STATE OF ORISSA Vs. GAURAB ENTERPRISERS

JUDGEMENT

(1.) AT the instance of the Revenue, the following questions have been referred to this Court by the Orissa Sales Tax Tribunal (in short "the Tribunal") under section 24 (1) of the Orissa Sales Tax Act, 1947 (in short "the Act" ).

(2.) BACKGROUND in which reference has been made is as follows : M/s. Gaurab Enterprisers (hereinafter referred to as "the assessee"), a registered dealer under the Act filed its returns for the assessment year 1984-85. Before the assessing officer, it produced books of accounts relating to purchases and sales. But annual account of the stock of goods purchased and sold by it, relating to the opening balance and closing balance at the beginning and closing of the accounting year was not produced. The assessing officer held that in the absence of such account, the cross verification of disclosed sales was not possible, and the books of accounts maintained by the assessee were incomplete and therefore, best judgment assessment was called for. He however made a minimal enhancement of about Rs. 1,500 to the disclosed turnovers. The assessee preferred an appeal before the Assistant Commissioner of Sales Tax, Orissa, Cuttack, contending that there was no discrepancy in the books of account maintained by it and in the absence of finding of any suppression of sale or purchase, rejection of books of accounts merely on the ground of non-maintenance of annual account of stock, and enhancement of turnover were uncalled for and illegal. The Assistant Commissioner accepted the prayer, holding that rejection of books of accounts for non-maintenance of books of accounts was not justified when correctness of accounts was verifiable from accounts maintained by the assessee. In support of his conclusion, the Assistant Commissioner relied on a decision of the Allahabad High Court in Commissioner, Sales Tax v. Khera Shoe Co. [1975] 36 STC 220, and held that books of accounts were verifiable from other documents. The Revenue assailed the correctness of the view before the Tribunal. It was contended that the Assistant Commissioner went wrong in deleting the enhancement in view of the decision of the Madras High Court in Indo Burma Stationery and Paper Stores v. State of Tamil Nadu [1984] 57 STC 290. The Tribunal did not accept the plea and observed that the assessee has maintained purchase and sales registers. In the absence of stock accounts, stocks are verifiable. Admittedly, no suppression either in purchase or sale was detected and therefore, the Assistant Commissioner was justified in deleting enhancement, relying on the decision reported in [1975] 36 STC 220 (Commissioner, Sales Tax v. Khera Shoe Co. ). The Revenue moved the Tribunal for reference of two questions under section 24 (1) of the Act. The prayer was accepted and reference has been made as indicated above. In spite of notice, the assessee has not entered appearance in this Court.

(3.) SO far as the first question is concerned, we find that the same does not arise out of the order of the Tribunal. The two questions referred to us are interrelated and essence of dispute is whether for non-maintenance of annual stock account as required under section 15 (2) of the Act, the books of accounts maintained can be discarded as being not correct and complete, and enhancement by way of best judgment assessment made. The answer to the first question is inconsequential in that sense. At this juncture, it is relevant to quote section 15 of the Act. The same reads as follows :