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Friday, April 11, 2014

Delhi Sales Tax Act, 1975 the Delhi Value Added Tax, 2004 -No explanation was offered to show that the random sample of sale for two days not correct - Sweet shop - No accounts were maintained for selling of small quantity - two days sale of small quantity was taken as a random sample - levied tax and penalty for difference in books and actual sales - No proper explanation was given like only in holidays and festivals small sales would raise than the ordinary days and as such the random sample is not correct for levying Tax and penalty - Apex court dismissed the appeals = M/s Nathu Ram Ramesh Kumar … Appellant Versus Commr. of Delhi Value Added Tax … Respondent = 2014 (April.Part) judis.nic.in/supremecourt/filename=41401

   Delhi  Sales Tax Act, 1975  the Delhi Value Added Tax, 2004 - No explanation was offered to show that the random sample of sale for two days not correct - Sweet shop - No accounts were maintained for selling of small quantity - two days sale of small quantity was taken as a random sample - levied tax and penalty for difference in books and actual sales - No proper explanation was given like only in holidays and festivals small sales would raise than the ordinary days and as such the random sample is not correct for levying Tax and penalty - Apex court dismissed the appeals =
  The appellant - assessee has been registered  under  the  Delhi  Sales
Tax Act, 1975 (hereinafter referred to as the ‘Act’) as well  as  under  the
Delhi Value Added Tax, 2004 and is carrying on the business  of  manufacture
and sale of sweets, namkeens and other eatables.  On  9th  March,  2000  and
10th March, 2000, officers from the office of the Commissioner of Sales  Tax
had visited  business  premises  of  the  appellant-firm  and  had  recorded
statements of partners of the appellant-firm  and  had  also  checked  total
cash  inflow  on  those  days.  =  

We do not find any substance in the submissions made on behalf of  the
appellant-assessee and therefore, we are not inclined to allow  the  appeals
for the reasons stated hereinbelow :

      (i)   The appellant-assessee is making and  selling  sweets,  namkeens
      and  other  eatables.   It  appears  from  the  record  that  when  an
      individual customer was buying eatables of a nominal  value,  possibly
      bill was not being issued.  There was no specific method whereby  each
      and every receipt from the buyers was recorded by  the  assessee.   In
      the aforestated circumstances, possibly due to some doubt, which might
      have arisen, a special search or inspection was made on 9th  and  10th
      March, 2000 and total sale proceeds had been meticulously recorded and
      calculated, which have been stated hereinabove.  On the basis  of  the
      receipts of those two  days,  considering  them  as  a  representative
      sample, the Assessing Officer had come to a conclusion that  the  sale
      proceeds or sales of the appellant-assessee for the year  should  have
      been a particular amount and, in fact, the  amount  reflected  in  the
      books of accounts was much less than the calculations  arrived  at  by
      the Assessing Officer.

      (ii)  It is pertinent to note that the Assessing Officer did not  jump
      to a conclusion without any rhyme or reason.   The  Assessing  Officer
      had called upon  the  assessee  to  explain  the  difference  but  the
      assessee could not or did not give sufficient explanation  as  to  how
      the total sale on the basis of the average daily sale  arrived  at  by
      the Assessing Officer was not correct.  One can very well presume that
      in case of a dealer dealing in  eatables,  and  specially  sweets  and
      namkeens, on a particular day like a holiday or  on  account  of  some
      festivity, total sale can be more than other days.  For example,  sale
      would normally be  more  on  Saturdays,  Sundays  and  other  holidays
      because more people would be visiting such eateries.  In  the  instant
      case, had those two days, when business premises of the  assessee  was
      inspected and the sale proceeds were recorded, been some special days,
      the  assessee  could  have  placed  those  special  facts  before  the
      Assessing Officer,  but  nothing  of  that  sort  was  done.   In  the
      circumstances, in our opinion, the Assessing Officer had rightly  come
      to the conclusion  that  the  books  of  accounts  maintained  by  the
      assessee were not showing correct sales and therefore, the  conclusion
      arrived at by him cannot  be  said  to  be  incorrect.   There  was  a
      reasonable basis for him to arrive at the said conclusion,  especially
      when the assessee did not offer any satisfactory explanation in  spite
      of issuance of notice.

      (iii) The submission made by the learned  counsel  appearing  for  the
      appellant-assessee that no notice was issued, as  required  under  the
      Act,  before  framing  the  assessment  is  also  not  correct.    The
      assessment orders refer to notices issued to  the  assessee  and  they
      also record the fact that no satisfactory explanation had been offered
      by the appellant-assessee to make out  a  case  that  there  was  some
      special reason for which sale of sweets, namkeen etc. on 9th and  10th
      March, 2000 was exceptionally more.

