ALLIED DEALERS Vs. STATE OF ORISSA

JUDGEMENT

(1.) THE material facts may be stated in short to answer the questions referred and the questions called for by this court. The Allied Dealers (petitioner) has been assessed to sales tax for the quarters ending 31st March, 1958, to 31st March, 1959. The Orissa Sanitary Mart, alleged to be another firm, supplied goods worth Rs. 14,717 in quarters ending 31st March, 1958, 30th September, 1958, and 31st December, 1958, to the Public Health Division, Bhubaneswar. One Kunjabehari Swain was the proprietor of the Orissa Sanitary Mart. K. C. Panda was the manager of the Orissa Sanitary Mart and also the manager of the petitioner-firm. Manmohan Lal and K. C. Panda became partners of the petitioner-firm in 1959, i. e. , after the impugned period of five quarters for which the assessment was made. The S. D. O. , Intelligence Circle, got information that the transaction effected on behalf of the Orissa Sanitary Mart to the tune of Rs. 14,717 was really effected by the Allied Dealers. Accordingly, the Sales Tax Officer, Cuttack Circle-I, after issue of necessary notice, assessed the petitioner. The turnover, which the petitioner had returned for the aforesaid impugned quarters, was enhanced by 50 per cent. on the finding that there was a suppression of certain sale transactions. The assessee's stand, that the sales were not effected by it, was rejected all through up to the stage of the Tribunal. The petitioner accordingly asked for a reference and the Tribunal made a reference of the following question :

(2.) AFTER having heard Mr. Misra for the petitioner and the learned standing counsel for the opposite party, we are satisfied that two important questions of law require examination in this case. They are : (i) whether the finding of the taxing authorities that the transaction to the tune of Rs. 14,717 has been effected by the Allied Dealers, is based on any evidence and (ii) assuming that the finding is based on materials on record, whether the taxable turnover can be enhanced by 50 per cent. even though the suppression was only to the tune of Rs. 14,717.

(3.) THE question for consideration is, even if all the materials accepted by the taxing authorities are accepted, whether a conclusion in law arises that the transaction was effected by the petitioner benami in the name of the Orissa Sanitary Mart. Each of these features may now be separately examined. If during the impugned periods the Orissa Sanitary Mart had no existence, obviously the sale in its name was fictitious. It cannot be disputed that K. C. Panda effected the sale. At that time he was not a partner of the Allied Dealers, but was only its manager. There are no materials that the goods supplied by K. C. Panda to the Public Health Division belongs to the Allied Dealers. This material link is lacking. Once the material link is lacking, in the eye of law it cannot be held that the goods belonged to the Allied Dealers, and it is those goods that K. C. Panda sold to the Public Health Division. It is well settled that if a finding is based on no evidence, then a point of law arises. Here, all the facts, even if accepted, do not fulfil all the necessary legal requirements for coming to a conclusion that the transaction was effected benami by the petitioner in the name of the Orissa Sanitary Mart. It may be that K. C. Panda effected sale of his own goods or certain fraud was committed. Merely because a fraud was committed by somebody, it does not follow that the petitioner would be liable for the same.