IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 04.08.2011 Coram The Honourable Mrs.Justice CHITRA VENKATARAMAN and The Honourable Mr.Justice M.JAICHANDREN Tax Case (Revision) No.631 of 2006 --- The State of Tamil Nadu Rep. By the Deputy Commissioner(CT) Coimbatore Division, Coimbatore-18 ...Petitioner -vs- Tvl.Poddar Plantations Ribbon Estate Meppadi Kerala State ...Respondent Tax Case (Revision) filed under Section 38 of the TNGST Act, 1959 to revise the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore dated 12.12.2000 passed in Coimbatore Tribunal Appeal No.153/98 against the order of the Appellate Assistant Commissioner (CT) Coimbatore dated 20.3.98 and made in Appeal No.68/98 against the order of the Deputy Commercial Tax Officer,Coonoor dated 29.1.98 and made in TNGST No.2540209/96-97. For petitioner : Mr.R.Sivaraman, Spl.G.P.(Taxes) For respondent : Mr.S.Ramanathan O R D E R (The Order of the Court was made by M.JAICHANDREN, J.) The Revenue is on revision against the order of the Tamil Nadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore, dated 12.12.2000, made in Appeal No.153/98 raising the following substantial question of law:- " 1.Whether in the facts and circumstances, the deletion of estimation made for loss of Form XX and not intimated as per Rule 37(2) of the TNGST Rules and thus unaccounted for by the dealer is legally sustainable?" https://hcservices.ecourts.gov.in/hcservices/ 2. The assessee is a registered dealer in tea, having tea plantations and a tea factory at Waynad, State of Kerala. The tea sold by the assessee in the State of Tamilnadu was produced and manufactured at their factory in the State of Kerala and the processed tea were transferred under stock transfer to the State of Tamil Nadu, supported by necessary sales tax forms, under Kerala General Sales Tax Act, particularly Form-26. While scrutinising the returns, it was found that the dealers had received Form XX Declarations, from Sl.No.150450 to 150475. They had produced the same for verification. They had used upto Sl.No.150469, for the year 1995-96 accounts. As they had not produced the remaining 6 leaves from 150470 to 150475, at the time of the check of the accounts, for the year 1996-97, the Assessing Authority proposed to estimate the sale of tea at Rs.50,000/- per leaf and therefore, the turnover was estimated at Rs.3,00,000/-, for the 6 leaves and it had been held that the dealers had sold tea worth Rs.3,00,000/- and had transported them using those Form XX declarations. The Assessing Officer had further determined the assessee's total and taxable turnover, for the year 1996-97, to the best of judgment as follows:- Section 3(2) -Estimated 1st sales of tea as per Defect No.1 - Rs.3,00,000/- @ 8% Taxable turnover proposed for 96-97 -Rs.3,00,000/- Add: Exemption claimed and allowed being the sales of tea through auctions at Coonoor against Certificate (Brokers have paid the taxes due thereon) -Rs.16,52,985/- -------------- Total turnover proposed for 1996-97 -Rs.19,52,985/- -------------- Penalty:- Penalty at appropriate slab under Section 12(3)(b) of the Tamil Nadu General Sales Tax Act, 1959, was also proposed to be levied for the non-payment of taxes due on the turnover of Rs.3,00,000/-. 3. A notice had been sent to the assessee, on 2.1.1998, to raise its objections, if any. For the notice issued to the assessee objections had been raised in their letter, dated 19.1.1998. It had been stated that though the assessee was a registered dealer in Tamil Nadu it had a Tea Garden and a Tea Factory at Waynad, State of Kerala. It had also been stated that the tea sold in the State of Tamilnadu had been produced and manufactured at the factory at Waynad and the finished products had been transferred to the State of Tamilnadu, by stock transfer. The Transfer of stock from one state to another has to be supported by necessary sales tax forms, in Kerala, particularly Form–26. https://hcservices.ecourts.gov.in/hcservices/ 4. It had also been stated that while transporting the goods from Waynad, in the State of Kerala, through the State of Tamilnadu, it had to cross various check posts, where the genuineness of the transactions had been scrutinized. The assessee had also enclosed the entire list of Form-26 and had stated that, from the said list, all the transfers/transactions, made between 1.4.1996 and 31.3.1997, can be seen. They had also produced the copies of Form-26 issued during the season and had stated that the estate was under lockout, from 5.1.1996 to 3.5.1996. The first load of tea had been transported only on 4.5.1996. 5. As per the register the total quantity of tea transferred to Coonoor was 34521 kilograms. The entire quantity of tea transferred to Poddar Plantations, Coonoor, had been sold through auctions and that no other sale had taken place. The asseseee had also stated that they were selling only tea and that they had not made any other sale in Form XX, as alleged in the pre-assessment notice. Since, there was a change in the management many records and books had been misplaced and they were untraceable. They had requested the Assessing Officer to consider the above and delete the proposals made under Section 3(2) of the Act, for a sum of Rs.3,00,000/-. 6. The Assessing Officer on considering the objections raised by the assessee had held that, as per Rule 37(2), every dealer or clearing or forwarding agent to whom the delivery Form XX or Form XX-B is issued, by the assessing authority or the Registering authority, as the case may be, shall maintain a register in Form XXIV, showing a true and complete account of every such form. If any such form is lost, destroyed or stolen, the dealer or the clearing or the forwarding agent shall report the fact to the assessing authority or the Registering authority, as the case may be, within a week of the loss of such forms and appropriate entries shall be made in the remarks column of the concerned register, and steps had to be taken for issuing a public notice regarding the loss, destruction or theft, as the assessing authority or the registering authority may direct. 