TMI Blog1993 (2) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... question is in the negative and against the assessee whether in the facts and circumstances of the case, the finding of the Tribunal that the oil-cakes shown as purchased from M/s. Ratilal Bhogilal are really the by-product of manufacture of oil by the applicant sold outside its books, by making unaccounted purchases of groundnuts and tins is vitiated being perverse and contrary to the evidence produced, and based on no evidence, as well as surmises and conjectures? 3.. Whether, in the facts and circumstances of the case, the Tribunal's implied finding, that payment of price by the applicant to M/s. Ratilal Bhogilal is not proved is vitiated being perverse, contrary to the evidence and based on no evidence? 4.. Whether, in the facts and circumstances of the case, the Tribunal was justified in laying burden of proof upon the applicant to prove that its vendor M/s. Ratilal Bhogilal has purchased oil-cakes from his Rajasthan vendor, and has paid price to his vendor? 5.. Whether, in the facts and circumstances of the case, the findings of the Tribunal that the only normal and convenient route for the oil-cakes to come from Vanswada to Himmatnagar is via, Ratanpur check-post and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilal were also visited by the sales tax authorities wherefrom some account papers were seized. After scrutiny of the materials, the Sales Tax Officer issued a notice dated May 9/12, 1975 to the applicant to show cause as to why the purchases of oil-cakes made by the applicant from M/s. Ratilal Bhogilal should not be held to be nongenuine and why it should not be held that oil-cakes were produced by it out of the suppressed purchases of groundnuts and the suppressed manufacture of oil therefrom, which was sold without accounting in the books of account. The sales tax authority for this purpose gave the following reasons: (1) In Samvat Year 2029, 42,163 units of electricity had been consumed against which 12,484 tins of oil had been shown to have been produced. The said production of oil was less in proportion to the aforesaid electricity consumption. (2) On enquiry, it was found that there was no firm in the name of Harishchandra Nagavat Co. at village Dhanmandi, Vansvada in the State of Rajasthan from whom it is alleged that M/s. Ratilal Bhogilal had purchased oilcakes. (3) There was no motor truck number disclosed by the applicant or by M/s. Ratilal Bhogilal to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate appearing on behalf of the applicant, contended that the finding given by the Tribunal that the applicant has not purchased oil-cakes from M/s. Ratilal Bhogilal and the delivery of the said oil-cakes to the applicant is not proved, is on the face of it illegal and perverse. He contended that the Tribunal was not justified in laying the burden of proof upon the applicant to prove that its vendor, M/s. Ratilal Bhogilal, had purchased oil-cakes from M/s. Harishchandra Nagavat Co. of Vansvada, Rajasthan. It is his contention that the applicant had paid the amount for purchases of the said oil-cakes by "bearer cheque" or by "crossed cheque" to M/s. Ratilal Bhogilal Co. and, therefore, there is no reason for holding that the purchases of oil-cakes made by the applicant from M/s. Ratilal Bhogilal were only by way of bogus billing. In our view, it is apparent that the questions referred to us for decision depend only on appreciation of evidence. It would be difficult to hold that the finding given by the Tribunal that purchases of oil-cakes shown to have been made by the applicant from M/s. Ratilal Bhogilal were merely billing transactions and not genuine transactions of purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the alleged copy of the certificate, the Assistant Commissioner had made an enquiry at the said check-post and it was found that no record for the concerned period was available. (d) The Tribunal also noted that, at the time of hearing of the appeals, the Assistant Commissioner of Sales Tax had made an enquiry at Vansvada to find out whether a firm, namely, M/s. Harishchandra Nagavat Co. was in existence. For that purpose, the Sales Tax Officer had received a letter dated May 3, 1974, from the Assistant Commercial Tax Officer, Vansvada, stating that no firm, namely, M/s. Harishchandra Nagavat Co. was in existence in Vansvada. That officer has further reiterated that he made an enquiry in the local market and found that there was no firm dealing in the name and style of M/s. Harishchandra Nagavat Co., Dhanmandi-Vansvada and that in the office records also he did not find any firm in the said name. He opined that it may be an assumed name employed by M/s. Ratilal Bhogilal of Gujarat. (e) The Tribunal also considered the finding of the Sales Tax Officer that the convenient road for transportation from Vansvada in Rajasthan to Himmatnagar was via Ratanpur check-post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque or in any case after obtaining receipt. Further, if there was a genuine transaction, M/s, Ratilal Bhogilal would not have straightaway handed over the cheques received by it to M/s. Harishchandra Nagavat Co. There would normally be some difference of amount between the purchase price which is required to be paid to M/s. Harishchandra Nagavat Co., and the sale price which he is entitled to receive from the applicant. (g) Neither the applicant nor M/s. Ratilal Bhogilal has produced any correspondence between them or between M/s. Harishchandra Nagavat Co. and M/s. Ratilal Bhogilal to establish that there were sale transactions between the applicant and M/s. Ratilal Bhogilal on the one hand, and between M/s. Ratilal Bhogilal and M/s. Harishchandra Nagavat Co. on the