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TMI Blog1975 (1) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... as in force during the assessment period, when a dealer holding a recognition, who Is referred to in the said Act as a "recognised dealer", makes purchases of goods mentioned in the said clause by giving a certificate In the prescribed form and the said goods are of the class specified In his recognition and are purchased by him for use by him In the manufacture or packing of taxable goods for sale by him, the amount of sale price paid by him to his vendor is not to be included in the vendor's turnover of sales and would be excluded on the vendor producing in his assessment the certificates in the prescribed form given by the recognised dealer while purchasing the said goods. Under rule 21 of the Bombay Sales Tax Rules, 1959, as then in force, the certificate for the purposes of the said clause (b) of section 12 was to be in form 15. The said certificate required a declaration to be made by the recognised dealer purchasing the goods and giving the certificate that the goods purchased by him would be used by him in the manufacture of taxable goods specified in the said certificate and that such sale would not take place outside the State and that the said goods were included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacturing unit and that they were not keeping separately the stock of raw materials purchased against certificates in form 15 and the products manufactured out of such stock. For the said reason it was Impossible for the respondents to prove that the raw materials purchased against certificates in form 15 were utilised only in the manufacture of products which were sold in accordance with the declaration contained in such certificates. The question, which accordingly arose in the assessment of the respondents for the aforesaid period, was how much of the purchase price of the goods purchased by the respondents should be included in their turnover of purchases and made liable to purchase tax under section 14(1) of the said Act. Relying upon a decision of the Madras High Court in S. Rathinaswamy Chettiar v. State of Madras[1962] 13 S.T.C. 419., the Sales Tax Officer held that the natural presumption was that a person engaged in a transaction would presumably follow that course which took him out of the taxable category rather than otherwise, and that it should, therefore, be presumed that the raw materials purchased by the respondents against certificates in form 15 were the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case or because separate accounts have not been kept by the assessee to prove that the goods purchased by him against certificates in form 15 have been utilised in the manner specified in the declaration made by him in the said certificates. All the authorities, including the Tribunal, have proceeded upon the assumption that in such a case, the turnover of purchases liable to purchase tax under section 14(1) has to be estimated. This is also the view which was taken in somewhat similar circumstances by the Madras High Court in M.M. Anwaraulla AM. Ghouse and Company v. State of Tamil Nadu[1971] 28 S.T.C. 610., in which it was held that where an assessee fails to keep two types of goods which have gone into the manufacture of certain articles and other goods, one of which qualifies for exemption and the other does not, that is, if he mixes up his stocks of raw materials of two types and has not kept separate accounts, the assessing authority is left with no alternative but to use its best judgment and estimate the relative turnover to be brought to charge. Two competing formulae for estimating the turnover on this basis have been canvassed before us, namely, the one adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly discharged the burden placed upon him. It would be putting him In a better position than he would have been had he set out to discharge the burden and had succeeded in discharging it only partially. There is no logic about raising the presumption which was raised by the Sales Tax Officer or the Tribunal in favour of the respondents. An assessee cannot, because of his failure to discharge the statutory burden, be put in the same position as if he has succeeded in discharging it. To raise the presumption which was raised by the Sales Tax Officer and Tribunal is to render nugatory the provisions of section 14(3) of the said Act. The formula which can apply in estimating the turnover of purchases in such a case must, therefore, be a different formula. In our view, in such a case the pro rata formula adopted by the Assistant Commissioner and approved by the Deputy Commissioner is a proper and rational formula to apply in estimating such turnover of purchases. The adoption of this formula is also not unfair to the assessee, for if one were to place an extremely strict construction upon sub-section (3) of section 14, since the assessee failed to prove that the very goods purchased aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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