TMI Blog1975 (11) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... f these sales, sales worth Rs. 18,27,053-3-6 could not be allowed as these did not appear to be genuine transactions. It may be mentioned that no particulars have been given by the Sales Tax Officer regarding these sales, which were disallowed on the ground that they were not genuine transactions. Although the order of the Sales Tax Officer does not make it clear, from the judgment of the Tribunal it is clear that the sales to M/s. Keshavji Hirji, which are the subject-matter of this reference, were not disallowed by the Sales Tax Officer. The applicants appealed against the order passed by the Sales Tax Officer to the Assistant Collector of Sales Tax. During the pendency of this appeal, on 12th March, 1956, the Assistant Collector of Sales Tax issued a notice to the applicants calling upon them to prove that the sales shown in the schedule appended to the said notice were made to bona fide registered dealers in good faith and that the signatures obtained on the declarations were those of the persons by whom they purported to have been signed or by some responsible persons duly authorised by the purchasing dealers in that behalf. At the end of the said show cause notice the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lekhraj did not pay the taxes and the Government had filed a complaint against Lekhraj in the Court of a Presidency Magistrate and the evidence of one Ramji Vasanji, a partner of the applicants, was taken in that matter. This evidence showed that the applicants had sold goods worth Rs. 9,76,182-5-6 to Lekhraj and it was admitted by Lekhraj that he had purchased the goods from the applicants. The applicants by this letter protested against the department proposing to disallow the sales effected by the applicants to Lekhraj without considering this evidence and pointed out that the department could not blow hot and cold at the same time. Regarding the sales to M/s. Keshavji Hirji it was pointed out by the applicants that the sales made to M/s. Keshavji Hirji were in good faith and the signatures which had been obtained on the declarations were those of Keshavji Hirji. The difference in writing the word "Keshavji" in Gujarati, which was pointed out in the aforesaid schedule, was explained on the ground that it was not uncommon that many persons spelt their names differently on different occasions. It was pointed out that these sales had already been allowed by the Sales Tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was affirmed on 6th December, 1958, Damji Vasanji, inter alia, stated that he was a partner of the applicants and that the applicants had sold goods worth Rs. 6,25,247-11-3 during the period from 1st April, 1950, to 31st October, 1952, to M/s. Keshavji Hirji, who were registered under the Bombay Sales Tax Act, 1946, and had given declarations to the applicants. He further stated that these declarations were signed by Keshavji Hirji personally. Manilal Bhavanji in his affidavit affirmed on the same day stated that he was doing brokerage business at Dana Bunder for the last three years or so. He further averred that Keshavji Hirji was coming to the applicants' shop in 1950-51 for purchasing vegetable products from them and that Keshavji Hirji had purchased goods worth some lakhs from the applicants during the period from 1st April, 1950, to 31st October, 1952. The Additional Collector then issued a questionnaire dated 29th September, 1959, to the applicants. Paragraph 3 of the said questionnaire stated that cash sales of Rs. 6,25,247-11-3 alleged to have been effected to Keshavji Hirji were proposed to be taxed by an order under section 34 of the Bombay Sales Tax Act, 1953, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... havji Hirji was absolutely false and must have been made by him to save his own skin and nothing else. The said revision application of the applicants was heard by the Deputy Commissioner of Sales Tax. By his order dated 22nd July, 1961, the Deputy Commissioner, after referring to the proposed disallowance of the sales to Keshavji Hirji, and to the notice in form XXIV, which was served on the applicants, revised the order passed by the Assistant Collector suo motu and, inter alia, disallowed the sales made to M/s. Keshavji Hirji. In his order the Deputy Commissioner has stated that as regards the oral statement made by Keshavji Hirji before the P. A. to the Collector of Sales Tax and the letter of Keshavji Hirji dated 24th November, 1952, the applicants could not be permitted to read the original letter as it would be against public interest but that the gist of the information laid before the department was communicated to the applicants. The question which the Deputy Commissioner posed before himself was whether, in the light and circumstances and the facts before him, it could be said that the sales in question were not made genuinely to the said dealer, viz., Keshavji Hirji. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 24th November, 1952, was ever made available to the applicants. In fact, it is common ground that all that the Deputy Commissioner did was to convey the gist of the information given by Keshavji Hirji to the applicants. The Tribunal rejected the contention of the applicants that the rules of natural justice had not been complied with and dismissed the revision application, as we have already set out earlier. This reference arises out of the judgment and order of the Tribunal and the aforementioned question has been referred pursuant to an order made by a Division Bench of this Court. The first contention of Mr. Shah, the learned counsel for the applicants, was that there was a clear violation of the rules of natural justice by the Deputy Commissioner in passing his order as the applicants were not given any opportunity to cross-examine Keshavji. In this regard the facts we have narrated earlier show that in the letter of 9th April, 1956, addressed to the Assistant Collector of Sales Tax, the applicants had expressly desired to cross-examine all the dealers, sales to whom were proposed to be disallowed, including Keshavji. In their reply to the questionnaire issued by the Additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Deputy Commissioner dated 22nd July, 1961, is a single order and deals with the revisional appli. cation of the applicants as well as the question of sales to M/s. Keshavji Hirji. It is significant that in the heading to this order there is no reference at all to the notice of suo motu revision, though there was such a notice issued on 16th May, 1958. The heading only refers to the revision application received on 25th May, 1956, from the applicants against the order passed by the Assistant Collector of Sales Tax. The narration of facts in the order makes it abundantly clear that the notice dated 16th May, 1958, has been issued merely in the course of the revision application preferred by the applicants, in view of the fact that an adverse order was proposed to be passed against the applicants regarding the sales to M/s. Keshavji Hirji, which had been allowed by the Assistant Collector as having been made to a registered dealer. The heading of this order clearly shows that the papers of the case submitted by the Sales Tax Officer and the Assistant Collector of Sales Tax had been perused by the Deputy Commissioner of Sales Tax before passing the order. On these facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this contention at all, because the memorandum of revision specifically states that the grounds are liable to be altered or added to and this contention has been specifically advanced by the applicants before the Tribunal and rejected by the Tribunal. The question which we have now to consider is as to what is the effect of the Deputy Commissioner not having afforded an opportunity to the applicants to cross-examine Keshavji, even though there was a demand for such cross-examination. Reference may be usefully made in this connection to the statement of law in paragraph 76 of Halsbury's Laws of England (4th Edition), Vol. I, which runs as under: "Rejection of a request to be permitted to cross-examine witnesses who appear at a hearing for the other side will normally be construed as a breach of natural justice; but it is not a necessary ingredient of natural justice that one who has submitted relevant evidence in writing or ex parte must be produced for cross-examination, provided that the evidence is disclosed and an adequate opportunity is given to reply to it." Reference may also be made to the decision of a Division Bench of the High Court of Punjab and Haryana at Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and a former employee. All this evidence was sought to be rejected by the Deputy Commissioner and the allowance granted by the lower authorities was sought to be reversed merely relying on the statement made by Keshavji before the Personal Assistant to the Collector of Sales Tax, the said Personal Assistant not being any of the authorities named under the relevant Sales Tax Laws at all, and the rojmel of Keshavji for the period from 30th October, 1951, to 11th August, 1952, which was in the possession of the Sales Tax Officer, Enforcement Branch, presumably pursuant to a seizure. Moreover, it is significant that the declarations in respect of the sales to M/s. Keshavji Hirji purporting to be signed by Keshavji had been produced by the applicants before the sales tax authorities and the order of the Deputy Commissioner does not show that he rejected the contention of the applicants that these declarations had been signed by Keshavji. In fact, the Assistant Collector had accepted that these declarations 'were signed by Keshavji and all that the Deputy Commissioner has done is to observe that it cannot be surmised under what circumstances these declarations had been furnished by Kes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing on the record to show that the applicants might have abandoned their intention to cross-examine Keshavji, which was evidenced by their earlier demand, and, if at all, the record suggested to the contrary. In view of this and the other facts and circumstances, which we have adverted to earlier, in our view, it was the duty of the Deputy Commissioner to have given an opportunity to the applicants to cross-examine Keshavji, if they so desired, and his failure to give such an opportunity amounts to a violation of the principles of natural justice. In our opinion, the order of the Deputy Commissioner is bad in law on this ground alone and the order of the Tribunal is also bad in law for the same reason. But, in view of several other contentions having been raised before us, we propose to consider even such further contentions. The next contention of Mr. Shah was that there was a violation of the principles of natural justice in so far as the statement made by Keshavji before the Personal Assistant to the Collector and the letter dated 24th November, 1952, written by Keshavji were neither shown to the applicants nor were copies of the same given to them. The questionnaire serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicants a copy of the said letter of Keshavji deleting only those portions, which, according to him, it was in the public interest to delete, and he could also have furnished to the applicants a transcript of the statement made by Keshavji to the Personal Assistant to the Collector deleting only such portion which the public interest prevented him from disclosing. In connection with this question, the observations of a Division Bench of this Court in Gyanchand Santlal Jain v. Union of India (Special Civil Applications Nos. 140 and 141 of 1971 decided by Tulzapurkar and Kania, JJ., on 10th/13th October, 1975, the judgment having been delivered by Tulzapurkar, J.) can be usefully set out. These observations are as follows: "In other words, it seems to be a fairly settled position in law that it is not necessary that persons whose statements have been previously recorded must be examined in the presence of the party against whom such previous statements are intended to be used. The rules of natural justice do require that their previous statements must be made available to the party against whom they are intended to be used and such party must be given a fair opportunity to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should