1. The appellants herein are dealers in cardamom at Bodinayakanur, Madurai. They were finally assessed on 25th June, 1962, under the Madras General Sales Tax Act, 1959, for the year 1958-59 on a total taxable turnover of Rs. 20,31,479.60 as against Rs. 9,49,485.26 returned by them. The addition made by the assessing authority was made up of (1) turnover of Rs. 12,29,750.08 claimed to be purchases of cardamom outside the State but held by the assessing authority to be purchases within the State of Madras on the basis of the investigation made by the special departmental staff and (2) a turnover of Rs. 41,448 amounting to three times of the value of the stock discrepancy noticed on inspection. The appellants went in appeal to the Appellate Assistant Commissioner, who reduced the total addition from Rs. 12,29,750.08 to Rs. 14,420.
2. The Board of Revenue, exercising its special powers Under Section 34 of the Act, called for and examined the relevant assessment and appellate records and found that the matter required a further and fuller investigation. It, therefore, directed the Deputy Commissioner, Intelligence, to make such further enquiries, as considered necessary to find out whether Rs. 12,29,750.08 represented purchases of cardamom outside the State or whether it represented local purchases. In pursuance of the said direction, the Deputy Commissioner issued a notice dated 15th February, 1964, to the appellants and to certain witnesses. The appellants thereafter filed a writ petition before this court to quash the orders of the Board and prohibit the Deputy Commissioner from conducting such an enquiry. This court dismissed the writ petition on 1st December, 1966. Thereupon, the Deputy Commissioner conducted an enquiry in the presence of the appellants and their counsel and the State representative and submitted his report to the Board. A copy of the said report was also furnished to the appellants. The Board, after examining the said report of the Deputy Commissioner, felt that the order of the appellate authority required revision and it, therefore, issued a notice to the appellants proposing to revise the order of the appellate authority and calling for their objections. The appellants sent in their objections to the proposed revision by the Board. All those objections were overruled by the Board and it passed an order on 18th March, 1967, setting aside the order of the appellate authority and restoring the order of the assessing authority. This tax revision is directed against the said order of the Board of Revenue.
3. It is contended on behalf of the appellants that neither the Board of Revenue nor the Deputy Commissioner, Intelligence, had jurisdiction Under Section 34 of the Act to make a roving enquiry in the matter especially when the assessing and appellate authorities have examined the matter thoroughly by examining the relevant witnesses and perusing the connected records and that the witnesses who have been already examined by the assessing and appellate authorities should not have been re-examined for the purpose of making a fresh appraisal of their evidence by the Board. It was also contended that the revision of assessment on the appellant-firm after the firm was dissolved is invalid 'in law. The appellants also challenge the order of the Board of Revenue on merits contending that the facts and circumstances of the case do not warrant the interference by the Board with the order of the appellate authority.
4. Before considering the merits of the appellants' above contentions, it is necessary to set out certain facts, which gave rise to the direction of the Board of Revenue to the Deputy Commissioner, Intelligence, to examine certain witnesses and submit a report in the course of the revisional proceedings. As already stated, the appellate authority had held that the disputed turnover of Rs. 12,29,750.08 related to purchase of cardamom completed outside the State and set aside the order of the assessing authority in that regard. Before the appellate authority it had been contended by the assessees that the assessing authority had not properly considered the documentary evidence placed before it by them, that the ex parte statements taken from certain persons should not have been relied upon by it and that the assessing authority has failed to give any opportunity to them to cross-examine the persons whom the assessing authority had examined earlier. The assessees had also filed affidavits from Messrs. V. K. Balraj and M. L. Goodalingam from whom a substantial portion of the alleged purchases have been made, in support of their case that they had purchased cardamom from outside the State to the extent of the disputed turnover. The appellate authority, after holding that the statements taken by the departmental staff from the planters and dealers in Kerala State as also from Balraj and Goodalingam, behind the back of the appellants, should not have been acted upon by the assessing authority without the appellants being given an opportunity to cross-examine those persons, proceeded to consider the documents and other records available in the case. Though the appellate authority in its order states that Balraj and Goodalingam appeared before it and deposed in a detailed manner in respect of all matters on 15th December, 1962, it is clear from a perusal of its files that the said Balraj and Goodalingam were not examined in the presence of the assessing authority or the departmental staff when the appeal was taken up for hearing, but it has taken certain statements from those persons in its chambers a few days before the date of the hearing of the appeal. The statements taken in those circumstances from those two persons had been relied upon for coming to the conclusion that the appellants had purchased cardamom from them in Kerala State. In those statements, Balraj and Goodalingam had retracted from certain earlier statements made by them before the Special Assistant Commercial Tax Officer at the earliest stage of the proceedings to the effect that they were merely name-lenders, that they did not deal with cardamom either at Bodinayakanur or in Kerala State and that they had nothing to do with the appellants' transactions of purchase of cardamom. Mainly relying on the statements of Balraj and Goodalingam given before the appellate authority in its chambers before the date of the hearing of the appeal, the appellate authority came to the conclusion that the appellants' case of purchase of cardamom from Kerala State should be true. The Board of Revenue, after examining the assessment and appellate records, found that there have been inconsistent statements given by Balraj and Goodalingam on various occasions and that the appellate authority should have examined those two persons in open court at the time of hearing of the appeal instead of taking statements from them in his chambers at a time when the appeal was not posted before him for hearing and without the knowledge of the assessing authority. It, therefore, felt that all the persons who have given statements before the assessing authority as well as before the appellate authority should be examined in the presence of the appellants as well as the assessing authority and that both sides should be given an opportunity to cross-examine the witnesses. As per the directions of the Board of Revenue, the Deputy Commissioner, after notice to the appellants and the department, examined certain witnesses as court witnesses giving opportunity to the appellants and the assessing authority to cross-examine them. He also examined two witnesses tendered by the appellants and one witness tendered by the assessing authority. After analysing the evidence of the various witnesses who have been subjected to cross-examination, both by the appellants and the assessing authority, the Deputy Commissioner submitted a report as follows:
The result of the enquiry therefore reveals that the order of the Appellate Assistant Commissioner is one-sided and that the vouchers produced by the dealers are bogus and are prepared for the only purpose of avoiding levy of sales tax on purchase of cardamom.... When it is found that the cardamom sales usually take place in Madras State and also in Kerala State and a dealer who operates in both the places, it is for him to prove that he effected purchases outside the Madras State and in Kerala State. It is for him to prove because this is a circumstance known to him only and when his evidence on this point is found to be unreliable, it is a legitimate inference that he must have effected purchase in Madras State.
