Decided on July 29,1968

Cochin Company Private Ltd. Appellant


- (1.) The petitioner is a private limited company carrying on the business of purchasing prawns, lobsters and frog legs, processing them in its factory at Cochin and selling them mostly to customers outside India and to a very limited extent to customers in India. Prawns and lobsters are taxable under the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the Act) at the point of last purchase in the State. For the year 1964-65, the petitioner filed a return showing a net turnover of Rs. 16,83,180-61 in respect of purchase of these goods. The Sales Tax Officer rejected the petitioner's books of accounts and made a best judgment assessment. He fixed the net turnover by adding 40% of the returned turnover to make up for alleged suppression of purchases. The petitioner filed an appeal before the Appellate Assistant Commissioner without any success. It filed a second appeal before the Sales Tax Appellate Tribunal. The Tribunal agreed with the Subordinate authorities in rejecting the petitioner's accounts; but it held that the enhancement of the turnover by 40% was unreasonable, and limited the addition to Rs. 1,00,000/-. The petitioner has objected to the above order of the Tribunal, and moved this Court in revision, raising the following questions of law:- (i) Whether on the facts and in the circumstances of the case, the findings of the Tribunal that the books of accounts of the petitioner and the turnover returned by it in respect of purchase turnover of prawns and lobsters are incorrect and incomplete and that they are to be rejected, are warranted (ii) Whether there is material to support the estimated addition of Rs. 1,00,000/- to the purchase turnover, as ordered by the Tribunal
(2.) It is necessary to state a few more facts to know how the above questions arise. The petitioner purchases prawns and lobsters partly at Cochin, and partly from outstations. Goods purchased from outstations are transported to Cochin for the purpose of being processed and exported. S.29 of the Act provides for establishment of check posts and inspection of goods in transit with a view to prevent and check evasion of tax. Sub-s.(2) of S.29 provides among other things that no person shall transport within the State across or beyond the notified area of a check post, any consignment of goods exceeding the prescribed quantity or value by any vehicle or vessel, unless he is in possession of either a bill of sale or delivery note or way bill or certificate of ownership containing the prescribed particulars. R.32 of the Kerala General Sales Tax R.1963 (hereinafter referred to as the Rules) deals with maintenance and preservation of accounts. Sub-rule (19) of the above rule reads as follows:- "Every person who consigns goods by any vehicle or vessel or any other means in pursuance of a sale where a sale bill or delivery note is not issued or consigns goods through the said means from one godown to another or from one branch to another branch for storage or sale shall issue a way bill in Form 27. Every such way bill shall be prepared in duplicate serially machine numbered, shall be kept in book form, shall be duly signed and dated by the dealer or his manager or his authorised agent and one copy of its shall be issued to the purchaser or the person in charge of the goods as the case may be and the other copy shall be retained by the dealer."
(3.) The petitioner has printed way bills in Form 27 for transport of goods purchased from outstations in Cochin. On checking the duplicate of the waybills issued by the petitioner during the year 1964-65, it was found that about 1350 duplicates were missing. The numbers of the missing duplicates are given in the order of assessment. F-208 dated 1-12-1964 and F-210 dated 2-12-1964 are two among these missing duplicates. The originals of these two way bills were received by the Sales Tax Officer from the Feroke Sales Tax Check Post. F-208 relates to a transport of 3000 Kgs. of prawns from Quilandy to Cochin. The consignor is shown as one T. Mammu, and the consignee is the petitioner. F-210 relates to another transport of 3000 Kgs. of prawns from Parappanagadi to Cochin. It was goods purchased by the petitioner at Parappanagadi; and therefore the petitioner is shown as the consignor and the consignee in this way bill. The petitioner's books of accounts did not show entries for the purchase of the above two consignments for which the petitioner submitted the following explanation. There is an entry in the accounts on 1-12-1964 in the name of one P. K. Aziz, Cochin showing purchase of 4166 Kgs. of prawns; and there is also another entry in the name of the same person on 2-12-1964 showing the purchase of 3395 Kgs. The petitioner submitted that T. Mammu mentioned in way bill F-208 was the agent of P.K. Aziz, and on 1-12-1964 the petitioner purchased 4166 Kgs. of prawns from him, out of which 3000 Kgs. were transported by lorry as per F-208 and 1165 Kgs. were transported by rail, and that the goods consigned to the petitioner had thus been actually accounted in the petitioner's books. Regarding the goods transported as per way bill F-210, the petitioner submitted that the 3000 Kgs. of prawns covered by the said way bill were purchased from P. K. Aziz, and that the credit given to him on 2-12-1964 for 3395 Kgs. of prawns consisted of 3000 Kgs. transported under this way bill and 395 Kgs. locally purchased from him. The Sales Tax Officer did not accept the above explanation. Regarding the consignment as per F-208, he stated:- "So long as there are no receipts in the name of Mammu, it cannot be said that their receipt has been accounted for. Though it is said that it has been accounted for along with a rail consignment, the name of the consignor, and the station from which it was consigned are not known. I am, therefore, unable to agree that a purchase of 4166 Kgs. on 1-12-1964 from P. K. Aziz, Cochin 5 represents purchases from Mammu." The reason for rejecting the explanation about the consignment as per F-210 is stated as follows:- "As regards the other purchase also, it is not accounted for, as on 2-12-1964 there was only one purchase of 3395 Kgs. from Aziz, Cochin.";

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