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Deputy Commissioner (C.T.), Coimbatore Division Vs. T.M. Ramaswamy Chettiar and Company - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 261 of 1966 (Revision No. 188)
Judge
Reported in[1973]30STC556(Mad)
AppellantDeputy Commissioner (C.T.), Coimbatore Division
RespondentT.M. Ramaswamy Chettiar and Company
Appellant Advocate K. Venkataswami, the First Assistant Government Pleader
Respondent Advocate R.S. Venkatachari, Adv. for V. Venkataseshayya, Adv.
DispositionPetition allowed
Cases ReferredM. Ghouse & Co. v. State of Tamil Nadu
Excerpt:
- .....but he had not, however, maintained separate stock accounts in respect of the sale of the locally purchased oil as well as manufactured oil, and from the accounts it was not possible to say whether the said turnover of rs. 23,557.47 being the sales of oil was from the oil purchased locally or from the manufactured stock. the assessee's explanation for not keeping a separate stock account in respect of oil locally purchased and the oil manufactured by him was that it was impracticable to keep separate stock accounts.2. the assessing authority in this case, in the absence of a separate account for the locally purchased oil and the manufactured oil, adopted the usual formula-local sales of oil x local purchase within the state total purchase value of the oil + purchase value of the.....
Judgment:

Ramanujam, J.

1. The only question that arises for consideration in this tax case is as to whether the interference of the Tribunal with the order of the lower authorities disallowing a sum of Rs. 23,557.47 as second sales of oil is proper. The assessee in this case is a manufacturer of gingelly oil. He not only manufactured oil but also purchased the same locally. He sold oil locally as well as inter-State, but he had not, however, maintained separate stock accounts in respect of the sale of the locally purchased oil as well as manufactured oil, and from the accounts it was not possible to say whether the said turnover of Rs. 23,557.47 being the sales of oil was from the oil purchased locally or from the manufactured stock. The assessee's explanation for not keeping a separate stock account in respect of oil locally purchased and the oil manufactured by him was that it was impracticable to keep separate stock accounts.

2. The assessing authority in this case, in the absence of a separate account for the locally purchased oil and the manufactured oil, adopted the usual formula-local sales of oil X local purchase within the State total purchase value of the oil + purchase value of the manufactured oil- and worked out the turnover of second sales of oil. Aggrieved against the adoption of such a formula by the assessing authority, the assessee filed an appeal and the appellate authority also affirmed the assessment order.

3. The Tribunal, on appeal, however, purporting to follow the decision in Rathinaswamy Chettiar v. The State of Madras [1962] 13 S.T.C. 419, where this court, in a similar situation invoked the presumption 'that a person engaged in a transaction would presumably follow that course which took him out of the taxable category rather than otherwise', upheld the assessee's claim that the turnover of Rs. 23,557.47 formed part of second sales of oil. The Tribunal accepted the assessee's case that it was impracticable to keep a separate stock account in respect of the oil locally purchased and the oil manufactured by him.

4. We are unable to see how it is impracticable to keep a separate stock account. The Tribunal has merely accepted the ipse dixit of the assessee that such a separate account is impracticable to maintain. We are of the view that the Tribunal is not justified in acting on the presumption that 'a man will always follow that course which took him out of the taxable category rather than otherwise', especially after the observations of the Supreme Court in State of Madras v. Narayana Nadar & Co. [1968] 21 S.T.C. 25 Rathinaswamy Chettiar v. The State of Madras [1962] 13 S.T.C. 419, though dealt with a similar situation, was rendered under the provisions of Madras Act 9 of 1939. But we are concerned here with the provisions of Madras Act 1 of 1959 wherein there are specific provisions which throw the onus on the assessee to show that a particular transaction is not taxable.

5. Sections 10 and 40 and Rule 26 contemplate that it is the duty of the assessee to prove to the satisfaction of the assessing authority that a particular transaction will not come within the purview of the taxing provisions.

6. The Supreme Court in State of Madras v. Narayana Nadar & Co. [1968] 21 S.T.C. 25, while referring to the decision in Rathinaswamy Chettiar v. State of Madras [1962] 13 S.T.C. 419, has observed clearly that the said decision requires to be reconsidered in view of the said statutory provisions contained in Madras Act 1 of 1959.

7. While dealing with a similar situation where separate accounts were not maintained in respect of hides and skins purchased locally and from outside, which were later tanned and sold, this court pointed out in Anwaraulla AM. Ghouse & Co. v. State of Tamil Nadu [1971] 28 S.T.C. 610, that:

Although the assessee' has maintained accounts as required by Rule 26, still, it is for the assessee to establish the particular raw hides which have gone into the manufacture of tanned hides and skins. But, if he fails to do so, and has mixed up on the ground that it is impossible to keep separate accounts, the assessing authority is left with no alternative but to use its best judgment and estimate the relative turnover to be brought to charge.

8. We are, therefore, of the view that the Tribunal is not justified in allowing the turnover of Rs. 23,557.47 as second sales of oil and setting aside the order of the lower authorities in this case. The tax case is, therefore, allowed with costs. Counsel's fee Rs. 150.


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