JASHODALAL GHOSAL PVT LTD Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) The petitioner is a company incorporated under the Companies Act and carrying on its business at 20, Maharshi Debendra Road, Calcutta-7. The petitioner is a dealer in iron and steel and registered under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act). For the period of four quarters ending 31st December, 1967, the petitioner was assessed by the Commercial Tax Officer, respondent No. 1, on the 30th September, 1971, under Section 11(1) of the said Act. In computing the taxable turnover the Commercial Tax Officer rejected the claim made by the petitioner under Section 5(2)(a)(ii) of the said Act on the basis of the declaration form supplied by the purchasers, the registered dealers. The petitioner claimed exemption of a total amount of Rs. 25,89,286.18, but the Commercial Tax Officer disallowed Rs. 1,72,905.62 with respect to sales to M/s. Laxmi Iron & Steel Co., M/s. Bansal Iron & Steel Engineering, and M/s. Krishna Commercial Engineering on the grounds that purchasing dealers' registration certificates were cancelled on 28th April, 1969, 9th November, 1970, 12th April, 1971, and 25th November, 1970, respectively. The Commercial Tax Officer was also of the opinion that no order from the purchasing dealer was produced and payments were made partly in cheque and partly by cash. The declaration forms produced by the petitioner were incomplete inasmuch as the words "used in the generation and distribution of electrical goods, etc." had not been struck out. Being aggrieved by the said order of assessment and disallowance thereunder, the petitioner preferred an appeal before the Assistant Commissioner of Commercial Taxes (North Circle), Calcutta. The said Assistant Commissioner of Commercial Taxes dismissed the appeal by an order dated 28th October, 1972, and confirmed the order of assessment and the views taken by the Commercial Tax Officer. The appellate authority was of the opinion that all the declaration forms were produced by the petitioner did not indicate the purpose for which the purchases had been made. The Assistant Commissioner observed that in the absence of any purchase order and in the context of subsequent course of conduct of all the alleged transactions, it cannot but be doubted that the transactions were not made bonafide with such alleged parties.

(2.) With respect to four quarters ending 31st December, 1968, the Commercial Tax Officer similarly disallowed the exemption claim under Section 5(2)(a)(ii) of the Act with respect to sales to M/s. Hindusthan Commercial & Engineering Co., 'M/s. Gupta Steel Engineering Co., and M/s. Tarakeswar Steel Supply Co. on the grounds that the registration certificates were cancelled on 25th November, 1970, 20th July, 1972, and 28th September, 1972. The petitioner claimed deduction for Rs. 12,97,029.29. The Commercial Tax Officer disallowed a sum of Rs. 3,26,671.66. The Commercial Tax Officer was of further opinion that the payment received was partly in cash and partly by cheque. In the declaration forms, number of challans and dates were not mentioned. No appeal was preferred against the said order of assessment. With respect to the assessment for four quarters ending 31st December, 1969, the petitioner duly filed returns. The petitioner apprehended that respondent No. 1 will reject the claim made by the petitioner under Section 5(2)(a)(ii) of the Act and thereby a huge demand will be raised against the petitioner and, in that event, the petitioner will suffer substantial loss and irreparable injury. Being aggrieved, the petitioner moved this court in an application under Article 226 of the Constitution and obtained the present rule. An ad interim order of injunction restraining the respondents from proceeding with the impugned order of assessment for the year 1967-68, and not to give any effect to the notice issued for the four quarters ending 31st December, 1969, till the disposal of the rule was issued. By an order of this court the petitioner was directed to furnish security deposit to the extent of Rs. 8,000 by way of bank guarantee and in compliance of the said order the petitioner furnished security on 26th March, 1973.

(3.) Mr. Chakraborty, appearing on behalf of the petitioner, contended that the respondent acted illegally and arbitrarily in disallowing the claim made under Section 5(2)(a)(ii) of the Act.