BHIMRAJ NAGARMAL Vs. STATE OF BIHAR

JUDGEMENT

(1.) THESE cases relate to assessment of sales tax on the petitioner firm Messrs. Bhimraj Nagarmal for the three quarters from 1st April, 1948, to 31st December, 1948. As the firm made a default in submitting returns, notices in Form XV were issued by the Sales Tax Officer asking the firm to produce books of account. The books of account were produced before the Sales Tax Officer, who upon examining the books of account held that they were unreliable. Actually the books of account indicated that for the period in question only salt and yarn were sold and it was claimed by the petitioner that these were not taxable commodities and as there was no sale of any other commodity, the petitioner was not liable to pay tax or to submit any return. The Department, however, had ample evidence that the petitioner had obtained between April and December, 1948, large consignments of cloth and had hold it through a firm called Messrs. Ramsaroop Mohanlal which was created in May, 1948, and closed down in October, 1948. The two partners of the firm Ramsaroop Mohanlal were Ramsaroop and Mohanlal who are both sons of Nagarmal who was senior partner of the firm Messrs. Bhimraj Nagarmal. The Sales Tax Officer was of opinion that the firm of Ramsaroop Mohanlal was merely a pretence and the sales of the petitioner firm were made through Ramsaroop Mohanlal merely for the purpose of evading sales tax. The Sales Tax Officer accordingly held that the sales of cloth in the name of Messrs. Ramsaroop Mohanlal were really sales of the petitioner firm, upon whom was imposed the liability to pay the tax. For the three quarters in question the Sales Tax Officer computed upon the material available before him that the petitioner was liable to pay tax on the sale of cloth to the extent of Rs. 1,05,800, Rs. 1,56,400 and Rs. 18,400. The Sales Tax Officer further held that the petitioner had suppressed also the sale of food-grain to the extent of Rs. 93,533-5-0 for each of the three quarters. Assessment was made upon the petitioner according to these figures.

(2.) APPEALS were taken by the petitioner to the Commissioner of Sales Tax against the order of the Sales Tax Officer but the appeals were dismissed. Revision petitions were then preferred before the Board of Revenue but these petitions were also rejected. At the instance of the petitioner the High Court has required the Board of Revenue to refer the following questions of law : "(1) Whether the turnover of the separate business of a partner could be amalgamated with the turnover of the assessee firm ? (2) Even if the firm sold some cloth, whether the addition of Rs. 1,05,800 or corresponding amount on account of such sales is based on any material or is absolutely arbitrary ? (3) Whether there was any material to justify the addition of Rs. 93,533-5-0 on account of sale of food-grains, etc. specially because the licence for food-grains granted to this firm appears to have been cancelled in the year 1945 ?"

(3.) THE second question is somewhat more difficult. The contention of the petitioner is that even if the sale of cloth made by Ramsaroop Mohanlal was held to be really sale of cloth in the name of Messrs. Bhimraj Nagarmal, there was no material before the Sales Tax Authorities which would justify the order made against the petitioner. We have already said that for the three quarters from 1st April, 1948, to 31st December, 1948, the Sales Tax Officer had calculated the sale of cloth to be Rs. 1,05,800, Rs. 1,56,400 and Rs. 18,400. The argument of the petitioner is not wholly right for the Sales Tax Authorities had relied upon certain railway consignments which had been shown to have been delivered either to Messrs. Bhimraj Nagarmal or to Ramsaroop Mohanlal. These consignments are set out at page 4 of the paper book as follows :-