COMMISSIONER OF SALES TAX Vs. MOTIRAM GANGASA AND CO

JUDGEMENT

(1.) This is a reference under section 34(1) of the Bombay Sales Tax Act, 1953 (hereinafter referred to as "the said Act"), made at the instance of the Commissioner of Sales Tax. The facts giving rise to this reference can be briefly stated :

(2.) The respondents-assessees were registered dealers under the said Act. The assessees have two shops, one at the village Poyanad and the other at the village Vadakal. In respect of the assessment period from 1-4-1956 to 31-3-1957 the assessees filed quarterly returns showing a particular gross turnover. The Sales Tax Officer, Thana and Kolaba districts, who dealt with the assessment of the assessees, issued notices for hearing on the assessees. The assessees appeared at the hearing and produced certain books of account on which they relied and which showed their gross turnover in a smaller sum than the one disclosed as per their returns. The Sales Tax Officer determined the gross turnover of the sales according to the returns and not according to the books of account of the assessees. The assessees then went in appeal before the Assistant Commissioner of Sales Tax and contended that in their returns the assessees had shown their gross turnover merely on the basis of the purchases made by them plus ten per cent. profit margin and contended that as their books of account which were closed and adjusted shown a smaller gross turnover, that smaller turnover which was the turnover as per the books of account, should be accepted. This contention was rejected by the Assistant Commissioner of Sales Tax and the order of the Sales Tax Officer was confirmed. The assessees then preferred a revision application which was disposed of by the Deputy Commissioner of Sales Tax. The Deputy Commissioner of Sales Tax in his order observed that the learned Advocate of the assessees failed to explain satisfactorily the basis on which the returns had been complied and he further pointed out that no vouchers were produced in respect of sales not in excess of Rs. 300/-, and hence there was no check on the sales recorded in the books of account. He further observed that the margin of profit as shown by the books of account, at 6% to 7% appear too law. The Deputy Commissioner of Sales Tax held that the Sales Tax Officer was justified in adopting the returned figures of sales as the gross turnover of the sales by the assessees and confirmed the order of the Sales Tax Officer. The assessees then went by way of further revision before the Sales Tax Tribunal. It was held by the Tribunal that unless the Sales Tax Authorities were able to detect and point out the discrepancies in the books of account of the assessees, they were not justified in rejecting the results shown by the books of account. The Tribunal further observed that the returns filed by the assessees could be looked upon as provisional or irregular returns and that the gross turnover as per the books of account of the assessee should be accepted in preference to the gross turnover shown in the returns filed by the assessees. Arising from this judgment and order of the Tribunal, the following question has been referred to us for our determination : Whether the Tribunal erred in law in holding that the returns submitted by the respondents under section 13 of the Bombay Sales Tax Act, 1953, read with rule 4 of the Bombay Sales Tax (Procedure) Rules 1954; were provisional or irregular returns and misdirected itself in law holding that the gross turnover of sales revealed by the books of accounts produced by the respondents should be accepted discarding the turnover of sales shown in the returns which he had declared as true and correct ?

(3.) The first question which we have to consider in this matter is whether any question of law arises at all from the judgment and order of the Tribunal. The observation of the Tribunal that the returns can be looked upon as provisional or irregular is of no consequence at all, because it is not disputed by Mr. Phadkar that in a case where the gross turnover reveiled by the returns is higher than the gross turnover disclosed by the books of account produced by the assessee which have been verified and found to be correct, the Sales Tax Officer is not entitled to assess the assessees on the footing of the higher gross turnover disclosed in the returns but must base the assessment on the gross turnover disclosed in the books of account which have been found to be correct. In view of this the question as to whether the returns were provisional or not is of no significance.