1. This Tax Case (Revision) is directed against the order dated March 27, 1992 of the Tamil Nadu Sales Tax Appellate Tribunal, Madras-104 (Main Bench) (for short 'Tribunal') and made in T.A. No. 851 of 1991 relating to the assessment year 1989-90 under the provisions of the Central Sales Tax Act, 1956 (Act No. 74 of 1956--for short 'CSTA').
2. The assessee-dealers--Tvl. Krishna Oil Mills, having their place of business at No. 34/3, Vellore Main Road, Arcot, is coming within the jurisdiction of the Deputy Commercial Tax Officer, Arcot. For the assessment year 1989-90, the assessee-dealers submitted their return under CSTA. The business premises of the assessee-dealers, it is said, was inspected on January 30, 1990 by the Enforcement officials and certain slips were recovered. One such slip recovered was slip No. 5 recovered under D7 records. The said slip No. 5 was written in the letter pad of Tvl. Krishna Oil Mills. On verification of the said slip, the following factors were revealed, in the sense of the said slip reading as below :
'TCZ 2655. Empty 6,660. Load 15,875. Thiru Rajendran, Madras-79--Chittoor, Bangalore, Pune, Bombay.........................'.
3. The Enforcement officials, it appears, demanded explanation for the entries in the said slip. One A. Gopal Chettiar, claiming to be a partner, stated that they sold 9,570 kgs. of groundnut oil to Bombay dealers. Tvl. Ahamed Umar Bai in bill No. 4/22.8.1989 for Rs. 2,63,175 and the same was despatched in lorry No. TCZ 2655. For the difference of 355 kgs. between this sale bill and the slip, he had stated that after weighment, 355 kgs. were filled up to adjust the lorry hire. This sort of an explanation, as trotted out by the said A. Gopal Chettiar, was not accepted by the assessing officer as the weight of the oil sold and noted in the sale bill did not tally and further the assessee-dealers would have sold many loads of groundnut oil and the said loads could have been sent in the same vehicle so many times. As long as the slip did not contain the date, the different transactions contained in the slip had to be taken as sales of groundnut oil, outside the State, during the current year and consequently, they are treated as sales suppression of groundnut oil of 9,215 kgs. The assessee-dealers had not supported the said turnover by production of 'C' forms and consequently, the same had been taxed at ten per cent under CSTA, valuing 9,215 kgs. of groundnut oil at the rate of Rs. 27.50 per kg., which comes to Rs. 2,53,414. The value of Rs. 27.50 per kg., it appears, had been worked out from bill No. 4 dated August 22, 1989. The said bill gives the sale value of 9,570 kgs. of groundnut oil at Rs. 2,63,175.
4. Since there was sales suppression of groundnut oil, as stated above, the assessing officer rejected the accounts as incorrect and incomplete and the assessing officer assessed the dealers to the best of his judgment for the assessment year 1989-90. The assessing officer also levied penalty under Section 9 of CSTA read with Section 12(3) of the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act No. 1 of 1959--for short, 'TNGSTA') at 50 per cent of the tax due at Rs. 25,341 on the actual suppression of turnover of Rs. 2,53,414 and the penalty was calculated at Rs. 38,012.
5. The aggrieved assessee-dealers preferred an appeal AP No. 51/91 (CST), before the Appellate Assistant Commissioner (CT), Vellore (for short, 'AAC') and he, in turn, passed an order dated April 25, 1991, confirming the assessment on a turnover of Rs. 2,53,414 at ten per cent, but, however, reduced the penalty to 50 per cent of the tax due on the actual suppression and accordingly, penalty was reduced to Rs. 12,671.
6. The assessee-dealers made a further appeal to the Tribunal, as stated above and the Tribunal, in turn, allowed the appeal, giving rise to the present action--Tax Case (Revision) No. 560 of 1995.
7. From the pith and substance of the submissions of Mr. K. Ravi Raja Pandian, learned Special Government Pleader (Taxes) representing the Revenue and Mr. N. Muralikumaran, learned counsel appearing for the assessee-dealers, the one and only question that arises for consideration is as to :
Whether the order of the Tribunal, on the facts and in the circumstances of the case, in setting aside the assessment on the suppressed turnover of Rs. 2,53,414 at ten per cent and upholding the reduced penalty to the extent of 50 per cent quantified in a sum of Rs. 12,671, as had been done by AAC, is sustainable in law.
8. The point : Axiomatic a proposition of law it is, the Tribunal is the ultimate fact-finding authority. The findings recorded, on the facts, by the Tribunal are, therefore, not normally interfered with. It is not as if, in all eventualities and situations, the findings recorded by the Tribunal, of fact, are sustained, without any sort of an interference by this Court--a revisional authority. Sometimes, it does happen that the ultimate fact-finding authority--the Tribunal--records certain findings, not based on any base material or material facts relevant for recording any finding. It also happens on certain occasions that such fact-finding authority records findings of fact, on perverse appreciation of facts, so as to choke the conscience of court. In such of those circumstances a revisional authority--like this Court--has to necessarily interfere with such findings of facts so recorded in a bid rather to avoid travesty of justice, resulting in allowing such orders to stand.