have been made available to him. As against these decisions, Mr. Andhyarujina referred us to the decision of the Supreme Court in Hira Nath v. Rajendra Medical College, Ranchi(1). In that case, an enquiry was held by an enquiry committee consisting of three respectable and independent members of the staff as appointed by the Principal of a Medical College to enquire into the complaint of the inmates of the girls' hostel against certain male students of that college about their indecent behaviour with them in the hostel compound itself during odd hours of night. It was held that, in such a caseA.I.R. 1973 S.C. 1260., the rules of natural justice do not require that statement of the girl students should be recorded in the presence of the male students concerned or that the latter should be furnished with the report of the enquiry committee. In that case, the girl students had made a complaint that on the night between 10th and 11th June, 1972, some male students of the college were found sitting on the compound wall of the girls' hostel. Later, they entered the compound and were seen walking without clothes on them. They went near the windows of the rooms of some of the gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements made by the girl students or their names were not disclosed to the male students against whom the charge was made. In the case before us, however, there are no such facts or circumstances which justified the holding back from the applicants of the statement made by Keshavji to the Personal Assistant to the Collector or of his letter apart from the actual portions thereof, the disclosure of which might have been considered by the Deputy Commissioner as against public interest. The question was after all one of suo motu revision under the provisions of the Bombay Sales Tax Act, whereby sales which had been allowed as deductions out of the taxable turnover, on the ground that they were made to registered dealers, were sought to be disallowed. The identity of Keshavji, as we have already pointed out, was disclosed to the applicants. There was no serious attempt to sift the evidence or test the truth of the statement made by Keshavji to the Personal Assistant to the Collector or of the statements contained in Keshavji's said letter, as we shall presently point out. Such a case bears no comparison to the case before the Supreme Court referred to by Mr. Andhyarujina. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich might be used against them, it was yet held that, in the circumstances of the case, the Inspectors had acted fairly and properly. This case again is totally different in its facts from the case before us. It was a case regarding an enquiry by the Inspectors into the affairs of the company and these Inspectors were to make a report on which further action was to follow. The case before us, as we have already pointed out, is of an assessment under the Bombay Sales Tax Act. The two cases bear no comparison. Hence, this decision also does not help the respondent in this case. Reliance was next placed by Mr. Andhyarujina on the decision of the Andhra High Court in Madugula Papayya v. Province of Madras[1956] 7 S.T.C. 180. That case arose under the Madras General Sales Tax Act, 1939. It was held there that when an assessee did not place the material on which the officer could make a proper assessment, he could take steps to procure the materials and proceed in the manner specified in the relevant rules. It was further held that the material on which the officer could act might not be acceptable as evidence by a court of law and the sufficiency or otherwise of it did not fall to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, the order of the Deputy Commissioner and that of the Tribunal were perverse and violated the principles of natural justice, as no reasons have been given for relying on the statement and letter of Keshavji and on the entries or rather the lack of entries about purchases from the applicants in his rojmel, in preference to the evidence tendered by the applicants by way of the two affidavits referred to earlier, and the books of account of the applicants. In connection with this argument, it is beyond dispute that it is not open to us in any manner to reappreciate the evidence. The only question is whether the approach of the Deputy Commissioner to the evidence, which has been upheld by the Tribunal, was such as could be considered to be perverse. In this connection, it is well to bear in mind that the question before the Deputy Commissioner was of disallowing the sales which had already been allowed as deductions out of the taxable turnover by the lower taxing authorities. Reliance was placed on the statement made by Keshavji to the Personal Assistant to the Collector, the said Personal Assistant not being an authority designated under the sales tax laws. Reliance was also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -employee of the applicants, could be said to have in the matter and as to how the statements contained in his affidavit could be rejected on this ground. At this stage, reference can usefully be made to the decision of the Kerala High Court in M. Appukutty v. Sales Tax Officer, Kozhikode[1966] 17 S.T.C. 380., where it has been held that if the quasi-judicial authority disregards the materials available or if it refuses to apply its mind to the question and if it reaches a conclusion which bears no relation to the facts before it, to allow those decisions to stand would be violative of the principles of natural justice. Applying this principle to the case before us, we are of the view that the said finding of the Deputy Commissioner is vitiated on account of the violation of the principles of natural justice. The entire approach adopted by him has been thoroughly unfair and no attempt has been made to sift or appreciate the evidence which was before him. Such a finding clearly violates the principles of natural justice. It was sought to be contended by Mr. Shah that even taking the finding of the Deputy Commissioner and the Tribunal as correct, what the Deputy Commissioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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