COMMISSIONER OF SALES TAX Vs. GWALIOR OIL MILLS

JUDGEMENT

(1.) THIS is a reference under Section 44 (1) of the Madhya Pradesh General Sales Tax Act, 1958 (for short, hereinafter referred to as the Act), at the instance of the department by the Sales Tax Tribunal (the Board of Revenue, Madhya Pradesh, Gwalior), whereby it has referred the following questions for our decision, arising out of its decision dated 25th October, 1977, as questions of law :

(2.) THE material facts giving rise to this reference, as obtainable from the agreed statement of the case, are these : The assessee-non-applicant herein (hereinafter referred to as the assessee) owns an oil mill at Indore where oil and oil-cake are manufactured for sale. He was assessed to sales tax for the period 1st January, 1970, to 31st December, 1970, by the Additional Assistant Commissioner of Sales Tax, Ujjain Region, Ratlam, by his order dated 31st July, 1974. The tax was assessed at Rs. 32,999. 44 and purchase tax was assessed at Rs. 50,120. 22 and penalties were imposed at Rs. 5,052 inclusive of penalty of Rs. 5,000 under Section 8 (2) of the Act, holding that the non-applicant had transferred manufactured goods out of the State to the tune of Rs. 43,81,701.

(3.) THE argument of the learned Advocate-Genera], appearing on behalf of the department, had been that the purchase of the raw material by the assessee under Section 8 (1) of the Act carried with it an obligation on the assessee of selling the finished goods in the State of Madhya Pradesh or in the course of inter-State trade or commerce or in the course of export outside the territory of India. He further argued that for evidencing the discharge of this obligation and particularly in view of Rule 52 of the Madhya Pradesh General Sales Tax Rules, 1959 (for short, hereinafter referred to as the "rules"), read with Section 26 of the Act, the assessee should have maintained separate accounts regarding raw material purchased without concessional rate of tax and those purchased at concessional rate of tax on a declaration in form XII-A under Rule 20 (3) of the Rules and of the finished product from these two sorts of purchases of the raw material. He also argued that in reality the penalty under Section 8 (2) of the Act is the balance amount of sales tax which ought to have been paid by the assessee at the time of purchase of goods had the concession on the condition under Section 8 (1) not been availed and in view of Section 9 of the Act, the burden was on the assessee to prove that the goods sold outside the State were not manufactured from the raw materials that were purchased at the concessional rate of tax and when the assessee failed to discharge this onus, the only course open in law to the assessing authority was to find out on pro rata basis the quantum of sales outside the State of finished product manufactured out of the raw material purchased at concessional rate of tax and without the concessional rate of tax.