other. The Tribunal has observed that the oil-cakes worth lakhs of rupees were purchased and there was no satisfactory evidence about payment having been paid by M/s. Ratilal Bhogilal to the vendor. Considering the aforesaid main aspects dealt with by the Tribunal, it cannot be held that the Tribunal has erred in confirming the findings of the sales tax authorities that the applicant had not purchased o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., oil-cakes, which were found in possession of the applicant. The Sales Tax Officer held that the applicant obtained bogus bills for purchases of oil-cakes and adjusted its production of oil and oil-cakes. He arrived at the conclusion that the applicant had not maintained accounts regularly and assessments cannot be made properly on the basis of the accounts maintained by the assessee and, therefore, assessed to the best of his judgment the amount of tax due from the assessee. For this purpose, he took into consideration the alleged purchases of oil-cakes made from M/s. Ratilal Bhogilal weighing 2,54,754 kgs. in Samvat Year 2029 and oil-cakes weighing 32,250 kgs. in Samvat Year 2030. Hence it cannot be held that guess-work made by the authorities is in any way unreasonable or dishonest. With regard to correctness of estimation and determination of proportion of groundnuts, oil and oil-cakes, the learned advocate for the applicant has not disputed it before the Tribunal and before this Court. It is established law that, when the books of accounts submitted by the assessee are rejected, the assessing officer under the Sales Tax Act or under the Income-tax Act is empowered to ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer must make an estimate, and to that extent he must make a guess; but the estimate must be related to some evidence or material and it must be something more than mere suspicion.' Again in State of Kerala v. C. Velukutty [1966] 17 STC 465 (SC); [1966] 60 ITR 239 (SC) which was a case under the Travancore-Cochin General Sales Tax Act, Subba Rao, J. (as he then was), speaking for this Court observed at page 244 of the Report (at page 470 of STC) thus: 'The limits of the power are implicit in the expression "best of his judgment". Judgment is a faculty to decide matters with wisdom truly and legally. Judgment does not depend upon the arbitrary caprice of a judge, but on settled and invariable principles of justice. Though there is an element of guess-work in a "best judgment assessment ", it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case.' 7.. It will appear clear from what has been said above that the authority making a best judgment assessment must make an honest and fair estimate of the income of the assessee and though arbitrariness cannot be avoided in such estimate the same must not be capricious bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive. With regard to question No. 8 also, we hold that the Tribunal was justified in relying upon ratio of the electricity consumption with the production of oil by the applicant in arriving at the aforesaid findings. Hence, question No. 8 is answered in the affirmative. Re: Question No. 7: It is vehemently contended by learned advocate Mr. Pathak that the Tribunal was not justified in recording the findings against the applicant in spite of the fact that in identical circumstances the Tribunal had recorded the finding with regard to the similar purchases made by other assessees, namely, M/s. Saraswati Oil Mills and M/s. Mahalaxmi Oil Mills, from M/s. Ratilal Bhogilal of Kapadwanj in their favour. In our view, the principles of res judicata would have no bearing on the findings based on question of facts. The Tribunal is entitled to appreciate the evidence in each case and to arrive at its own conclusion. If that finding is an erroneous one, it would not mean that the said finding is required to be followed in other cases. Hence, we hold that the Tribunal was justified in recording the findings on facts after appreciating the evidence on record without being influenced by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l-cakes were made from M/s. Ratilal Bhogilal. The business premises of the applicant were visited by the Sales Tax Officer, Enforcement Branch, on December 19, 1973. Some accounts papers were seized from the applicant. Thereafter, the notice dated January 8, 1975, was issued by the Sales Tax Officer to the applicant asking him to show cause why purchases of groundnut oil-cakes made from M/s. Ratilal Bhogilal should not be held to be non-genuine and why it should not be held that oil-cakes were produced out of the suppressed purchases of groundnuts. The applicant was also asked to show cause why the suppressed manufacture of oil should not be treated as sold outside account books and also to show cause why those sales should not be held to be of goods packed in empty tins purchased by it. The Sales Tax Officer relied upon the following grounds for issuing the aforesaid show cause notice: 1.. No proof in respect of delivery of the goods except bills was produced by the applicant. No proof was available as to who gave and took delivery of the goods purchased; the expenditure of transporting the goods, truck number, etc., were not produced. 