Skip to content


The Madras Metal Works Vs. the State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case NumberTax Case No. 220 of 1966 (Revision No. 155 of 1966)
Judge
Reported in[1973]31STC566(Mad)
AppellantThe Madras Metal Works
RespondentThe State of Madras
Appellant AdvocateS. Padmanabhan, Adv.
Respondent AdvocateK. Venkataswami, First Assistant Government Pleader
DispositionPetition dismissed
Cases ReferredSri Ranganathar Mills v. State of Madras
Excerpt:
- .....certain aluminium and brass utensils. as a result of the said surprise inspection, certain anamath account books and slips were recovered from the premises. out of the account books and slips so recovered, one book contained the details of certain transactions during the period 15th february, 1964, to 31st march, 1964 and it was found to be of the value of rs. 27,794. this sum was treated by the assessing officer as the sale value of the utensils during the relevant period and, taking it as the basis, the suppressed turnover for the entire year on this account was calculated at rs. 2,22,352. there were other account books and slips which showed transactions on certain dates which had been suppressed from the regular accounts. the assessee could not explain the entries in those account.....
Judgment:

Ramanujam, J.

1. On 15th May, 1964, there was a surprise inspection by the commercial tax authorities of the business premises of the assessee in this case, who was a manufacturer of certain aluminium and brass utensils. As a result of the said surprise inspection, certain anamath account books and slips were recovered from the premises. Out of the account books and slips so recovered, one book contained the details of certain transactions during the period 15th February, 1964, to 31st March, 1964 and it was found to be of the value of Rs. 27,794. This sum was treated by the assessing officer as the sale value of the utensils during the relevant period and, taking it as the basis, the suppressed turnover for the entire year on this account was calculated at Rs. 2,22,352. There were other account books and slips which showed transactions on certain dates which had been suppressed from the regular accounts. The assessee could not explain the entries in those account books and slips. Therefore, the assessing authority took the entries in the other account books and slips as representing the suppression during the assessment year 1963-64 and enhanced the turnover returned by the assessee to the tune of Rs. 2,68,907.76.

2. Before the appellate authority as well as the Sales Tax Appellate Tribunal, the assessee mainly concentrated on the turnover of Rs. 2,22,352 being the estimated turnover on the basis of the anamath account book, (A-1), which according to the revenue showed the value of the utensils manufactured and sold for the period from 15th February, 1964, to 31st March, 1964. The contention of the assessee before the Tribunal was that the addition of the said turnover of Rs. 2,22,352 could not be justified, on the following grounds: (i) there was no justification to multiply the turnover determined from the account book (A-l), which is for the specific period 15th February, 1964, to 31st March, 1964, by eight times so as to find out the turnover for the entire year and, if at all, the actual figures found in the book (A-l) alone should be added; (ii) the assessing officer should have given due allowance for the holidays during which the manufacturing operations and sales of utensils could not have taken place and the estimate of the turnover for the entire year without reference to the holidays could not be justified; and (iii) the explanation offered by the assessee in relation to the account book covering the period 15th February, 1964, to 31st March, 1964, that it represented the actual entrustment of the metal to the manufacturers for making utensils and that it did not represent the sales of the manufactured utensils, should have been accepted.

3. The Tribunal considered all these contentions and rejected them and ultimately upheld the estimate made by the assessing officer. The same contentions were reiterated before us by the learned counsel for the assessee. We are, however, inclined to accept the view taken by the Tribunal, having regard to the facts and circumstances of this case. Here, the anamath account book, (A-l), showed certain transactions during the period 15th February, 1964, to 31st March, 1964. The assessee's explanation that it related to the entrustment of the metal to the manufacturers for making utensils and that it did not represent the turnover of sales did not find acceptance before the authorities below, including the Tribunal. That explanation not having been accepted by the Tribunal and its decision being a finding on a question of fact, it is not possible for us to entertain the assessee's said contention. Once the assessee's explanation is found to be not acceptable, then it must be taken that the book (A-l) represented the sales turnover of the utensils during the period 15th February, 1964, to 31st March, 1964. It has been pointed out by the authorities below that the first entry in the account book was a carried forward entry showing that there should have been an account for the period anterior to 15th February, 1964. That means the assessee should have maintained similar accounts even for the anterior period. According to the learned counsel for the assessee, the authorities below could not assume that the assessee had suppressed a portion of his turnover throughout the year, merely because there was suppression during a specific period. But, having regard to the first entry in the account book, (A-l), which showed that there should have been some sort of suppression before 15th February, 1964, the authorities below, including the Tribunal, inferred that the suppression should have spread over throughout the year. We are not in a position to say that such an inference drawn by the Tribunal is in any way erroneous.

4. The other contention urged on behalf of the assessee that the holidays throughout the assessment year should have been taken into account and due allowance should have been made in estimating the suppressed turnover is equally without any substance. As a matter of fact, it cannot be disputed that the period covered by the account book, (A-l), namely, 15th February, 1964, to 31st March, 1964, also included within it certain holidays and that the turnover estimated at Rs. 27,794 calculated for that period took note of the holidays during that six weeks as well. Therefore, there appears to be no need for excluding the holidays in estimating the turnover on the basis of the actual turnover found in (A-l). We are, therefore, of the view that the attack made by the assessee on the estimate made by the assessing authority is not sustainable.

5. The learned counsel for the assessee, however, contends that the estimate made by the authorities below is arbitrary and capricious, having regard to the fact that a large estimated turnover has been added to the turnover returned by him. But, as has been held by this court in Sri Ranganathar Mills v. State of Madras [1971] 27 S.T.C. 216, no question of law can be said to arise out of the order of the Tribunal so as to enable this court to interfere with the estimate of the turnover made by the assessing authority. Though, normally, the best judgment method of assessment involves certain amount of legitimate guess, though it may be tempered, with judicial mercy, it has to depend mainly upon the facts and circumstances of each case, particularly the conduct of the assessee in the course of his business during the assessment year. Therefore, we cannot, in the exercise of our powers of revision, interfere with the estimate made by the assessing authority as upheld by the Tribunal, in the circumstances of the case.

6. The learned counsel for the assessee also contends that there is no justification for the levy of penalty in this case and that, in any event, the quantum of penalty is excessive. It is seen that the penalty originally levied by the assessing authority was Rs. 2,230 and this has been reduced by the Tribunal to Rs. 750, having regard to the circumstances of the case. The contention advanced on behalf of the assessee in this regard is that mere suppression of turnover for a particular period during the assessment year will not show that there was a wilful suppression of turnover throughout the year and that, unless the assessee is shown to have had sufficient mens rea leading to the inference of wilful suppression of turnover, there could be no levy of penalty. We are not able to accept this contention, for, if there was non-disclosure of a portion of the turnover from the regular account books and the turnover has actually been suppressed from the regular account books, it could easily be inferred that the assessee had the necessary mens rea to exclude such turnover from his regular accounts, with a view to evade payment of tax on such turnover. As a matter of fact, Section 12(3) of the Tamil Nadu General Sales Tax Act, which empowers the assessing authority to levy penalty in cases of this kind, does not make it a condition that the assessee should have the necessary mens rea before he is found guilty of making certain suppressions. In our view, the imposition of penalty in this case cannot legally be taken exception to.

7. The tax case is therefore dismissed. There will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //