MACHILIPATNAM CENTRAL CONSUMERS CO-OPERATIVE STORES LIMITED Vs. COMMISSIONER OF COMMERCIAL TAXES HYDERABAD

JUDGEMENT

(1.) THE appellant in these cases is a co-operative society carrying on business in rice and other consumable goods. During the years 1982-83 and 1983-84, the assessee claims to have purchased rice from Phani Enterprises, Machilipatnam and Sri Sai Lakshmi Rice Traders, Machilipatnam. At the relevant time sales tax is payable on sales of rice at the first point. Consequently the assessee claimed that no tax is payable in respect of the sale of rice corresponding to the purchases from the aforesaid persons.

(2.) EVEN before the assessment proceedings were completed the Commercial Tax Officer visited the premises of the assessee, seized certain documents and after scrutiny held that the claim of the purchase from the aforementioned persons was bogus. According to the Commercial Tax Officer the sales were merely paper sales and in order to avoid payment of tax at the first point the assessee manoeuvred to obtain certain bills and produced the same as if he has purchased the rice from the aforementioned dealers. In view of the above, the Commercial Tax Officer called upon the assessee to discharge the burden that lay on him that the rice was purchased from the aforementioned persons. The assessee placed information before the Commercial Tax Officer that the claim of purchase of rice from the aforementioned persons was genuine and that the first seller paid the taxes in challan Nos. 179, 180 and 181 dated 3rd October, 1983. The amounts of taxes paid were Rs. 2,628, Rs. 2,503 and Rs. 5,540. The Commercial Tax Officer refused to believe the above statement of the assessee and levied three sets of penalties acting under section 7-A of the A. P. General Sales Tax Act. The penalties levied were Rs. 7,884, Rs. 7,509 and Rs. 16,620 by orders dated 6th October, 1983. In disbelieving the particulars furnished by the assessee the Commercial Tax Officer relied on some enquiries made behind the assessee's back. It may be mentioned that although a reference was made to the aforesaid enquiries in the show cause notice issued and the assessee flatly denied the correctness of the averments in the show cause notice the Commercial Tax Officer did not consider it fit to confront the assessee with the persons from whom the statements were recorded.

(3.) THE Commissioner of Commercial Taxes in the purported exercise of revisionary powers under section 20 of the Act cancelled the orders of the Appellate Deputy Commissioner and restored the orders of the Commercial Tax Officer levying penalty. The ground specified by the Commissioner in his order is that enquiries were made by the department and a statement was recorded from one Shyamalarao, proprietor of Phani Enterprises, where he denied the genuineness of the sales. It is also said that a statement recorded from Narendra Babu, proprietor of Sai Lakshmi Rice Traders, disclosed that only paper bills were issued without sales. Relying on the above information the Commissioner revised the order of the Appellate Deputy Commissioner and restored the order of the Commercial Tax Officer levying penalty.