G.P. Singh, J.
1. This judgment will dispose of Miscellaneous Civil Cases Nos. 361 and 362 of 1967. These are two sales tax references which arise out of the same order of the Sales Tax Tribunal in the following circumstances :-
2. M/s. Sardar House, Jabalpur, is a registered dealer in radios, radio parts, electrical, musical and sports goods, electrical fans, batteries etc. For the period intervening 1st January, 1963, and 31st March, 1964, the dealer showed a gross turnover of Rs. 16,18,505. The Sales Tax Officer, Jabalpur Circle I, who passed the original order of assessment enhanced the figure of the gross turnover to Rs. 16,34,000. He also found that the dealer committed defaults in filing returns and payment of tax. He, therefore, imposed a penalty of Rs. 20,000. The dealer claimed that he was entitled to the benefit of the concessional rate of tax in respect of goods sold to the Government departments. This was allowed by the Sales Tax Officer to the extent of the certificates produced before him. The dealer filed an appeal against the order of assessment before the Appellate Assistant Commissioner of Sales Tax. It appears that the dealer produced in appeal the remaining certificates in respect of sales to the Government departments. The Appellate Assistant Commissioner upheld the order of assessment passed by the Sales Tax Officer. As regards the certificates that were produced before him, his view was that the dealer ought to have produced these certificates before the Sales Tax Officer and, therefore, they could not be accepted in appeal. The dealer then went up in second appeal before the Tribunal (the Board of Revenue). The Tribunal found that the dealer's gross turnover had been rightly enhanced from Rs. 16,18,505 to Rs. 16,34,000. The imposition of penalty of Rs. 20,000 was also upheld. As regards the sales made to the Government departments, the Tribunal held that the dealer was entitled to the benefit of the certificates that were produced before the Appellate Assistant Commissioner, and directed that the sales covered by these certificates should also be assessed at the concessional rate of tax. Subject to this modification, the appeal was dismissed. The dealer and the Commissioner of Sales Tax both applied to the Tribunal for referring to this Court the points decided against them. On these applications the Tribunal by a common order has referred for our answer the following three questions:
(1) Whether on the facts and circumstances of the case the enhancement in gross turnover of the assessee and the quantum of such enhancement was legal and reasonable ;
(2) Whether on the facts and circumstances of the case the discretion to impose penalty given by Section 17(3) of the Act was properly exercised in the matter of determining the liability for penalty and the quantum thereof; and
(3) Whether on the facts and circumstances of the case the assessee could be denied the benefit of the concessional rate of assessment provided by Notification No. 2044/1885/V.S.T. dated 8th August, 1962, because certain departments of the Government, to whom goods were sold, failed to supply prescribed certificates in time in spite of best efforts of the assessee.
3. As regards the first question, it may be stated that the Sales Tax Officer called upon the dealer by a notice issued in Form XVI to produce his account books, The dealer thereupon produced cash-books, sales register, ledgers, cash memos, receipt books for recovery of outstanding amounts, C Form register, R.R. register etc. The Sales Tax Officer was, however, not satisfied by the mode in which the accounts were kept. According to him the accounts lacked 'quantitative details and inventory to enable the verification of correctness'. He therefore held that there was 'likelihood of errors and omissions' and the gross turnover should be slightly enhanced. On this reasoning he fixed the gross turnover at Ks. 10,34,000 as against Rs. 10,18,505 shown by the dealer. The enhancement was done 'to cover the errors and omissions' in the dealer's accounts. The Appellate Assistant Commissioner did not give any independent reasoning while upholding that finding of the Sales Tax Officer as regards the quantum of gross turnover. The Tribunal in holding that the enhancement was properly made reasoned as follows :
There is no presumption that because radios are to be licensed there cannot be a concealment of sales of radios. It is a notorious fact that there are large number of unlicensed radios and that the postal authorities initiate periodically a drive to discover such unlicensed radios. While it may be that the appellant was not a party to such activities it was in the appellant to satisfy the assessing authority the radio account is correct. This has not been done. Admittedly no separate account of radios was kept nor were quantitative details furnished even at the second appellate stage. Even as regards tax-paid goods, the accounts have been found to be not wholly correct or properly maintained, and this is the subject-matter of the second point mentioned supra. Besides, the total increase made in the gross turnover is Rs. 15,495. If the total declared turnover of Rs. 16,18,505 is taken, the increase is less than 1 per cent, if the balance of the turnover after deducting the value of tax-paid goods and radios sold is taken which is Rs. 5,87,985, the increase works out to about 3 per cent. The increase of even 3 per cent, cannot be said to be arbitrary in the circumstances of this case. Therefore, it is held that the enhancement in the gross turnover was properly made.
