1. The petitioner in this case is Gem and Co. In the petition it is stated that the petitioner is a firm having its business premises in Old China Bazar Street and that Sri Kali Charan Saksena is its proprietor.
2. We next come to the names of two other business concerns. The first is the 'West Bengal Paper House Private Limited'. It is stated in the petition that this company was established in 1948 with Saksena as one of the founder-directors. The next business with which we are concerned is 'Sri Kali Paper Mart'. It is stated in the petition that this is the personal business of Saksena and was established in 1953. All these concerns carry on business in paper. In the petition it is stated that Gem & Co. was not concerned in the matter of sale of any goods, because all that it did was to obtain financial facilities for these two concerns. Even on the facts as stated in the petition, the entire case made out is complicated enough. It is said that Saksena used to hypothecate goods with banks in the name of the petitioner-firm, although the goods belonged to the other two concerns, but without there being any sale or purchase of goods. These complicated and disputed facts cannot obviously be gone into by me in this application. Fortunately, it is also not necessary, in view of the stand taken on behalf of the petitioner.
3.In August, 1957, in the course of investigation of the assessment case of the West Bengal Paper House Private Limited and Sri Kali Paper Mart, some books of account of Gem & Co. were seized by the Commercial Tax Authorities. These books were examined by the Commercial Tax Officer between 30th October, 1957, and 27th February, 1958, in the presence of the authorised representative of the petitioner. It has been stated in the affidavit affirmed by Rabi Kiran Mukerjee dated the 31st July, 1959, that upon such examination it was found that the petitioner's gross turnover had exceeded the taxable quantum of Rs. 50,000 on the 24th day of October, 1955. That fact was recorded in the order sheet of the Commercial Tax Officer, and a copy of it has been set out in paragraph 4 of the said affidavit. The original has also been produced for inspection by the Court. It will appear from the findings embodied therein that with regard to the assessment year, January, 1955, to December, 1955, the taxable quantum of Rs. 50,000 was reached at least on the 24th October, 1955. Under Section4 of the Bengal Finance (Sales Tax) Act, 1941, it is provided that in a given year if the gross turnover exceeds the taxable quantum, then upon the expiry of two months from the date on which this happens, that is to say, when such gross turnover first exceeds the taxable quantum, sales tax becomes payable. In this case, it is admitted that the taxable quantum is Rs. 50,000. Thus the taxable quantum having been reached on the 24th October, 1955, the tax became payable on the 24th December, 1955. According to Section 7 of the said Act, a dealer is not permitted to carry on business under such circumstances without registration. In this particular case, the petitioner carried on business but did not register itself. The consequences that follow under the Act in such circumstances are to be found in Section 11. The particular provision which applies to the facts of this case is Sub-section (2) of Section 11. The relevant part thereof is set out below :-
(2) If upon information which has come into his possession, the Commissioner is satisfied that any dealer, who has been liable to pay tax under this Act, in respect of any period but has failed to get himself registered or to obtain a special certificate, as the case may be, the Commissioner shall proceed in such manner as may be prescribed to assess to the best of his judgment the amount of tax due from the dealer in respect of such period and all subsequent periods and in making such assessment shall give the dealer a reasonable opportunity of being heard; and the Commissioner may if he is satisfied that the default was made without reasonable cause, direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding one and half times that amount.
4. Thereafter the notice was issued in Form VI which is the prescribed notice under the Act. In that notice it was, inter alia, stated:-
Whereas I am satisfied on information which came in to my possession that you have been liable to pay tax under the Bengal Finance (Sales Tax) Act, 1941, in respect of the period commencing on 24th December, 1955, and ending with 31st December, 1955, but that you have failed to get yourself registered....
And whereas it appears to me to be necessary to make an assessment under Sub-section (2) of Section 11 of the said Act in respect of the above-mentioned period and all subsequent periods ;
5. You are hereby directed to attend in person or by an agent at (place) 14 Beliaghata Road, Calcutta on (date) 25th April, 1958, at (time) 12 noon and there to produce or cause there to be produced at the said time and place the accounts and documents specified below for the purpose of such assessment together with any objection which you may wish to prefer and any evidence you may wish to adduce in respect thereof, and to show cause on that date and at that time why in addition to the amount of tax to be assessed on you for the period 24th December, 1955, to 31st December, 1955, a penalty not exceeding one and half times the amount should not be imposed on you under Sub-section (2) of Section 11 of the said Act.
5. In the event of your failure to comply with this notice, I shall assess under Section 11 of the Bengal Finance (Sales Tax) Act, 1941, to the best of my judgment without further reference to you.
6. I have set out the above portion of the notice, as the copy has not been annexed to the petition or affidavit. The petitioner did not appear at the hearing nor did its authorised representative.