9. The case on hand is a glaring example of travesty of justice resulting in by perverse appreciation of the base material or material facts by the Tribunal, which alone, we rather feel, was responsible for allowing of the appeal by the Tribunal. In a commercial transaction, the nature and character of the transaction must have to be sifted, scanned and analysed in the best of fashion possible, before ever the law is applied to the factual matrix of the case consisting of several commercial transactions. If this sort of a ritualistic exercise is not undertaken by the authorities concerned, it is well-nigh possible for the culmination of travesty of justice, in the process of making or passing orders.
10. Admittedly, during the course of inspection by the Enforcement officials of the business premises of the assessee-dealers on January 30, 1990, certain slips were recovered and one such slip is 'Slip No. 5' recovered under 'D7 records' containing certain entries relatable to the commercial transactions of the assessee-dealers. We have reproduced the entries in the said slip in the process of summation of the facts of the case. Therefore, we rather feel, there is no need of reproduction of the said entries here again. It is not as if the entries in the said slip had been interpreted or construed by the assessing authorities without giving any sort of an opportunity to the assessee-dealers to explain the same. One of the partners of the asgessee-dealers namely, A, Gopal Chettiar explained the entries in the said slip. According to him, the said slip was correctable to bill No. 4 dated August 22, 1989 for a sum of Rs. 2,63,175. Under the said bill No. 9,570 kgs. of groundnut oil were sold. The referred slip No. 5 is admittedly not at all bearing any date at all. Even according to the said Gopal Chettiar, commercial transaction of sale of groundnut oil covered by the slip would work out only to 9,215 kgs. The said figure appeared to have been arrived at by deducting 6,660 kgs. from 15,875 kgs, which comes to 9,215 kgs. There can be no quarrel in deriving at such a figure.
11. When we discern the entries in slip No. 5, there is one entry as 'empty 6,660'. There is another entry as 'load 15,875'. In the business world, practice appears to be that before ever, the lorry is loaded, the weight of the lorry is determined first and then the lorry is loaded with the goods and the weight of the lorry and the goods are found out by weighing the lorry in the weigh bridge after loading. Therefore, the entry 'empty 6,660' may mean weight of the lorry, before ever it is loaded and the other entry 'load 15,875' may mean the weight of the lorry after it is being loaded. Therefore, the explanation given by the said A. Gopal Chettiar for deducing the figure at 9,215 kgs., as covered by the slip, without any demur, may be accepted. But, at the same time, one should not omit to take notice of the difference in kgs. of groundnut oil between slip No. 5 and bill No. 4 dated August 22, 1989. In slip No. 5, an excess quantity of groundnut oil to the extent of 355 kgs. had been dealt with in comparison to the bill No. 4 dated August 22, 1989. The value of 355 kgs. of excess quantity dealt in slip No. 5, if valued at the rate of Rs. 27.50 per kg. would work out at Rs. 9,762.50.
12. While correlating slip No. 5 with bill No. 4 dated August 22, 1989 alleged to have been despatched through lorry TCZ 2655 to a dealer in Bombay, the said Gopal Chettiar would trot out an explanation, during the assessment proceedings that such excess quantity was loaded in the said lorry with a view to adjust the payment to be made for freight to the said lorry TCZ 2655. This sort of a puerile explanation so offered had been rightly rejected by the assessing officer and laterly by AAC. If the said lorry is loaded with oil to the consignee at Bombay, the consignee alone will be entitled to the goods despatched through the lorry and normally in the case of despatch of oil, the despatch is effected in such a way that no one will be in a position to tamper with the contents of the container of the lorry, in the sense of the container being sealed and the same to be opened at the destination by the consignee. Even assuming for argument's sake that the said lorry was loaded with excess quantity of 355 kgs. of groundnut oil to be adjusted against lorry freight, nothing it is said was mentioned in the said bill No. 4 dated August 22, 1989 so that the consignee at Bombay would permit the lorry owner to appropriate groundnut oil to the extent of 355 kgs. in the absence of any indication in the said bill and further, the fact that there are no materials produced by the asgessee-dealers indicating that the lorry owner is also a dealer in oil so that he could have, in terms of freight, received certain quantities of oil to be dealt with by him at the destination point, that is to say, Bombay. Further, it is not as if the assessee-dealers sent only one load to the consignee at Bombay and in the course of business transactions, the assessee-dealers could have despatched many a time oil through the same lorry or different lorries to the same consignee or different consignees at Bombay. This sort of a rationale had also been taken into account by the assessing officer, viewing things from the angle of common sense and the ordinary course of events happening in day-to-day commercial activities. This sort of a reasoning had also been accepted by the first appellate authority--AAC.
13. Unfortunate it is that the Tribunal, while reversing the orders of the authorities below, did not at all advert to as to how the rationale or reasoning, as projected by the assessing authorities below were not amenable to reason and therefore could not be accepted. It is not incumbent for the Tribunal to say how the authorities below were not right in arriving at a conclusion ; but, it is necessary and requisite for the Tribunal to say how the tax authorities went wrong, while reversing the decisions of the said authorities.
