the plaintiffs in the other suit made a return for Rs. 20,79,821-2-8 on 29th April, 1947. A few days later, a provisional assessment was made on the basis of these returns. On 22nd October, 1947, the Deputy Commercial Tax Officer, Bobbili, issued notices to these assessees calling upon them to produce their accounts, bills, pattis, income-tax orders and trading accounts for 1946-47 and 1947-48 on or before 4th November, 1947, in default of which the turnover would be determined to the best of his judgment without further notice. The assessees produced some account books with a list thereof but not the pattis, bill-books or the income-tax orders etc. A request was made on their behalf for extension of time for the production of the other records required by the Department, and they were permitted to do it in the first case before the 21st and in the second before the 20th of December, 1947. But, nothing was done by either of them within the time allowed. On behalf of the plaintiff in 0. S. No. 58 of 1948, a letter was written to the Deputy Commercial Tax Officer containing a representation that the vouchers for purchases and report books for the years 1946-47 and 1947-48 were not available and that the contracts and the railway receipts relating to 1945-46 and 1947-48 would be filed in four or five days. The same day another letter was written on his behalf to the effect that he did not have the contracts with him, that he would submit a list of waggons and other relevant records for the year 1946-47 such as copies of loan and stock statements from the Imperial Bank. Time was extended up to 10th March, 1948, finally for the production of the other records. As the assessee in the other case remained silent a demand was made again upon him to produce the statements furnished by the Imperial Bank-all the accounts, stock-books, pattis and bills and the contracts. But, neither of them did anything further in the matter. Thereupon, notices were issued to them separately on the 15th and 16th of March, 1948, intimating that on verification of transactions reported in the note-books of one Sadhu Suryam a broker employed by them with their accounts it was seen that they omitted to account for several purchases and sales of commodities and that the rates of the several commodities recorded in their accounts were less than those noted in the note-books of the said Suryam. It was added :

(3.) THEREUPON, the Deputy Commercial Tax Officer made the orders of assessment in question estimating the turnover at Rs. 11,89,000 in O. S. No. 58 of 1948 and Rs. 22,01,960 in 0. S. No. 10 of 1949. The sales tax levied on this basis was paid by both the plaintiffs under protest. This was carried in appeal to the District Commercial Tax Officer who confirmed the assessment order after hearing the parties. The plaintiffs in O. S. No. 10 of 1949 filed a revision petition in the Board of Revenue but that was dismissed with the result that the turnover estimated by the Deputy Commercial Tax Officer became final.