1957 (4) TMI 50 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Preliminary objection to maintainability of appeals.
2. Validity of the assessment orders based on seized account books.
3. Jurisdiction under Article 227 of the Constitution.
4. Ownership and authenticity of the seized account books.
5. Method of estimating turnover for periods not covered by seized books.

Issue-wise Detailed Analysis:

1. Preliminary Objection to Maintainability of Appeals:
The primary issue raised was whether the appeals were maintainable under section 12-C(1) of the Madras General Sales Tax Act. The court held that an appeal under section 12-C(1) is only permissible where the Board of Revenue acted *suo motu* under section 12(3). The court noted that the Board's revisional jurisdiction could be invoked either *suo motu* or by an application from a party. Since the Board's jurisdiction was invoked by the assessees through an application, the appeals were deemed incompetent. The court emphasized that the term "suo motu" in section 12-C(1) could not be disregarded or considered superfluous.

2. Validity of the Assessment Orders Based on Seized Account Books:
The assessees contended that the seized account books did not belong to them and were planted by their enemies. The court found this argument to be an afterthought, as it was not raised during the initial stages of the assessment process. The court referred to statements made by one of the partners at the time of the seizure, which admitted that the books pertained to their business. These admissions were considered sufficient material to support the assessment orders.

3. Jurisdiction Under Article 227 of the Constitution:
Upon upholding the preliminary objection, the court allowed the conversion of the appeals into revisions under Article 227 of the Constitution. The court permitted this conversion in the interests of justice, especially since the construction of section 12-C(1) was being considered for the first time. The court clarified that its jurisdiction under Article 227 was limited to examining whether there was any material on record to support the assessment orders.

4. Ownership and Authenticity of the Seized Account Books:
The assessees argued that the seized books were not in their exclusive possession and contained transactions that were not genuine. The court dismissed these arguments, noting that the claim about the books being planted was raised only at a later stage. The court also found that the statements made by the partner at the time of the seizure, which acknowledged the books as part of their business, were credible. The court rejected the contention that the books contained fictitious transactions, stating that it was the assessees' responsibility to explain any discrepancies.

5. Method of Estimating Turnover for Periods Not Covered by Seized Books:
The assessees challenged the method used to estimate the turnover for periods not covered by the seized books. The court upheld the tax authorities' approach of attributing a proportionate addition to the turnover for these periods. The court reasoned that since the regular account books were unreliable due to suppression of transactions, the authorities were justified in estimating the turnover based on the seized books. The court found no error in law or failure of justice in this method.

Conclusion:
The court dismissed the petitions, holding that the appeals were incompetent and that there was sufficient material to support the assessment orders. The court also found no jurisdictional error in the method used to estimate the turnover. The petitions were dismissed with costs.