4. It will be seen that the Sales Tax Authorities did not refer to any statutory provision under which the order of enhancement was made. The learned Government Advocate has, however, supported the enhancement under Section 18(4)(d) of the Madhya Pradesh General Sales Tax Act, 1958, which reads as follows :
Section 18(4). If a registered dealer-
(a) ... ... ... ...(b) ... ... ... ...(c) ... ... ... ...(d) has not maintained any account, or has not regularly employed any method of accounting, or if the method employed is such that in the opinion of the Commissioner assessment cannot properly be made on the basis thereof,
the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment.
5. This was clearly not a case where it could be said that the dealer did not maintain any account or did not regularly employ any method of accounting. It was also not found by the Sales Tax Authorities that the method of accounting employed was such that the assessment could not properly be made on the basis thereof. All that the Sales Tax Officer found was that 'there was likelihood of errors and omissions' in the accounts produced by the dealer. This finding cannot be equated to a finding that the method of accounting employed was such that the assessment could not properly be made on the basis thereof. In the absence of such a finding the power to make best judgment assessment could not be exercised under Section 18(4)(d). Moreover, the authorities did not refer to any material or circumstance which could support the fixing of gross turnover at Rs. 16,34,000. Simply because the enhancement made was only 1 per cent, on the gross turnover disclosed by the dealer and there was likelihood of errors or omissions in the accounts, the enhancement cannot be justified in the absence of any material or circumstance to support it. The Tribunal observed that it was a notorious fact that there are large number of unlicensed radios and there can be concealment of sales of radios. But there can be no presumption that the dealer indulged in sale of unlicensed radios for a criminal practice cannot be attributed to the dealer in the absence of any evidence to show that the dealer followed such practice : Lalchand Bhagat Ambica Ram v. Commissioner of Income-tax  37 I.T.R. 288 (S.C.). There was no material referred to by the Sales Tax Authorities which could support the enhancement of the gross turnover from Rs. 16,18,505 as shown by the dealer to Rs. 16,34,000. In the absence of any material to support it, the enhancement was arbitrary and merely a guess-work. An assessment cannot be based on mere suspicion or pure guess-work without reference to any evidence or material : Dhakeswari Cotton Mills v. Commissioner of Income-tax  26 I.T.R. 775 (S.C.), Omar Salaj Mohd. v. Commissioner of Income-tax  37 I.T.R. 151 (S.C.). In our opinion, the enhancement of gross turnover was neither legal nor reasonable.
6. As regards the second question, the findings are that the dealer admittedly did not submit all the quarterly returns, did not comply with the direction to submit monthly returns and the tax amount which was admittedly collected by him was not deposited. It was also found that the dealer was a habitual defaulter. The defaults of the dealer made him liable to penalty under Section 17(3) of the Act. On the facts found, the authorities had the discretion to direct the dealer to pay by way of penalty a sum not exceeding one fourth of the tax assessed on him. As the facts found bring the case of the dealer under Section 17(3) and as the maximum limit of the penalty prescribed by that section has not been exceeded, it must be held that discretion in imposing the penalty and determining its quantum was properly exercised.
