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TMI Blog1999 (12) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... aled the transactions which were transacted by him in the territory of this State which was taxable. 2.. Few facts need to be stated for the purpose of unfolding the matter. The petitioners trade in betelnuts and black pepper having their headquarter in Kerala State and having a branch office at Indore. They trade in those two commodities within the territory of M.P. and in that context they hold a registration in view of the provisions of the M.P. General Sales Tax Act, 1958 (hereinafter referred to as "the Act", for convenience). The petitioner is having a registered partnership firm carrying on business of betelnut and black pepper under the style M/s. Keveyam Co. having its branch at 36, Gajendra House, 10, Jawahar Marg, Siyaganj, Indore. The said firm is having partners, namely- K.V. Mohammad, K.V. Baba K.V. Zakir Mainer K.V. Zinuddin. They are having a manager named as K.V. Abdul who is managing the business of the petitioners at Indore while functioning as such at Indore. One P.T. Daud was the sales manager of the petitioner at Indore branch of the petitioners at the relevant time. The said firm is having its godown at Bank of Baroda Bhawan, Khosla Chambers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners' employees residing at Kerala and thus turnover was minimised and tax was evaded. It has been also alleged that the said transfers of money were made to Abdul Kadir and C.C. Quadar and those transfers represented purchases made by the petitioners. It was further alleged that there were transfers by M/s. Kishore Company, Siyaganj, Indore and M/s. K.V. Supari Traders, Daulatganj, Indore and the said transfers were to the petitioners. It is also alleged by the respondents that Shri K. Ahmed who had opened a bank account with Vijaya Bank was introduced to the said bank by one Arvind Kumar who happens to be a partner of Arvind Trading Company and Prabhakar Rao, Branch Manager of Vijaya Bank stated that he knew K. Ahmed. 6.. The petitioners replied to the show cause notice which was issued by the respondents on December 12, 1986 by their reply dated December 26, 1986 and the petitioners had pointed out that the report submitted to the assessing authority by the Sales Tax Officer, flying squad had not been given to the petitioner and no opportunity had been given to the petitioners to go through the same so as to make an effective representation. It was further pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners could not cross-examine and bring the truth on record showing that the petitioners did not conceal the turnover, did not minimise it and did not evade the tax which was liable to be paid in that context. 9.. The respondents contended that the said bank accounts were operated by the employees of the petitioners and those transactions, transfer of money, demand drafts showed the turnover of the business of the petitioners. The respondents also contended that the petitioner had evaded tax by using clandestine method and by holding those two bank accounts in the bogus names through their employees. It is the case of the respondents that the sum which was indicated by the said transactions of those accounts in the said bank was nothing but the turnover of the petitioners which was concealed by the petitioners only for the purpose of evading the tax. 10.. Shri G.M. Chaphekar, Senior Counsel for the petitioners, reiterated these averments and put his submission for the purpose of canvassing the case of the petitioners. Shri D.D. Vyas, Additional Advocate-General also reiterated the stand taken by the respondents and justified the cause pleaded by the respondents. 11.. Shri D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing assailed are so significant that this Court has to exercise its jurisdiction in view of article 226 of the Constitution by issuing writ of certiorari. For substantiating his submission Shri Chaphekar placed reliance on judgments which can be enumerated as mentioned hereunder: (1) [1957] 8 STC 770 (SC) (Raghubar Mandal Harihar Mandal v. State of Bihar). (2) [1985] 59 STC 362 (MP) (Gadkari, V.B. v. Sales Tax Officer). (3) [1981] 127 ITR 27 (MP) (Ganga Prasad Sharma v. Commissioner of Income-tax, M.P.). He pointed out that these judgments are dealing with the facts and circumstances of the cases which are very much similar to the present one. He pointed out further that in the present case the orders which are being assailed by this writ petition by making a prayer of issuing of writ of certiorari are based on no material at all. According to him in the present matter there has been no evidence at all to show that the petitioners have transacted in territorial area of M.P. State and, therefore, it was not taxable at all as the taxing authority have done, he submitted further that the witnesses who have been examined do not render any basis by their testimonies that any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orari, is, that the writ can be availed of only to remove or adjudicate on the validity of judicial acts. The expression "judicial acts " includes the exercise of quasi-judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions and is used in contrast with what are purely ministerial acts. The second essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi-judicial Tribunals or bodies is not in an appellate but supervisory capacity. In granting a writ of certiorari the superior court does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based. It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal. The supervision of the superior court exercised through writs of certiorari goes on two points. One is the area of inferior jurisdiction and the qualifications and conditions of its exercise; the other is the observance of law in the course of its exercise. These two heads normally cover all the grounds on which a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by not giving any opportunity to the company to rebut the material furnished to it by him, and lastly, by declining to take all the material that the assessee wanted to produce in support of its case, with the result that the assessee had not had a fair hearing." After assessing facts and circumstances of the said case the Supreme Court held, that"Both the Income-tax Officer and Tribunal in estimating the gross profit rate on sales did not act on any material but acted on pure guess and suspicion and it was thus a fit case for the exercise of the powers under article 136." 