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Jugal Kishore Radhakishan Vs. Additional Member, Board of Revenue and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 3807 (W) of 1973
Judge
Reported in[1978]41STC250(Cal)
AppellantJugal Kishore Radhakishan
RespondentAdditional Member, Board of Revenue and ors.
Appellant AdvocateNoni Coomar Chakraborty and ;Ambica Charan Bhattacherjee, Advs.
Respondent AdvocateNarayan Chandra Bhattacherjee, Adv.
Cases ReferredJasodalal Ghosal Pvt. Ltd. v. Commercial Tax Officer
Excerpt:
- .....in respect of 3 transactions only under section 5(2)(a)(ii) of the said act and they relate to (a) sales to messrs. dhansuk sohanlal, where the registration of the purchasing dealer was cancelled after 4 years, (b) sales to messrs. roken chand sarup chand on the same ground and (c) sales to messrs. d. ghose & company, where also the registration certificate was cancelled after 8 years of transaction. it would also appear from the determination as aforesaid that, at the time of granting the reliefs, respondent no. 1 has also observed that the sales tax authorities should seriously consider the fact for laying a firm criteria for cash transactions vis a vis use of cheques in business for the purpose of proof of the business.5. the aforesaid determination of respondent no. 1 has been.....
Judgment:

M.N. Roy, J.

1. Messrs. Jugal Kishore Radhakishan, a firm registered under the Indian Partnership Act (hereinafter referred to as the said petitioner), has impeached in this rule the ultimate determination of the respondents in the matter of disallowing exemption in terms of Section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act), which appears in annexure X to the supplementary affidavit and the incorporation of the same in annexure G to the petition. The said petitioner is, admittedly, a registered dealer under the said Act having registration certificate No. C.S.-2/1649-A and on the basis thereof carries on business both as a wholesale and retail dealer in textile amongst other commodities. There is also no dispute that the said petitioner duly submitted quarterly returns in the course of its business before the sales tax authorities concerned and has also paid and is paying sales tax in terms of the requirements of law. It appears that for the fourth quarter ending with Chait Sudi 8 of the year 2013 according to Hindi Calendar, Sambat, the said petitioner submitted its return and its gross turnover amounting to Rs. 11,86,970-13-3 as taxable turnover and after all deductions claimed an exemption amounting to Rs. 34,00,220-0-0 and on that basis duly paid a sum of Rs. 2,194-3-6 as the amount of tax payable on such turnover.

2. By an order dated 30th September, 1964, the Commercial Tax Officer, Amratalla Charge, respondent No. 4, imposed an additional tax of Rs. 15,947-8-0, after disallowing the claims of the petitioner under Section 5(2)(a)(i) of the said Act, which claim incidentally amounted to Rs. 5,23,975-2-3 and also a claim for deductions under Section 5(2)(a)(ii), for sales to the registered dealers amounting to Rs. 5,55,210-0-0 and a further claim of deductions under Section 5(2)(a)(v) for sale to the registered dealers amounting to Rs. 52,00,674-11-9. Respondent No. 4 further imposed a penalty for a sum of Rs. 300 and also issued a notice in form VII for Rs. 13,753-5-9 after deduction of a sum of Rs. 2,194, being the amount of tax paid by the said petitioner. Being aggrieved by such determination, the said petitioner preferred an appeal before the Assistant Commissioner, Commercial Taxes, Dharmatolla Charge, respondent No. 3, on the ground, inter alia, that the decision of respondent No. 4, in disallowing the total claim under Section 5(2)(a)(ii), merely on the ground of suspicion was wrong, erroneous and arbitrary, inasmuch as it is well-settled that if the date of cancellation of registration is subsequent to the date of transaction and, as required by Rule 27A of the Rules as framed under the said Act (hereinafter referred to as the said Rules), if the declaration forms are produced in support of the claim for exemption, then it would be an obligation on the part of the Commercial Tax Officer concerned to allow such claim. It was also submitted that imposition of penalty was excessive, as most of the returns were filed in time. The said respondent No. 3, however, upheld the order of respondent No. 4 and, consequently, rejected the appeal as aforesaid holding, inter alia, that respondent No. 4 was justified in disallowing the said petitioner's claim and holding further that because of the amount of tax involved the penalty cannot be said to be unreasonable or excessive and that too when no satisfactory explanation could be furnished as to why the returns in question were not filed in time.