14. Appropriate it is, at this juncture, we rather feel, to refer to a few decisions emerging from the apex Court of this country on this aspect of the matter.
(i) In Dollar Company v. Collector, Madras : AIR1975SC1670 , what their Lordships of the Supreme Court observed in paragraph 4 (at page 1671), is relevant and it reads as under :
'............. A court of appeal interferes not when the judgment under attack is not right but only when it i's shown to be wrong.......................' (ii) In S.V.R. Mudaliar v. Mrs. Rajabu F. Buhari : 3SCR312 , we may get the relevant observations made by their Lordships in paragraphs 14 and 15 and they read as under :
'14................ Though the appellate court is within its right to take a different view on a question of fact, that should be done after adverting to the reasons given by the trial judge in arriving at the finding in question............. The appellate court should interfere with the judgment under appeal not because it is not right, but when it is shown to be wrong, as observed by three Judge Bench of this Court in Dollar Co. v. Collector of Madras : AIR1975SC1670 .................
15............. the appellate court has to bear in mind the reasons ascribed by the trial court. This view of ours finds support from what was stated by the Privy Council in Rani Hemant Kumari v. Maharaja Jagadhindra Nath (1906) 10 CWN 630 wherein while regarding the appellate judgment of the High Court of Judicature at Fort William as 'careful and able', it was stated that it did not 'come to close quarters with the judgment which it reviews, and indeed never discusses or even alludes to the reasoning of the Subordinate Judge'.'
15. The observations, as above, made by the apex Court fit in nicely on all fours with the factual matrix of the case on hand. Agonising it is to note that the Tribunal not only not referred to the reasonings or rationale, as penned down by the assessing officer, in coming to the conclusion, subsequently affirmed by AAC, but also it referred to certain rationale or reasoning, not even adverted to by learned counsel appearing for the assessee and the rationale or reasoning, adverted to by the Tribunal from the fathom of its imagination reads as under :
'3................ The excess quantity was loaded in order to make up the spillage and other wastage accruing en route. Further to adjust any possible shortages when weighed at the other end, the appellants used to load more than the quantity actually shown in the bill. So the authorities are not correct in taking the quantity noted in the slip different from the one supported by bill. Therefore, the addition made taking the quantity as suppression and estimating the value at Rs. 2,53,414 is not correct. The appellants have accounted for the sales turnover of Rs. 2,63,175 and thus there is no question of making further addition of Rs. 2,53,414. In the absence of any omission, there is no question of making assessment on the turnover. Therefore, the assessment made at 10 per cent on a turnover of Rs. 2,53,414 is cancelled.'
16. The rationale or reasonings, as projected by the Tribunal in cancelling the assessment is quite contra even to the puerile explanation trotted out by one of the partners of the assessee-dealers, namely, A. Gopal Chettiar in stating that the excess quantity was loaded in the container of the said lorry so as to adjust the lorry freight to be paid to the said lorry owner, who happened to transport the groundnut oil to the dealer at Bombay.
17. This sort of a rationale or reasoning, as projected by the Tribunal is definitely a pointer to make it appear that the Tribunal did not at all apply its mind to the factual matrix of the case. We are sorry to say that the order of the Tribunal is nothing but the resultant product of perverse appreciation of the base materials or material facts, which alone led to the decision as it has arrived at and such a decision or order cannot at all be allowed to stand and the same deserves to be set aside.
18. With regard to the cancellation of the penalty, the reasoning given by the Tribunal is traceable to paragraph 4 of its order and it reads as under :
'4. The next issue is with regard to the levy of penalty under Section 9 of the Central Sales Tax Act read with Section 12(3) of the Tamil Nadu General Sales Tax Act. There is no suppression of turnover as discussed above and thus there is no question of levying penalty. Therefore, the penalty of Rs. 12,671 as sustained by the first appellate authority is cancelled.'
19. The Tribunal cancelled even the reduced penalty of Rs. 12,671, as had been sustained by the first appellate authority on the ground of there being no suppression of turnover. We have earlier arrived at a conclusion that the finding of the Tribunal that there was no suppression of sales turnover was based upon perverse appreciation of the materials and the same deserves to be set aside. The very finding itself is sufficient to set aside the order of the Tribunal in cancelling the penalty of Rs. 12,671, as sustained by the first appellate authority and therefore, the order of the Tribunal, as respects the cancellation of the penalty also deserves to be set aside.
20. In fine, the Tax Case (Revision) is allowed and the assessment order making a further addition of Rs. 2,53,414 exigible to tax at ten per cent for the assessment year 1989-90 by the assessing officer and laterly confirmed by AAC is ordered to be restored, by setting aside the order of the Tribunal in that regard. Further, the penalty of Rs. 12,671, as sustained by AAC--the first appellate authority is also ordered to be restored, by setting aside the order of the Tribunal in that regard. There shall, however, be no order as to costs, on the facts and in the circumstances of the case.