7. As regards the third question, the Notification No. 2044/1885/ V.S.T. dated 8th August, 1962, to which the question makes a reference reads as follows:
In exercise of the powers conferred by Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 (No. 2 of 1959), the State Government hereby exempts in part, the class of goods mentioned in column (1) of the schedule below from the payment of tax so as to reduce it to the rate of tax mentioned in column (2) thereof for the period specified in column (3) and subject to the restrictions and conditions specified in column (4) of the said schedule.
Schedule----------------------------------------------------------------------------------Class of Reduced Period. Restrictions and condi-goods. rate. tions subject to whichexemption is granted.1 2 3 4 ----------------------------------------------------------------------------------All classes of goods 1 per cent. From the date When sold by a dealerspecified in Sche- of publication registered under thedule II of the of this Notifica- M.P. General Sales TaxM.P. General tion in the M.P. Act, 1958 (No. 2 of Sales Tax Act, Gazette to the 1959), to the Govern-1958, for which 31st March, ment of Madhya Pra-the rate of tax 1963. (Both desh or any of itsexceeds one per days inclusive). departments for thecent. purpose of official use only against a certificate in writing in the appended form.----------------------------------------------------------------------------------Note:-In columns 1 and 2 of the schedule for the words 'one per cent.' the words 'two per cent.' shall be substituted, Vide Notification No. 874- 18-Con. V.S.T. dated 31st March, 1963, M.P. Gazette Extraordinary page 297, 31st March, 1963.'
It will be seen from this notification that in the case of sales made to the Government of Madhya Pradesh or any of its departments for the purpose of official use, the dealer is entitled to a concessional rate of tax provided the sales are made against certificates in writing in the form appended to the notification. The dealer claimed the benefit of this notification, but he could not produce all the certificates before the Sales Tax Officer as the Government departments failed to supply the certificates in time in spite of the best efforts of the dealer. The dealer, therefore, produced the rest of the certificates in appeal before the Appellate Assistant Commissioner. The Tribunal admitted these certificates and gave the dealer the benefit of concessional rate of tax in respect of sales covered by the certificates.
8. The argument of the learned Government Advocate for the department is that to get the benefit of the concessional rate the dealer must produce, the certificates before the assessing authority and the certificates cannot be filed in appeal. He was, however, unable to show any provision in the Act or the Rules which lays down that the certificates must be produced before the assessing authority. Reference was made by him to Rule 20. But that rule does not refer to the certificates prescribed by the notification under consideration. In the absence of any provision that the certificates can be filed only before the assessing authority, it cannot be held that the appellate authority is debarred from admitting the certificates in appeal. Section 38(5) of the Act empowers the appellate authority to make 'such further inquiry as it may deem fit.' These words confer wide discretion to the appellate authority to admit documents which are relevant and which the dealer in spite of his best efforts could not produce before the assessing authority. Reliance was placed by the learned Government Advocate on K.M. Chopra v. Additional Commissioner of Sales Tax  M.P.L.J. 1115. But that was a case under Section 8(4) of the Central Sales Tax Act, 1956, which requires that in cases of sales to a registered dealer the declaration of the purchasing dealer should be furnished 'to the prescribed authority.' This case has no application where the Act and the Rules do not contain a provision that certificates or documents under which the dealer claims a concession must be filed before the assessing authority. In the absence of any such provision, the certificates or documents may in proper cases be admitted in appeal or revision. Indeed, Chopra's case  M.P.L.J. 1115 was distinguished on this ground by this Court in National Traders (India), Indore v. Additional Commissioner of Sales Tax M.P. No. 195 of 1966 decided on the 8th April, 1968 ;  22 S.T.C. 86, where it was held that certificates of sales of medicines to Government departments required by Rule 24(ii) could be admitted in revision. In our opinion, the Tribunal was right in holding that the dealer could not be denied the benefit of concessional rate of tax under the Government notification of 8th August, 1962.
9. For the reasons stated above, we answer questions Nos. 1 and 3 in the negative and question No. 2 in the affirmative.
10. Having regard to the circumstances of this case the parties will bear their costs of these references.