3. From that determination, a revision under Section 20(3) of the said Act, being Revision Case No. 175 of 1966-67, was preferred by the said petitioner, before the Additional Commissioner, Commercial Taxes, West Bengal, respondent No. 2, contending, inter alia, that the sales in question being duly supported by the relevant declaration forms should have been admitted as claims under Section 5(2)(a)(ii) of the said Act and it was also contended that subsequent cancellation of registration certificates of the purchasing dealers would not be a valid ground justifying disallowance of the claims and further the assessment, as has been made and is sought to be the basis, was arbitrary and excessive and, furthermore, the penalty, as imposed, was unreasonable, apart from being excessive. By an order dated 29th January, 1971, the said respondent No. 2 allowed the revision in question in part by modifying the assessment order. From a reference to the order in question, it would appear that a sum of Rs. 5,000 only out of the claim under Section 5(2)(a)(ii) of the said Act was allowed, as a result whereof, the taxable turnover was reduced from Rs. 3,56,250-11-3 to Rs. 3,35,244-0-0. It would further appear from a reference to the determination that the other findings of respondent No. 3, including the penalty, were upheld.

4. Still aggrieved by such determination, the said petitioner moved an application in revision, being Case No. 236 of 1971, before the Board of Revenue on the ground that the subsequent cancellation of the registration certificates of the purchasing dealers could not, in law, be a ground for disallowing the claims for exemption and such disallowance on mere suspicion was not only improper, but was not bona fide and was not sufficient. It was also contended that the penalty, as imposed, was excessive and arbitrary too. It appears from the statements, as made in the petition, that it was contended before the Board of Revenue that the petitioner was a wholesaler and payments of goods were received mostly on cash and very small parts in cheques and, as a matter of trade practice, no purchase order or delivery challans were kept by them. That apart, it was also contended and, as recorded hereinbefore, that the subsequent cancellation of the registration certificates of the purchasing dealers should not have been taken into consideration, which, in fact, was considered to be a ground for disallowing the claims as made. It was also contended that no proper or due and bona fide enquiry into the matter was initiated or completed before making the impugned determinations. It has 'also been contended that the Additional Member, Board of Revenue, respondent No. 1, who made the said determination, did not apply his mind to the principles required for considering the claims relating to exemption under Section (5)(2)(a)(ii). It fact, it would appear from a reference to the determination that respondent No. 1 was pleased to allow exemption in respect of 3 transactions only under Section 5(2)(a)(ii) of the said Act and they relate to (a) sales to Messrs. Dhansuk Sohanlal, where the registration of the purchasing dealer was cancelled after 4 years, (b) sales to Messrs. Roken Chand Sarup Chand on the same ground and (c) sales to Messrs. D. Ghose & Company, where also the registration certificate was cancelled after 8 years of transaction. It would also appear from the determination as aforesaid that, at the time of granting the reliefs, respondent No. 1 has also observed that the sales tax authorities should seriously consider the fact for laying a firm criteria for cash transactions vis a vis use of cheques in business for the purpose of proof of the business.

5. The aforesaid determination of respondent No. 1 has been contended by the said petitioner to be whimsical, capricious and arbitrary inasmuch as it has been stated that the said respondent No. 1 has made the decision without assigning any reason or without applying his judicial mind. This fact has, of course, been categorically denied by the answering respondents in their return to the rule. The petitioner has also contended that the fact that the registration certificates of the purchasing dealers have been cancelled subsequent to the sale to them by the said petitioner could not, in any event, be a ground for refusal to grant the prayer under Section 5(2)(a)(ii). This submission has also been denied by the answering respondents and they have contended that the determination in the matter have been duly and properly made, as the said petitioner could not produce either any evidence of the necessary transactions or any proof of delivery and failed to establish the genuineness of the transactions. That apart, it was also contended that the determination was duly made as declaration forms were not produced, so also stock books and delivery challans.

