COMMISSIONER OF SALES TAX Vs. SARDAR HOUSE

JUDGEMENT

(1.) THIS judgment will dispose of Miscellaneous Civil Cases Nos. 361 and 362 of 1967. These are two sales tax references which arise out of the same order of the Sales Tax Tribunal in the following circumstances :

(2.) M/s. Sardar House, Jabalpur, is a registered dealer in radios, radio parts, electrical, musical and sports goods, electrical fans, batteries etc. For the period intervening 1st January, 1963, and 31st March, 1964, the dealer showed a gross turnover of Rs. 16,18,505. The Sales Tax Officer, Jabalpur Circle I, who passed the original order of assessment enhanced the figure of the gross turnover to Rs. 16,34,000. He also found that the dealer committed defaults in filing returns and payment of tax. He, therefore, imposed a penalty of Rs. 20,000. The dealer claimed that he was entitled to the benefit of the concessional rate of tax in respect of goods sold to the Government departments. This was allowed by the Sales Tax Officer to the extent of the certificates produced before him. The dealer filed an appeal against the order of assessment before the Appellate Assistant Commissioner of Sales Tax. It appears that the dealer produced in appeal the remaining certificates in respect of sales to the Government departments. The Appellate Assistant Commissioner upheld the order of assessment passed by the Sales Tax Officer. As regards the certificates that were produced before him, his view was that the dealer ought to have produced these certificates before the Sales Tax Officer and, therefore, they could not be accepted in appeal. The dealer then went up in second appeal before the Tribunal (the Board of Revenue ). The Tribunal found that the dealer's gross turnover had been rightly enhanced from Rs. 16,18,505 to Rs. 16,34,000. The imposition of penalty of Rs. 20,000 was also upheld. As regards the sales made to the Government departments, the Tribunal held that the dealer was entitled to the benefit of the certificates that were produced before the Appellate Assistant Commissioner, and directed that the sales covered by these certificates should also be assessed at the concessional rate of tax. Subject to this modification, the appeal was dismissed. The dealer and the Commissioner of Sales Tax both applied to the Tribunal for referring to this Court the points decided against them. On these applications the Tribunal by a common order has referred for our answer the following three questions:

(3.) AS regards the first question, it may be stated that the Sales Tax Officer called upon the dealer by a notice issued in Form XVI to produce his account books, The dealer thereupon produced cash-books, sales register, ledgers, cash memos, receipt books for recovery of outstanding amounts, C Form register, R. R. register etc. The Sales Tax Officer was, however, not satisfied by the mode in which the accounts were kept. According to him the accounts lacked "quantitative details and inventory to enable the verification of correctness". He therefore held that there was "likelihood of errors and omissions" and the gross turnover should be slightly enhanced. On this reasoning he fixed the gross turnover at Ks. 10,34,000 as against Rs. 10,18,505 shown by the dealer. The enhancement was done "to cover the errors and omissions" in the dealer's accounts. The Appellate Assistant Commissioner did not give any independent reasoning while upholding that finding of the Sales Tax Officer as regards the quantum of gross turnover. The Tribunal in holding that the enhancement was properly made reasoned as follows : There is no presumption that because radios are to be licensed there cannot be a concealment of sales of radios. It is a notorious fact that there are large number of unlicensed radios and that the postal authorities initiate periodically a drive to discover such unlicensed radios. While it may be that the appellant was not a party to such activities it was in the appellant to satisfy the assessing authority the radio account is correct. This has not been done. Admittedly no separate account of radios was kept nor were quantitative details furnished even at the second appellate stage. Even as regards tax-paid goods, the accounts have been found to be not wholly correct or properly maintained, and this is the subject-matter of the second point mentioned supra. Besides, the total increase made in the gross turnover is Rs. 15,495. If the total declared turnover of Rs. 16,18,505 is taken, the increase is less than 1 per cent, if the balance of the turnover after deducting the value of tax-paid goods and radios sold is taken which is Rs. 5,87,985, the increase works out to about 3 per cent. The increase of even 3 per cent, cannot be said to be arbitrary in the circumstances of this case. Therefore, it is held that the enhancement in the gross turnover was properly made.