      (iv)  Once the Assessing Officer had rightly come  to  the  conclusion
      that the books of accounts were not properly maintained and  were  not
      reflecting each and every transaction, in our opinion,  the  Assessing
      Officer had rightly come to a conclusion that total possible sale  was
      much higher and the conclusion  so  arrived  at  was  based  on  sound
      reasons.  We also do not  agree  with  the  learned  counsel  for  the
      assessee that proper adjustments regarding sales tax had not been made
      by the Assessing Officer in the process of the assessment.

      (v)   Once it is found that with some oblique motive, effort was  made
      to show lesser sale proceeds than  the  actual,  the  orders  imposing
      penalty can not be questioned.  We are,  therefore,  not  inclined  to
      interfere even with the quantum of penalty.

13.   For the aforestated reasons, in our  opinion,  the  impugned  judgment
delivered by the High Court is just and proper, which does not  require  any
interference and therefore, the appeals are dismissed with no  order  as  to
costs.

2014 (April.Part) judis.nic.in/supremecourt/filename=41401                 ANIL R. DAVE, DIPAK MISRA                       

 NON-REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION


                    CIVIL APPEAL NOs.  4465-4468 OF 2014
              (Arising out of SLP (C) Nos.22912-22915 of 2009)


M/s Nathu Ram Ramesh Kumar              … Appellant

                                   Versus

Commr. of Delhi Value Added Tax                … Respondent



                               J U D G M E N T


Anil R. Dave, J.


1.    Leave granted.

2.    Being aggrieved by the judgment delivered by the High Court  of  Delhi
in STC Nos.1 and 2 of 2008 and CM Nos.2161 and 2162 of 2008,  these  appeals
have been filed by the appellant assessee.  The assessee has been  aggrieved
by the assessment orders as well as the orders  of  penalty.   As  both  the
appeals pertain to the assessee-appellant, at the  request  of  the  learned
counsel, they were heard together.

3.    The facts giving rise to the present litigation, in  a  nutshell,  are
as under :

      The appellant - assessee has been registered  under  the  Delhi  Sales
Tax Act, 1975 (hereinafter referred to as the ‘Act’) as well  as  under  the
Delhi Value Added Tax, 2004 and is carrying on the business  of  manufacture
and sale of sweets, namkeens and other eatables.  On  9th  March,  2000  and
10th March, 2000, officers from the office of the Commissioner of Sales  Tax
had visited  business  premises  of  the  appellant-firm  and  had  recorded
statements of partners of the appellant-firm  and  had  also  checked  total
cash  inflow  on  those  days.   On  those  two  days,  sale  proceeds  were
Rs.2,13,974/- (Rupees two lac thirteen thousand  nine  hundred  and  seventy
four only) and Rs.1,98,009/- (Rupees one lac ninety eight thousand and  nine
only) respectively.

      At the time of assessment for the Assessment Year  1999-2000,  it  was
found by the Assessing Officer that the assessee had not  shown  its  income
correctly and therefore, the Assessing Officer had taken  into  account  the
facts gathered on the aforesaid two days for the purpose of assessing  total
sales.  On the  basis  of  the  gross  receipts  of  sale  effected  on  the
aforestated two days, average receipts per day had been calculated  and  the
Assessing Officer had come to a conclusion that the  sale  proceeds  of  the
assessee for the relevant year  was  Rs.7,51,86,350/-  (Rupees  seven  crore
fifty one lacs eighty six thousand three hundred and  fifty  only).   Before
coming to the said conclusion, the assessee  was  given  an  opportunity  to
explain its books of accounts, as there was substantial discrepancy  between
the receipts shown in the books of accounts and  the  gross  receipts  which
were actually found on the aforestated  two  days.   It  was,  prima  facie,
believed by the Assessing Officer that the assessee had not  given  accurate
details about the gross receipts.

      Similarly for the Assessment Year 2000-2001, on 24.10.2000 also  there
was a surprise visit to the place of business of the appellant-assessee  and
even on that day it was found by the officers that there was discrepancy  in
cash on hand and cash as per books of accounts. Moreover,  they  also  found
that there was discrepancy in stock as the actual stock  and  stock  as  per
books of accounts were not same.  Thus, once again it  was  found  that  the
books of accounts maintained by the appellant-assessee were not in order.