16.. In the matter of Ganga Prasad Sharma v. Commissioner of Incometax [1981] 127 ITR 27 (MP) the division Bench of this Court observed that: "While making a best judgment assessment, though there must necessarily be guess-work in the matter, it must not be arbitrary." In that matter also the division Bench was dealing with a matter where: "The petitioner filed his return on estimate basis by computing profit at a flat rate of 10 per cent on gross receipts as he did not maintain any account books. The ITO computed the net profit at 15 per cent on the contract payments received by the petitioner. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na fide agriculturist as defined in clause (e) of sub-section (1) of section 2 of the Madhya Pradesh Land Revenue Code, 1959 (No. 20 of 1959) of ghee produced by himself, or (b) in case of sale by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise, when such produce is sold in the form in which it was produced, without being subjected to any physical, chemical or other process for being made fit for consumption save mere dehusking, cleaning, grading or sorting, the amount of consideration relating to such sales shall be excluded from his turnover." Section 4(1) provides: "Every dealer whose turnover during a period of twelve months immediately preceding the commencement of this Act exceeds the limit specified in sub-section (5), shall from such commencement be liable to pay tax under this Act on his taxable turnover in respect of sales or supplies of goods effected in Madhya Pradesh." 19.. Thus, making a reference to provisions of section 4(1), Shri Chaphekar had argued that it was incumbent on the part of the taxing authority to prove it legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts to Rs. 14,60,803 which was pertaining to the period commencing from April 1, 1983 to March 31, 1984. 21.. Shri Chaphekar has submitted that raids which were effected resulted in report which was containing 150 pages even though the matter was remitted by the Supreme Court and direction was given to the concerned authority to decide it within a particular span of period, the copy of that report was not furnished to the petitioners. He pointed out the show cause notice which was sent to the petitioners on December 12, 1986 (annexure A). It is pertinent to note that in that show cause notice, it has been mentioned that a demand was made by the petitioners that a copy of said report be furnished to them for the purpose of enabling them to meet the situation and explain the situation to the taxing authorities. It means that when that show cause notice was issued, the copy of that report was not supplied to the petitioners. Further, it shows that Sales Tax Officers P.T. Daud, Dinesh Soni and J.K. Soni were present and they were appraised of the substance of the said report. The information which was conveyed to them, disclosed to them as shown by the said show cause notice, is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployment of the petitioners-company. It was averred that the petitioners nor the person employed by them in their business were knowing said T. Mohiuddin. It was also averred that the petitioners wanted to impeach the statement of K. Ahemad by cross-examining, because their statements were recorded by the assessing and taxing authorities behind back of the petitioners. So also petitioners wanted to cross-examine one Ashraf for the purpose of knowing whether he had signed for Mohiuddin. The petitioners also wanted to cross-examine these witnesses for the purpose of bringing it on record that there was no jural relationship of purchaser and seller between any person and so far as commodities mentioned above were concerned. The petitioners further wanted to demonstrate that P.T. Daud could have been within territory of M.P. State and in context of the said business or those transactions he might have been dealt with those bank accounts, transfer entries or demand drafts. Some summons were sent to those persons but they were returned with endorsement that those are not traceable. Shri Chaphekar submitted that unless an exercise has been established between the petitioners business in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of petitioners and, therefore, petitioners would not be liable to be assessed and taxed for that. I agree with it. It is so. A nexus has to be established between the said bank accounts and the trade conducted by the petitioners in territory of M.P. State, and if that is not established, the petitioners cannot be taxed on increased turnover. 27.. It is simply unimaginable that the counsel of the petitioners would be humanly capable of cross-examining those witnesses after perusing the report containing 150 pages during short span of time. Unfortunately, the tendency is growing when the persons who are put in a trade, commercially is required to peruse voluminous record and to be prepared for cross-examining the witnesses that cannot be, in any way, said to be consistent with rule of natural justice. A person against whom an adverse order is to be passed has to be given full opportunity of defending himself or for the purpose of showing the cause or explaining the situation as to why such adverse orders should not be passed against him. In the present matter unfortunately the taxing authorities have not done so. Inspite of repeated bouts, the said report of 150 pages was not mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent s case and submitted that the High Court does not have jurisdiction to decide or interfere in the orders which are being assailed by this writ petition. He submitted that the power of High Court while dealing with present writ petition would be of superintendence only. I am very much afraid, I will not be able to agree with him because as it has been pointed out by the Supreme Court in the judgment of T.C. Basappa v. T. Nagappa AIR 1954 SC 440, the Indian High Courts are not restricted to the prerogatives which were being used and which are being exercised by the courts in England. Those courts are totally dependent on common law but here the provisions of article 226 is quite clear and that is conferring the High Courts in India with more power than that which is expected to be exercised by the courts in England. Those courts are totally dependent on common law, in majority portion, mainly uncodified law. Indian High Courts are guided by the Indian Constitution which is full of details about the powers which are to be exercised by the High Courts while issuing the writs. 31.. Therefore, the Indian High Courts need not be shy of exercising the writ jurisdiction and exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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