G.L. Oza, C.J.
1. This petition has been filed by the petitioner challenging the orders of the Sales Tax Officer, Raigarh, and the Divisional Deputy Commissioner of Sales Tax, Bilaspur, on revision.
2. According to the petitioner, the petitioner is a proprietary concern and carries on business of dealing in minor forest produce. He has also a branch in the name of Chandra Medical and General Stores at Leilunga dealing in medicines and general goods. He is registered under the Madhya Pradesh General Sales Tax Act and he follows Diwali Year for the purpose of his accounts. The petitioner applied under Section 16 of the M.P. General Sales Tax Act for the proposed business of dealing in forest produce at Raigarh and the address of this business was given as Lal Tanki Chouk, Raigarh. The Sales Tax Officer, however, rejected the application.
3. It is alleged that the dealer took a lease of Government Forest, Raigarh, in the month of March, 1977, for collection of chironji for a sum of Rs. 2,200 from the Divisional Forest Officer, Raigarh Division. The contract was for purchase of chironji from the forest department.
4. The Sales Tax Officer, Flying Squad, Raigarh, raided the place of business at Raigarh on 28th August, 1978, and seized account books and other papers from the shop. The business premises at Lailunga were also raided and the books of account and other documents were seized from there also. The books of account seized at Raigarh covered the period from 24th October, 1976, to 13th July, 1977, i.e., till the completion of the season of exploitation of chironji lease. The transit passes seized contained transit passes for chironji sold on own account as also transit passes issued to third parties who themselves purchased it. It appears that in the enquiry conducted by the Sales Tax Officer, Flying Squad, as well as the Sales Tax Officer, Raigarh, during the course of assessment the dealer appeared from time to time and explained the account books and other documents seized from Lailunga and Raigarh shops.
5. The Sales Tax Officer, Raigarh, made enquiries about the nature of transactions covered by the transit passes issued to third parties for 292 quintals and 34 kgs. of chironji and added this in the taxable turnover and assessed sales tax On it at Rs. 2,63,286. There were some other items, e. g., mahua and amchur also, and on this tax was levied' by the Sales Tax Officer and penalty also was imposd under Section 17(3) of the M.P. General Sales Tax Act. The petitioner filed a revision before the Divisional Deputy Commissioner of Sales Tax, Bilaspur, who by his order dated 27th February, 1982, rejected the revision petition and hence the present petition is filed.
6. Learned counsel for the petitioner contended that the petitioner took the contract of chironji from the forest department. The system of collection was that the tribals and labourers collected chironji whom the petitioner made payments for collection and as the petitioner could not make arrangements for obtaining himself the entire quantity, he issued transit passes to those who collected the chironji and wanted to carry it out of area. The forest department in this case, however, charged sales tax from the petitioner on the chironji so collected. In these circumstances, as the goods were tax-paid goods and the assessee sold them to others, he was not liable to sales tax. It was contended that the Sales Tax Officer and the Divisional Deputy Commissioner of Sales Tax felt that the chironji in the hands of the assessee were not sales tax paid and therefore added these transactions amounting to 292 quintals and 34 kgs. to the taxable turnover of the petitioner.
7. As regards mahua and amchur, it was contended by the learned counsel for the petitioner that part of the explanation was accepted and there was no justification in not accepting the part of the explanation.
8. It was also contended that if this tax was not leviable, the question of penalty also will not arise.
9. Learned Deputy Advocate-General contended that although the assessee was a contractor of the forest department who had under the contract purchased all the chironji in the forest area and it is also not disputed that the forest department paid sales tax on this chironji but there was no material to indicate that the chironji was of the forest department. He, however, conceded that if this quantum of chironji is from the forest department, then it could not be disputed that it was sales tax-paid goods in the hands of the registered dealer and therefore it could not be added to the taxable turnover of the assessee.
10. It is not disputed that the petitioner had purchased all the chironji of the forest under a contract and he had disposed of the chironji by giving transit passes in the names of number of persons. What has been seized by the flying squad is only the account of chironji about which transit passes had been issued. There is no material also with the sales tax department to indicate that this was not the chironji of the forest which was purchased by the assessee under the contract. Apparently, the manner of collection may vary but when after collection it is sold to other dealers, it could not be said that this chironji is not of the forest. Admittedly, chironji is a forest produce and, therefore, learned counsel for the petitioner appears to be correct that this chironji was purchased by him from the forest department under a contract and the forest department had paid sales tax already on this chironji, this transaction of sale of chironji could not be added to the taxable turnover nor the assessee could be fastened with the liability of paying sales tax on these transactions. It appears that the Sales Tax Officer and the Divisional Deputy Commissioner who heard the revision did not take notice of the fact that the forest department itself when enters into a contract and pays sales tax on the goods so sold under the contract, these goods will be in the hands of the assessee, the contractor, as tax-paid goods and it is because of this it appears that the Sales Tax Officer as well as the Divisional Deputy Commissioner of Sales Tax committed a mistake.
11. As regards mahua and amchur transaction, after all, it was open to the authorities to accept the explanation or not to accept it. If it was considered that part of the explanation was good enough to be accepted, no grievance could be made in a writ petition under Article 226.
12. In the light of the discussion above, therefore, the orders passed by the Sales Tax Officer on 31st March, 198.1, and by the Divisional Deputy Commissioner of Sales Tax on 27th February, 1982, are hereby quashed and it is directed that the Sales Tax Officer in the light of the discussion above will pass a fresh order and assess the liability of tax of the petitioner excluding the tax on chironji and also will pass an appropriate order of penalty on the quantum of tax which may be found payable by the assessee. In the circumstances, parties are directed to bear their own costs. Security amount be refunded to the petitioner.