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TMI Blog1972 (4) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the dealer for the third quarter ending 31st December, 1968, in which the purchases were shown as "nil". Along with his return, the dealer sent a covering letter giving his reasons for non-liability for payment of tax and for his filing a "nil" return. In this, inter alia, he stated as following: (a) The paddy had been acquired by the dealer through commission agents with whom his relationship was that of principal and agents and, consequently, the purchases made by him from the agents were not on the basis of a contract of purchase and sale. (b) The bulk of the purchases were not made in the normal course of business but in the course of enforcement of Essential Supplies Act/ Punjab Procurement Price Control Order and in view of this compulsory acquisition of rice by the Government, the purchase could not be said to be made in the normal course of business and, therefore, is not purchase within the meaning of the Act. (c) Rice and paddy is one commodity under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, and as the tax is leviable on the last purchaser, the dealer is not liable, because the entire quantity of rice had been sold to somebody else. (d) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,368. With regard to point (b), he came to the conclusion that the fact that the dealer is running a rice shelter at Sarna and he made huge purchases of paddy and shelled the same, would show that the purchases were made in the normal course of business. The mere fact that the purchases were made for the purpose of procurement would not change the character of the business. With regard to points (c) and (d), he came to the conclusion that paddy and rice are two commodities and it does not make any difference whether paddy has been exhausted or not. With regard to point (e) also it was held that what was supplied was rice and what was purchased was paddy and, therefore, the question of exemption did not arise. The Assessing Authority thus dismissed the pleas and objections of the dealer and also came to the conclusion that section 10(7) of the Act covers not only wrong maintenance of accounts but also filing of incorrect returns and in the face of the figure of purchase of paddy to the tune of Rs. 89,009 from the market direct and of over Rs. 33 lacs from others "it undoubtedly tantamounts to the furnishing of incorrect return and warrants action under section 10(7) of the Act". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Bhawani Cotton Mills Ltd. v. The State of Punjab and Another[1967] 20 S.T.C. 290 (S.C.)., when such a plea is taken, it is a matter to be gone into by the department and the mere fact that on the very first date of hearing, which was within four days of the date of the notice under section 10(7) of the Act, if, for any reason, the dealer could not be present, it was not appropriate for the Assessing Authority to assume that the plea taken by the dealer was incorrect. In fact, the Assessing Authority itself had stated that it was not possible without the material being there to give any finding on this matter. In Bhawani Cotton Mills case[1967] 20 S.T.C. 290 at p. 303 (S.C.)., their Lordships of the Supreme Court started examining the following question which was raised in Civil Writ No. 344 of 1964, before them: "Whether the purchase tax should have been assessed in the hands of the commission agents through whom the purchase had been made and not in the hands of the petitioners. " After examining the definition of "dealer" and noticing a number of decisions, their Lordships at page 305 of the report, observed as follows: "It has been necessary' to advert to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfactory way of doing things that the assessment even for a quarter should not be done in a proper manner, but the penalty should have been imposed, which penalty has to be imposed in terms of the assessment made or liability to be assessed. It is, however, not necessary to go into this matter any further in the light of the view that we have taken of the next contention of the learned counsel that the penalty proceedings are quasi-criminal proceedings and the burden is on the Assessing Authority to show that there was a mens rea. In Commissioner of Income-tax, West Bengal, and Another v. Anwari Ali[1970] 76 I.T.R. 696 (S.C.)., the decision of the Calcutta High Court reported as Commissioner of Income-tax v. Anwari Ali[1967] 65 I.T.R. 95., was approved. That was a case under the Income-tax Act, 1922, and section 28(1)(c) provided that if the assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, then he was liable to a penalty. The provisions of that section were similar to those of sub-section (7) of section 10 of the Act. The facts in that case were that while making the assessment for the year 1947-48, the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this decision, which was not available to the Assessing Authority at the time of imposing the penalty, it is obvious that even if it be found that the explanation given by the dealer is wrong, that by itself is not enough and the onus to show that there was a mens rea and the concealment was deliberate with a view to avoid payment is on the department which can discharge this burden only by bringing adequate evidence in this respect, on the record. In the present case, it is clear that the question, whether rice and paddy are one and the same commodity, was thrashed out by a Bench of this Court in Messrs. Ganesh Trading Co. v. Haryana State, etc., L.P. A. 37 of 1970 decided on 15th October, 1970[1971] 27 S.T.C. 340. , and on a certificate having been granted by this Court in S.C.A. 427 of 1970, the matter is stated to be pending in the Supreme Court. Similarly, the question, whether for the paddy purchased through commission agent it would be the commission agent or the dealer who would be liable, is a matter which cannot be said to be so obvious. In Hindustan Steel Ltd. v. The State of Orissa[1970] 25 S.T.C. 211 (S.C.)., Hindustan Steel Ltd. did not register itself as a deale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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