6. Mr. Chakraborty, appearing in support of the rule, on the pleadings as aforesaid, submitted that the determination in annexure X to the supplementary affidavit and, more particularly, which relates to the transactions with Messrs. Jeonlal Malchand, Messrs. Shri Laxmi Cloth Stores, Messrs. Shri Laxmi Works & Company Limited, Messrs. Dey Ghose & Company, Messrs. Kalyani Stores, Messrs. Sridhar Bastralaya and Messrs. Kamal Stores, mainly on the ground that no purchase order from the alleged purchasing dealers could be produced, so also any delivery challan copy showing receipt of goods by them, or any stock book showing entries regarding transaction of stocks to the alleged purchasing dealers and of receipt of the payment entirely in cash and the subsequent cancellation of the registration certificates of the purchasing dealers as grounds for disallowing the claims were improper. Mr. Chakraborty submitted that from a reference to the two ultimate orders, as referred to hereinbefore, it would appear that such determinations and the basis of the same were duly maintained, although some reliefs in respect of 3 purchasers, as mentioned hereinbefore, was granted. In any event, he submitted that the grounds on which the determinations were made and, more particularly, because the transactions were in cash and the purchasers have subsequently gone underground or their registrations have been cancelled could not be a valid ground for disallowing the claim.

7. In support of such submission, Mr. Chakraborty referred to the determination in the case of Jasodalal Ghosal Pvt. Ltd. v. Commercial Tax Officer [1975] 35 S.T.C. 383. In that case, it has been observed that where an assessee claimed deductions under Section 5(2)(a)(ii) of the said Act, by filing the declaration form in support of his claim, he has discharged his onus under Rule 27A of the said Rules and the onus of proof that the transaction was not genuine thus would shift on the Commercial Tax Officer concerned. It has also been observed that there is no obligation on the part of the assessee and the law does not cast any responsibility upon him to satisfy about the correctness of the declaration. It has also been observed that although the mere production of the declaration form will not be conclusive, yet it raises a strong presumption in support of the claim for deduction and it would be open to the Commercial Tax Officer concerned to rebut that presumption. It has further been observed that the mere fact that the certificate of registration of the purchasing dealer has been cancelled subsequent to the date of the transaction could not have any retrospective effect so as to affect the legality or validity of the transactions of sale on earlier dates. If the purpose of the purchase had been scored out in the declaration form, only for that reason it could not be said that the declaration form was unauthen-ticated and no deduction could be granted on the basis of that declaration form. It has also been observed that in a business transaction sales are often made partly in cash and partly in cheques. Simply because the transaction was in cash, an adverse inference should not be drawn against the genuineness of such transaction. Moreover, a sale could be made either by cash or deferred payment as provided in Section 2(g) of the said Act. It has also been observed that it is not expected that in each and every transaction of sale, there shall be a purchase order for sale.

8. Mr. Chakraborty further placed reliance on the unreported judgment dated 1st September, 1975, in Civil Rule No. 7836(W) of 1973, wherein Sabyasachi Mukharji, J., has followed the determination as referred to (1) hereinbefore and has observed that the disallowance of claim on the ground that subsequent to the transaction and issue of the declaration form the registration of the purchasing dealers with whom the petitioner had transactions had been cancelled would not be a proper ground for rejection or non-consideration of a claim under Section 5(2)(a)(ii).

9. The facts of the present case fit in with all force with the facts of the earlier determination, excepting the arguments as appeared to have been made by the respondents that no proper or due document or record, as mentioned hereinbefore, was produced and such non-production would justify the respondents concerned to make the impugned determinations. In the case of Jasodalal Ghosal Pvt. Ltd. v. Commercial Tax Officer [1975] 35 S.T.C. 383, it has been specifically observed that the onus, immediately on production of the declaration forms, which would not be a conclusive proof but raises a strong presumption in support of the claim for deduction, would shift on the Commercial Tax Officer concerned. Here, in the instant case, such tests as have been laid down in the said reported decision have been satisfied and thus the onus in the instant case, in terms of the said determination, was on the respondents and, in fact, they have not been able to disprove the presumption which was so raised by the said petitioner. I am also of the view that the fact that a case is very old would not be a cause or a criteria for exonerating the authorities concerned from their obligations to discharge the onus as aforesaid.

10. In that view of the matter, the arguments of Mr. Chakraborty should succeed and the rule as such must be made absolute. I order accordingly.

11. Let appropriate writs be issued setting aside the impugned order in annexure G to the main petition.

12. This will not, however, prejudice the respondents from proceeding afresh in the matter and to make a proper and appropriate determination in accordance with law after due notice to the said petitioner if they so like or are advised.

13. There will be no order for costs.


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