TMI Blog1988 (6) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are required to preserve all the accounts maintained by them together with all vouchers, declarations, way-bills, etc., for a period of 5 years after the close of the year to which they relate. This rule was amended with effect from 1st April, 1986 by the Karnataka Sales Tax (Amendment) Rules, 1986. The effect of the amendment is, the five years period mentioned in the said rule has been substituted with the following words "till the assessment for the year to which they relate has become final". Notices under section 28(1) of the Act was issued to the petitioners to produce the books of accounts for the year 1978-79 for the purpose of verifying the correctness of the statement made in the return. The contention of the learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the returns submitted by the dealers under sub-section (1) of section 12 of the Act is correct, they may complete the assessment without any further enquiry. If the assessing officer finds that the return submitted by the dealer appears to be incorrect or incomplete, he may proceed to make a best judgment assessment. But, before making any such assessment, the statute requires that the dealer should be given an opportunity of proving the correctness and completeness of the return submitted by him. For this purpose the provisions of section 28 empower the assessing officer to order production of accounts for the purpose of assessment. Rule 26-A prescribes the form in which the notice under section 28(1) is required to be issued, namely, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year to which they relate has become final. The point that arises for decision on the submissions made by Sri Katageri is, whether it is permissible for the assessee-dealer, relying upon the old rule 26(10) to refused to produce the books of accounts and also to contend that he is not under any statutory obligation to produce them after a period of five years from the close of the year to which they relate? In order to appreciate these contentions, we have to look to the purpose of rule 26(10) which was in vogue till the 1st of April, 1986, from which day it was substituted by the new rule. Under that rule, every dealer was required to preserve the accounts for a period of five years. The argument of Sri Katageri is that this new rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate the contention of the petitioner. Rule 6 provides for the procedure to be observed in making the assessments. The taxable and total turnover has got to be determined for the purpose of assessment under the Act. Both the expressions are defined in section 2(u-1) and 2(u-2). What is relevant to notice is the definition of taxable turnover on which every dealer has to pay the prescribed tax under the charging section 5. "'taxable turnover' means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed, but shall not include the turnover of purchase or sale in the course of inter-State trade or commerce or in the course of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before an assessment could be made under the Act, is it the assessee's contention that such assessment can be done without reference to his own accounts? Such an argument has to be rejected outright as only suicidal besides being misconceived. The reasoning found in the decision of the Bombay High Court in the case of Commissioner o Sales Tax v. Ramdas Laxmidas [1976] 38 STC 354, is to be accepted as the correct approach and the petitioner's contention is liable to be rejected for the very reasons given by their Lordships in the said case. Their Lordships held that though rule 41-A of the Bombay Sales Tax Rules cast an obligation upon the dealers to preserve the accounts, etc., for a period of three years after the expiry of the year to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. (ii) State of Andhra Pradesh v. Donthala Rajaiah [1960] 11 STC 819 (AP). That was a case where the assessee had submitted his return voluntarily beyond three years from the end of the year. The High Court held, that there is no legal bar to complete the assessment and it was competent for the taxing authority to excuse the delay in exercise of its discretion and make the assessment on the basis of it. (iii) Bata India Limited v. State of Haryana [1983] 54 STC 226 (P H). None of the above decisions help the petitioners' case and they are not relevant. On an examination of the scheme of the Act and the Rules, the arguments of the petitioners in all these cases, have to be rejected as having no substance in them. I further hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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