2.. No firm in the name and style of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid suppressed purchase of groundnuts. Some additional evidence in the form of chits which were found from the possession of the applicant was also taken into consideration and the Sales Tax Officer took a view that groundnuts worth Rs. 41,183 were also suppressed purchases. On that basis, he calculated that groundnut oil worth Rs. 37,264 was sold. He also calculated resultant oil-cakes to be of Rs. 16,306 and purchase of empty tins to be of Rs. 1,690. He levied purchase tax and sales tax at the appropriate rates on the suppression. He also imposed penalty under section 45(2)(c), 45(6) and 45(8) of the Act. The applicant preferred first appeals against the aforesaid two assessment orders before the Assistant Commissioner of Sales Tax. The Assistant Commissioner of Sales Tax upheld the decision of the Sales Tax Officer in respect of purchase of oil-cakes made by the applicant from M/s. Ratilal Bhogilal as being bogus. He gave partial relief in respect of the remaining assessment made by the Sales Tax Officer and consequential relief in penalties under sections 45(2)(c) and 45(6) of the Sales Tax Act. So far as Samvat Year 2030 is concerned, he held suppressed purchases of groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs in spite of the fact that in identical circumstances, the Tribunal had recorded the findings on the very subjectmatter in favour of the other assessees, viz., Saraswati Oil Mills and Mahalaxmi Oil Mill? 6.. Whether, in the facts and circumstances of the case, the Tribunal was justified in law in relying upon the ratio of electricity consumption with the production of oil by the applicant in arriving at the above findings? 7.. Whether, in the facts and circumstances of the case, the Tribunal has applied correct principle of law in sustaining the levy of penalties under sections 45(2)(c) and 45(6) of the Gujarat Sales Tax Act, 1969? In this reference also, learned advocate Mr. Pathak submitted that the finding given by the Tribunal that the applicant has not purchased oil-cakes from M/s. Ratilal Bhogilal and the delivery of the said oil-cakes to the applicant is not proved, is on the face of it illegal and perverse. He contended that the Tribunal was not justified in laying the burden of proof upon the applicant to prove that its vendor, M/s. Ratilal Bhogilal, had purchased oil-cakes from M/s. Harishchandra Nagavat Co. of Vansvada, Rajasthan. It is his submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e., the Assistant Commissioner of Sales Tax made an enquiry about the correctness of the certificate. On enquiry, the Assistant Commercial Tax Officer has written a letter dated October 20, 1977, stating that no such certificate or letter can be traced out at his end. Further, the applicant was asked to produce the original certificate but the applicant has failed to produce before the appellate authority. The Tribunal considered the aforesaid letter and observed that copy of the certificate dated June 16, 1975, appears to be bogus. (iv) The Tribunal also considered the finding of the Sales Tax Officer that the convenient road for transportation from Vansvada in Rajasthan to Himmatnagar was via Ratanpur check-post and there was no entry whatsoever in the records of the Ratanpur check-post showing entry of oil-cakes from Rajasthan to Himmatnagar during the relevant period. The Tribunal held that the said circumstances relied upon by the Sales Tax Officer cannot be said to be in any way irrelevant. The Tribunal also rejected the contention that the goods might have been sent to Himmatnagar, via Mandali-Sarthu check-post. The Tribunal held that the sales tax authorities rightly arri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in detail. (b) Apart from the fact that M/s. Ratilal Bhogilal has not proved any payment to M/s. Harishchandra Nagavat Co., it is apparent that his first say that the cheques were encashed by him is contradictory to his second statement, that the cheques were encashed by M/s. Harishchandra Nagavat Co. If really there was a genuine transaction between M/s. Ratilal Bhogilal and M/s. Harishchandra Nagavat Co., M/s. Ratilal Bhogilal would have paid the amount of the goods purchased by it to M/s. Harishchandra Nagavat Co. by cheque or, in any case, after obtaining receipt. Further, if there was a genuine transaction, M/s. Ratilal Bhogilal would not have straightway handed over the cheques received by it to M/s. Harishchandra Nagavat Co. There would normally be some difference of amount between the purchase price which is required to be paid to M/s. Harishchandra Nagavat Co. and the sale price which he is entitled to receive from the applicant. (c) Neither the applicant nor M/s. Ratilal Bhogilal has produced any correspondence between them or between M/s. Harishchandra Nagavat Co. and M/s. Ratilal Bhogilal to establish that there were sale transactions between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the similar purchases made by other assessees, namely, M/s. Saraswati Oil Mills and M/s. Mahalaxmi Oil Mills from M/s. Ratilal Bhogilal of Kapadwanj, in their favour. We have held so mainly on the ground that the principles of res judicata would have no bearing on the finding based on questions of facts. The Tribunal is required to appreciate the evidence in each case and to arrive at its own conclusion. If appreciation of evidence in one case is erroneous, it would not mean that the said finding is required to be followed in other cases. For the same reasons, question No. 5 is answered in the affirmative in favour of the Revenue and against the assessee. Re: Question No. 7: The Tribunal has confirmed the penalties on the ground that the applicant attempted to conceal the production of oil and consequential concealment of purchase of groundnuts and empty tins and has resorted to bogus billing with the help of M/s. Ratilal Bhogilal in order to dispose of oil-cakes manufactured by the applicant in its oil-mill. The Tribunal has therefore rightly held that it cannot be said that the penalty under section 45(2)(c) of the Sales Tax Act was wrongly levied by the sales tax aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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