SHRI KRISHNA TIMBERS Vs. STATE OF ORISSA

JUDGEMENT

(1.) IN this group of writ petitions the petitioners have challenged the orders of assessment passed by the Sales Tax Officer, Intelligence Wing, Berhampur, making assessment of sales tax under rule 10 for the financial years 1984-85, 1985-86, and 1986-87 and under rule 12 (5) of the Central Sales Tax (Orissa) Rules, 1957, for the financial year 1987-88.

(2.) THE petitioners' case in short is that they carry on business in partnership registered under the Indian Partnership Act, 1932, in Aska Road, Berhampur, in Ganjam District in timber and are registered dealers under the Orissa Sales Tax Act, 1947 and the Central Sales Tax Act, 1956 (for short "the OST Act" and "the CST Act" ). They effect sale of timber, both round and sized at their place of business referred to above to various customers and dealers belonging to Orissa, as well as Andhra Pradesh, both on cash and credit. After sale is effected they give delivery of the goods at the same place and do not lake the responsibility for the movement of the goods. It is the responsibility and the risk of the purchasers to transport the goods to places inside and outside Orissa mainly to Andhra Pradesh passing through sales tax check-gates. At the check-gates the purchasers produce the cash memos and the way-bills and the sales tax authorities concerned never suspected the genuineness of the transactions as intra-State sales because in the documents the petitioners describe themselves as the seller of the goods and the purchasers remain both the consignor and consignee thereof. For the sales effected in their business premises the petitioners collect tax at the Orissa Sales Tax Rules at the time of filing returns (? ). There was no occasion for default at any time. For the years 1984-85, 1985-86 and 1986-87 they were assessed in normal course under section 12 (4) of the OST Act and by and large the Sales Tax Officer (opposite party No. 4) accepted the returned figures for the purpose of assessment. As the petitioners did not carry on business on inter-State sale basis, they did not file any return under the CST Act nor pay Central sales tax. For the financial year 1987-88 assessment, however, was made under rule 12 (5) of the Central Sales Tax (Orissa) Rules, 1957. On the basis of reports of fraud submitted by the Inspector of Sales Tax, Intelligence Wing, Berhampur, dated September 20, 1988, the Sales Tax Officer, Intelligence Wing, Berhampur (opposite party No. 3), reopened the assessment proceedings for the years 1984-85 up to 1987-88 under rule 10 of the Central Sales Tax (Orissa) Rules, on the ground that the petitioners effected inter-State sales to purchasers and dealers belonging to Andhra Pradesh and thereby evaded payment of Central sales tax. A notice being served, the petitioners appeared and contended that they did not effect inter-State sales to outside purchasers during the years under assessment. All the sales took place at their business premises at Aska Road, Berhampur and the purchasers took delivery of goods for the purpose of transportation at their risk. The petitioners never undertook to transport the goods to places outside the State. Accordingly, sales tax from the purchasers was collected at the sale point at the rate of 8 per cent. The transactions were not in accordance with section 3 (a) of the CST Act and so the petitioners did not conceal any turnover of the alleged inter-State sales and there was no evasion of tax. Opposite party No. 3, however, was not satisfied with the explanation offered on the ground that the petitioners were shown both as consignor and consignee of some transactions and took the view that the turnover of the petitioners for the inter-State sales escaped assessment and so he determined the turnover of inter-State sales for the years under consideration and assessed Central sales tax.

(3.) OPPOSITE party No. 3 examined the outgoing registers maintained at Girisola check-gate and found that petitioner No. 1 had actually moved timber in round logs and different sizes on different dates to different places in Andhra Pradesh showing itself as the consignor of the goods, the consignee being the purchasers. He also heard the manager of petitioner No. 1 who offered explanations in defence of the charge of suppression of inter-State sale transactions. Ultimately, he concluded that the transactions shown by the petitioners as intra-State sales were actually inter-State sales and thus, there was suppression of inter-State turnover and evasion of Central sales tax.