7. On the 2nd June, 1958, an assessment order was made. Before I proceed further I should explain why this particular assessment order covers a period of only 7 days. As I have stated above, the assessment order is according to the English calendar. Therefore, so far as 1955 is concerned, the taxable quantum having been reached on the 24th October, 1955, the period of assessment was from 24th December, 1955, to 31st December, 1955. That is only the first period. Apart from this, notices were directed to be issued separately for 3 other periods from 1st January, 1956, to 2nd September, 1958, and for subsequent periods. I am informed that various notices were issued and they are the subject-matters of other applications. A copy of this assessment order is annexed to the petition and appears at pages 18 to 20. This is the assessment order which is being challenged in this case. The assessment order roughly is in two parts. In the first part, the assessment is made and in the second part a penalty is imposed under sub-Section (2) of Section 11 for failure to register. The way the assessment has been made for this period is as follows : The Commercial Tax Officer noticed that in spite of notice in Form VI being served on the dealer, nobody appeared and no intimation even had been sent as to why it failed to appear. Under the circumstances, the Commercial Tax Officer had to make what is called a ' best judgment assessment'. This had to be done on the materials and records available to him. As I have stated above, certain books had been seized, and upon inspection thereof, the Commercial Tax Officer came to certain conclusions which were duly recorded. There can be no doubt whatsoever that the Commercial Tax Officer, in his assessment order, has referred to these records and particularly to his finding as recorded on the 6th March, 1958. In other words, he relied on his previous finding that on the 24th October, 1955, the petitioner had reached the taxable quantum and that from 24th December, 1955, he was liable to pay sales tax and should have registered itself. Then follows the assessment of tax for a period of 7 days, and the amount of gross turnover is Rs. 5,000, the tax payable thereon being Rs. 223-13-3. With regard to the penalty, it was recorded that there was a failure to obtain registration and there was no explanation to be had from the dealer. The penalty was an equivalent sum to the tax payable.
8. Those being the facts, I now come the contention put forward in this application. Mr. Dutt, appearing on behalf of the petitioner, has not, in this application gone into disputed questions of facts, and has started with the assumption that the petitioner was assessable and his assessment has rightly been made on the footing of Rs. 5,000 being gross turnover during the period of assessment. He argues, however, that the penalty could not be levied because the dealer is only liable to pay the penalty if it was compelled by law to get itself registered and yet failed to get itself registered. He argues that there is no evidence to show that the petitioner is a dealer who should have obtained registration. It is clear that this depends on the question as to what was the 'gross turnover' of the petitioner during the period in question, and what was the ' taxable quantum' and when it was reached. As I have stated above, these were the very facts gone into by the Commercial Tax Officer and as recorded in his note dated 6th March, 1958. It was found that the petitioner reached the taxable quantum on the 24th October, 1955, and therefore became liable to pay sales tax as and from the 24th December, 1955. Mr. Dutt has argued that in the assessment order, there is really no reference to the previous finding of the 6th March, 1958, and in any event, the Commercial Tax Officer was not entitled to make any such reference. I am unable to accept either of these arguments. There is a plain reference in the assessment order to his previous finding, which was made shortly after the books of accounts were seized, and on the materials before me I have no doubt whatsoever that the reference is to the endorsement dated the 6th March, 1958, which is being set out in the affidavit of Rabi Kiran Mukherjee in paragraph 4.
9. The next question is whether the Commercial Tax Officer was entitled to refer to this entry. Mr. Dutt has argued that the assessment order should be a self-contained one and being a quasi-judicial proceeding it was not open to the Commercial Tax Officer to make reference to incidents which had happened before the hearing took place, and of which no intimation was given to the assessee. Attractive as this plea sounds, it is not acceptable. There can be no doubt that the proceedings were quasi-judicial and the initiation of it was by issue of a notice in Form VI. By that notice the petitioner was asked to appear on a certain date to prefer his objection and be heard. It failed to avail itself of all those opportunities granted to it. That being so, the Commercial Tax Officer, on the date fixed for hearing, was entitled in law to make what is known as a 'bast judgment assessment.' The mode in which such assessment can be made and the limitations thereof have by now been firmly established. It is not open to make a computation Arbitrarily. On the other hand, if the assessee does not render assistance, the taxing authorities have the right to make the computation on such materials as are available to them. If the petitioner had appeared, at the hearing, it would have to be informed of the materials upon which the Commercial Tax Officer intended to rely. As I have stated above, nobody appeared at the hearing. The result was that the Commercial Tax Officer was entitled to rely on his own computations previously made. Perhaps it would have been best if in his assessment order he had repeated all that he had said before. On the other hand, it would certainly be a tiresome repetition, without any object. It was not as if such computations were to be checked or scrutinised in view of any objections advanced on behalf of the assessee. In such a case the computations might have to be re-checked or altered. Here, however, the assessee did not at all appear. Therefore, there were two alternatives before the Commercial Tax Officer, namely, either to repeat verbatim what he had said before, or alternatively to refer to it in his assessment order, so that any one wishing to verify it might do so by looking into the records. He has chosen to follow the second course. I am unable to hold that this is a procedure which is fatal, and one which renders the assessment void. Inasmuch as the assessment is now held to be valid, in so far as gross turnover and the taxable quantum is concerned, the question of penalty follows almost as a matter of course. All that is necessary is for the Commercial Tax Officer to satisfy himself that there was no reasonable explanation forthcoming for the absence of registration. He has mentioned in his assessment order that there was no explanation forthcoming, for the assessee had neither put forward any objection in pursuance of the notice under Form VI, nor appeared at the hearing. Im my opinion, therefore, the Commercial Tax Officer was entitled to impose the penalty.
10. The result is that the assessment order appears to me to be perfectly valid and does not call for interference. The application is dismissed. The rule is discharged. Interim order, if any, is vacated. No order as to costs.