1953 (9) TMI 15 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Amalgamation of the turnover of the separate business of a partner with the turnover of the assessee firm.
2. Justification of the addition of Rs. 1,05,800 on account of cloth sales.
3. Justification of the addition of Rs. 93,533-5-0 on account of food-grain sales.

Issue-Wise Detailed Analysis:

1. Amalgamation of Turnover:
The primary question was whether the sale of cloth in the name of Messrs. Ramsaroop Mohanlal could be assessed as sales of Messrs. Bhimraj Nagarmal. The Sales Tax Authorities concluded that the firm of Ramsaroop Mohanlal was a bogus entity created by Bhimraj Nagarmal to evade sales tax. This finding was based on the relationship between the partners, shared premises, and common bank accounts. The Commissioner noted that arguments regarding Jaydayal Bajaj being a servant of Nagarmal Modi were unrefuted. Additionally, a railway claim in favor of Ramsaroop Mohanlal was cashed by Bhimraj Nagarmal, further supporting the conclusion. The court upheld that this was a factual determination supported by sufficient material, thus answering the first question against the assessee.

2. Addition of Rs. 1,05,800 on Cloth Sales:
The Sales Tax Officer calculated the sale of cloth for the three quarters based on railway consignments delivered to Bhimraj Nagarmal or Ramsaroop Mohanlal. However, it was found that four out of fifteen consignments were delivered to other entities, making part of the assessment arbitrary. The court instructed the Sales Tax Authorities to ascertain which consignments were delivered to outsiders and adjust the assessment proportionately. Thus, the second question was answered partially in favor of the assessee, requiring a reassessment based on verified consignments.

3. Addition of Rs. 93,533-5-0 on Food-Grain Sales:
The addition of Rs. 93,533-5-0 per quarter for food-grain sales was based on the assumption that the petitioner had suppressed such sales, similar to the suppression of cloth sales. The court found this reasoning speculative and unsupported by material evidence. The certificate of registration allowing the purchase of certain goods free of tax did not justify the assessment. The court emphasized that while assessments under Section 13(4) of the Act involve some guesswork, they must be based on honest and reasonable consideration of available material. The court concluded that the assessment for food-grain sales was arbitrary and unsupported, answering the third question in favor of the assessee.

Conclusion:
The court required a reassessment of the cloth sales based on verified consignments and ruled that the addition for food-grain sales was unjustified. The petitioner was entitled to a refund of Rs. 300 paid under Section 25(1) of the Sales Tax Act. The reference was answered accordingly, with no order for costs.