      In spite of issuance of notice and giving hearing to   the  appellant-
assessee firm, sufficient explanation was  not  provided  to  the  Assessing
Officer and therefore, assessment for Assessment  Year  1999-2000  was  made
under Section 23(3) of the Act.  As the Assessing  Officer  had  come  to  a
conclusion that correct books of accounts had not been  maintained,  penalty
was also imposed upon the assessee by assessment order dated 31.12.2001  for
the said assessment year.   Similarly,  for  the  Assessment-Year  2000-2001
also, the books of accounts had not been maintained properly.   In  view  of
the said fact the Assessing Officer had taken into account figures of  sales
arrived at by him for the  Assessment  Year  1999-2000  and  had  added  10%
thereon as that was considered to be a normal  growth  of  the  business  in
normal circumstances, thereby arriving at gross  sales  for  the  Assessment
Year 2000-2001.

       Being  aggrieved  by  the  above  mentioned  assessment  orders,  the
assessee had preferred appeals before the Commissioner of Sales  Tax,  which
had been dismissed by an order dated 13.11.2003 and therefore, the  assessee
had preferred appeals before the Appellate Tribunal of Sales Tax, which  had
also been dismissed by a common order dated 03.11.2004.

      Thereafter, the appellant-assessee had approached the  High  Court  by
filing STC Nos.1 and 2 of 2008.  The High Court was also pleased to  dismiss
the said Reference Cases after giving hearing to the concerned parties by  a
common judgment dated 19th May, 2009 as no question of law was  involved  in
the said cases.  The said  judgment  has  been  challenged  in  the  present
appeals.

4.    The learned counsel appearing for the  appellant-assessee  had  mainly
submitted that the assessment orders were passed under Section 23(3) of  the
Act as the authorities were not satisfied with the details furnished by  the
appellant-assessee.  In the aforestated circumstances, it was obligatory  on
the part of the assessing authority to issue notice and give hearing to  the
assessee so that appropriate explanation could be given to  the  authorities
by the assessee.  As  no  notice  was  given  to  the  assessee  before  the
assessment, the impugned assessment orders as well as the orders  passed  in
appeal are bad in law.  Thereafter, it had been  submitted  that  merely  on
the basis of two visits to the business  place  of  the  appellant-assessee,
the Assessing Officer could not have jumped to a conclusion  that  the  sale
proceeds received on those two days were standard or normal  and  therefore,
on the basis of those sale proceeds, assessments could not have  been  made.
It had been further submitted that in the business of the assessee, being  a
dealer in eatables, normally there  would  be  huge  variation  in  sale  on
different days.  On a particular day, sale proceeds could be more than  rest
of the days and therefore, on the basis of some  selected  days,  i.e.,  9th
and 10th March, 2000 and 24th October, 2000,  the  Assessing  Officer  could
not have made the assessments.

5.    It had been further  submitted  that  the  penalty  imposed  upon  the
appellant-assessee was based on guess work or  conjectures.   There  was  no
basis for the Assessing Officer  to  believe  that  the  books  of  accounts
maintained by the assessee were not correct and the  facts  found  on  those
selected days when there  were  surprise  visits  by  the  officers  of  the
Department were normal, i.e., the assessee was every day  getting  the  same
amount by way of sale of  eatables.   Moreover,  adjustments  regarding  the
amount of tax recovered had not been made while  calculating  the  estimated
sales.

6.    For the aforestated submissions, the  learned  counsel  appearing  for
the appellant-assessee had submitted that the judgment of  the  High  Court,
confirming the assessment orders, should be quashed and set aside  and  even
the orders imposing penalty should be quashed.

7.    On the other hand, the learned counsel appearing for the  Revenue  had
submitted  that  it  was  apparent  that  the  appellant-assessee  was   not
correctly showing all transactions in his books of accounts.  The said  fact
could be very well seen when  the  representatives  of  the  Department  had
visited the place of business of the assessee on 9th and  10th  March,  2000
and on 24th October, 2000.  The sale proceeds, which had  been  meticulously
recorded on those two days in accounting year 1999-2000  were  Rs.2,13,974/-
and Rs.1,98,009/- respectively whereas total sales for  the  said  year  was
much  less.  In  the  aforestated  circumstances,  average   sale   of   the
aforestated two days was calculated and multiplying the same  by  365  (days
of the year), the Department had arrived at a figure of estimated sales  for
the year 1999-2000 and similarly after making a reasonable addition of  10%,
sale for the  Assessment Year 2000-2001 had been arrived at.

8.    In spite of the notice issued to the assessee for  giving  explanation
with  regard  to  the  discrepancy,  the  assessee  could   not   give   any
satisfactory  explanation  and  therefore,   the   Assessing   Officer   was
constrained to presume that  the  books  of  accounts  were  not  maintained
properly by the appellant- assessee.