5. This report of the Deputy Commissioner was considered by the Board of Revenue and it accepted the findings given by the Deputy Commissioner on the evidence adduced before him and proceeded to revise the order of the Appellate Assistant Commissioner.
6. With regard to the appellants' contention that the Board of Revenue or the Deputy Commissioner in its direction had no jurisdiction to examine the various witnesses and that the revisional jurisdiction of the Board will not extend to making of a fresh investigation, we are of the view that the contention is not tenable. Section 34 of the Madras General Sales Tax Act, 1959, enables the Board to make such enquiry and pass such orders as it deems fit in the exercise of its revisional jurisdiction. In this case, the assessing authority relied on certain ex parte statements made by certain persons. The appellate authority relied on certain other ex parte statements made by the same persons before him and came to a different conclusion. It is for this reason the Board of Revenue felt that those persons have to be examined in the presence of the appellants as well as the departmental staff and their actual evidence as subjected to cross-examination should be considered for finding out the nature of the transactions. It cannot, therefore, be said that the Board of Revenue cannot cause the examination of the same persons who have given ex parte statements which have been considered by the assessing and appellate authorities one way or the other. We are, therefore, of the view that the Board of Revenue has not acted without jurisdiction in directing the examination of those persons who have given statements at the various stages of the assessment and appellate proceedings.
7. As regards the appellants' contention that the appellant-firm cannot be assessed after it is dissolved, we are of the view that the same is untenable. Section 19-A, which was inserted by Section 3 of Madras Act 12 of 1968 with retrospective effect from the commencement of the principal Act, specifically enables the levy of tax payable by the firm for the period up to the date of such dissolution as if no such dissolution has taken place and it also provides that every person who was a partner of the dissolved firm is jointly and severally liable for payment of tax, whether the assessment is made prior to or after the dissolution.
8. Then, dealing with the validity of the order passed by the Board of Revenue on merits, we find that the dealers have claimed exemption on the disputed turnover before the assessing authority on the ground that it represented purchases of cardamom outside the State of Madras. In support of their case they produced vouchers from certain dealers and planters from Kerala State, The assessing authority sent letters to those parties who had given these vouchers and most of the letters were returned undelivered by the postal authorities with the endorsement that no such addressees existed. In some cases the assessing authority also found that the dealers who have given the vouchers were not registered dealers in Kerala State nor were they assessed to agricultural income-tax under the Kerala Agricultural Income-tax Act. The assessing authority accepted the appellants' case wherever the transport charges are shown to have been paid for bringing the goods from Kerala State to Madras State. In other cases the vouchers produced by the appellants were held to be bogus. In the course of the evidence V. K. Balraj, one of the dealers from whom the appellants are alleged to have purchased cardamom, specifically states that he is not doing business in cardamom, that he merely issued bills at the request of the appellants and other cardamom dealers in Bodi, that even the registration certificates in his name had been obtained by the appellants and other dealers at their cost from the Sales Tax Officer, Devikulam and that the registration has been cancelled by that Sales Tax Officer on coming to know of the real position. This evidence shows that the appellants have procured the vouchers from the said Balraj after registering his name as a dealer in cardamom in Kerala State only for the purpose of showing that local purchases of cardamom as outside purchases. It is not in dispute that Balraj is a resident of Bodi and that he has no place of business in Kerala State. Even the appellants' case proceeds on the basis that the said Balraj and Goodalingam were brokers operating in Kerala State without having any fixed place of business there. It is. also seen that some of the persons whose names are shown in the vouchers as sellers have denied the transactions of sale. There is also the additional circumstance that substantial quantities of cardamom covered by the disputed turnover is said to have been brought from Kerala State to this State by headloads and carts. The transport of such large quantities by headloads and carts is highly improbable and some vouchers for transport through lorries have been found to be inconsistent with the accounts of the lorry owners. These circumstances are sufficient to draw an inference that the appellants' case that they purchased cardamom worth Rs. 12,29,750.08 outside the State cannot be true. Wherever it was found that the goods have been transported from Kerala to Madras by lorries, the assessing authority has given the exemption. But, in respect of the disputed turnover of Rs. 12,29,750.08, no acceptable evidence was forthcoming to sustain the case that the goods involved had been purchased outside the State and transported to Bodi. In our view, the order of the Board of Revenue cannot be successfully challenged on merits.
9. The tax case is, therefore, dismissed with costs. Counsel's fee Rs. 150.