9.    As the Assessing Officer had come to the conclusion that the books  of
accounts had not been properly maintained with an  oblique  motive,  penalty
was rightly imposed upon the assessee and the  quantum  of  penalty  imposed
was also just and proper.

10.   For the aforestated reasons, the learned  counsel  appearing  for  the
Revenue had submitted that the assessment orders, which  had  been  affirmed
by all the authorities below and the High Court  are  just  and  proper  and
they need not be interfered with.

11.   We had heard  the  learned  counsel  for  the  parties  and  had  also
considered the relevant orders as well as  legal  submissions  made  by  the
counsel.

12.   We do not find any substance in the submissions made on behalf of  the
appellant-assessee and therefore, we are not inclined to allow  the  appeals
for the reasons stated hereinbelow :

      (i)   The appellant-assessee is making and  selling  sweets,  namkeens
      and  other  eatables.   It  appears  from  the  record  that  when  an
      individual customer was buying eatables of a nominal  value,  possibly
      bill was not being issued.  There was no specific method whereby  each
      and every receipt from the buyers was recorded by  the  assessee.   In
      the aforestated circumstances, possibly due to some doubt, which might
      have arisen, a special search or inspection was made on 9th  and  10th
      March, 2000 and total sale proceeds had been meticulously recorded and
      calculated, which have been stated hereinabove.  On the basis  of  the
      receipts of those two  days,  considering  them  as  a  representative
      sample, the Assessing Officer had come to a conclusion that  the  sale
      proceeds or sales of the appellant-assessee for the year  should  have
      been a particular amount and, in fact, the  amount  reflected  in  the
      books of accounts was much less than the calculations  arrived  at  by
      the Assessing Officer.

      (ii)  It is pertinent to note that the Assessing Officer did not  jump
      to a conclusion without any rhyme or reason.   The  Assessing  Officer
      had called upon  the  assessee  to  explain  the  difference  but  the
      assessee could not or did not give sufficient explanation  as  to  how
      the total sale on the basis of the average daily sale  arrived  at  by
      the Assessing Officer was not correct.  One can very well presume that
      in case of a dealer dealing in  eatables,  and  specially  sweets  and
      namkeens, on a particular day like a holiday or  on  account  of  some
      festivity, total sale can be more than other days.  For example,  sale
      would normally be  more  on  Saturdays,  Sundays  and  other  holidays
      because more people would be visiting such eateries.  In  the  instant
      case, had those two days, when business premises of the  assessee  was
      inspected and the sale proceeds were recorded, been some special days,
      the  assessee  could  have  placed  those  special  facts  before  the
      Assessing Officer,  but  nothing  of  that  sort  was  done.   In  the
      circumstances, in our opinion, the Assessing Officer had rightly  come
      to the conclusion  that  the  books  of  accounts  maintained  by  the
      assessee were not showing correct sales and therefore, the  conclusion
      arrived at by him cannot  be  said  to  be  incorrect.   There  was  a
      reasonable basis for him to arrive at the said conclusion,  especially
      when the assessee did not offer any satisfactory explanation in  spite
      of issuance of notice.

      (iii) The submission made by the learned  counsel  appearing  for  the
      appellant-assessee that no notice was issued, as  required  under  the
      Act,  before  framing  the  assessment  is  also  not  correct.    The
      assessment orders refer to notices issued to  the  assessee  and  they
      also record the fact that no satisfactory explanation had been offered
      by the appellant-assessee to make out  a  case  that  there  was  some
      special reason for which sale of sweets, namkeen etc. on 9th and  10th
      March, 2000 was exceptionally more.

      (iv)  Once the Assessing Officer had rightly come  to  the  conclusion
      that the books of accounts were not properly maintained and  were  not
      reflecting each and every transaction, in our opinion,  the  Assessing
      Officer had rightly come to a conclusion that total possible sale  was
      much higher and the conclusion  so  arrived  at  was  based  on  sound
      reasons.  We also do not  agree  with  the  learned  counsel  for  the
      assessee that proper adjustments regarding sales tax had not been made
      by the Assessing Officer in the process of the assessment.

      (v)   Once it is found that with some oblique motive, effort was  made
      to show lesser sale proceeds than  the  actual,  the  orders  imposing
      penalty can not be questioned.  We are,  therefore,  not  inclined  to
      interfere even with the quantum of penalty.

13.   For the aforestated reasons, in our  opinion,  the  impugned  judgment
delivered by the High Court is just and proper, which does not  require  any
interference and therefore, the appeals are dismissed with no  order  as  to
costs.


                                 …………………………….,J.
                                                 (Anil R. Dave)



                                                       …………………………….,J.
                                        (Dipak Misra)
New Delhi;
April 9, 2014

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