7. Accordingly, the Assessing authority had held that in the present case the dealers had not reported the loss of Form-XX Book, within a week, as prescribed by law. Further, the dealers had not submitted the Form XXIV register and its extract for the necessary verification. Hence, the objections raised by the assessee had been overruled and the proposals made in the pre-assessment notice had been confirmed and final orders had been passed, determining the taxable turnover of the assessee, for the assessement year 1996-1997, at Rs.3 https://hcservices.ecourts.gov.in/hcservices/ lakhs. 8. Aggrieved by the said order of the Assessing Officer the assessee had filed an appeal before the Appellate Assistant Commissioner (CT), Coimbatore, The Appellate Assistant Commissioner, by his order, dated 20.3.1998, had dismissed the appeal filed by the assessee, confirming the order of the assessing authority. The Appellate Assistant Commissioner had stated that the assesseee had not reported the loss of Form XX, as prescribed by law. They had not produced the Form XXIV register for verification. Until it was pointed out by the assessing authority the assesee had not cared to report about the missing of Form XX. They had not made any public notice of the loss. The assessee cannot shirk its responsibility by stating that they had not used the missing leaves of Form XX. On a verification of the assessment, it was found that the asseesse had made local purchase of many commodities like Dolomite, Jute, Hussain, packing materials, bearings etc., during the year 1996-1997. It is not known as to what they had done with the said purchases. Form XX delivery note was a saleable form and the assessee ought to have reported about the missing forms, to the assessing authority, at the appropriate time. As the assessee had not accounted for the missing leaves, the assessing authority was right in his estimation that the leaves had been used for the sales of tea and therefore, the order of the assessing authority cannot be said to be in correct. Aggrieved by the order of the Appellate Assistant Commissioner, the assessee had filed a further appeal before the Tamilnadu Sales Tax Appellate Tribunal (Additional Bench), Coimbatore. 9. The Tribunal had allowed the appeal stating that, even though some leaves of Form XX had been lost and that the assessee had not intimated the assessing authority about the said loss, there was no instance of any misuse of Form XX, by the assessee or by any other person. Further, there is no loss of Revenue to the Government. The Tribunal had also noted that the Assessing Authority had already determined the taxable turnover of the assessee for the year 1996-1997. Subsequently, on a revision of the assessment, passed an order, dated 29.1.1998. On a perusal of the said order it was found that the dealers had already produced Form XX Book, used upto Serial No.150469, for the year 1995-1996, and the remaining delivery note numbers 150470 to 150475, alone were not produced for the scrutiny of the assessing authority, during the year 1996-1997. 10. As such, the Tribunal believed that the assessee had genuinely, produced all the forms, which had been used during the year 1994-1995, before the assessing authority concerned, though they had failed to produce the six missing leaves, for the assessment year 1996-1997. Therefore, it would not be appropriate for the assessing authority to https://hcservices.ecourts.gov.in/hcservices/ propose the taxable turnover, at the ratio of Rs.50,000/- per unit, for the assessment year 1996-1997. The best of judgement is to decide the matters, factually, as per law. There cannot be an element of arbitrariness in deciding such matters. Further, there cannot be an element of guess work in the best of judgment. It has to have a reasonable nexus to the available materials and it shall be made taking into consideration the facts and circumstances of the case on hand. Where there is no clinching evidence to establish the jural relationship of the vendor and purchaser, the onus of proof would be on the Department to show the link. As such, there was no evidence to show that the assessing authority had misused the missing leaves for the sale of tea. Accordingly, the appeal filed by the asseseee had been allowed. Aggrieved by the order of the Tribunal the Revenue has preferred the present Tax Case Revision before this Court. 11. On a perusal of the order of the Tribunal it is noted that the Tribunal had pointed out that, even though the assessee is personally responsible for the loss of such forms, there was no loss of Revenue to Government, from such loss. Further, there were no good reasons shown by the Department to invoke the best of judgment assessment in determining the taxable turnover. The Tribunal had further held that there was no clinching evidence, except the circumstantial evidence, for estimating the taxable turnover. In such circumstances, the Tribunal allowed the assessee's appeal. 12. On a perusal of the records, it is found that the assessee had shown sufficient reasons for the loss of the leaves of Form XX. It had been shown that there was a change of Managing Agents and as a consequence many records and books had been misplaced and were untraceable. It is also found that there was no evidence to show that the assessee had misused the missing leaves for the sale of tea. 13. The assessee had placed before this Court the decision of this Court, in Tata Iron and Steel Co., Ltd., Vs. Assistant Commissioner (CT) Central Assessment, Circle V, Chennai and others, reported in (2004) 134 ITR 125, wherein, this Court had found that the assumption of the Assessing Officer that the `F' forms had been used for the movement of the goods in question and that the turnover had been suppressed cannot be justified as there were no materials to show that the forms, not produced or furnished by the assessee, had been used for the movement of the goods. Further, it was not open to the Assessing Officer to conclude that the goods had been moved and sold by assessee, without accounting for the same. Relying on the above said decision, the learned counsel for the assessee had submitted that the assessee cannot be held to have misused the missing leaves for the sale of tea and that he had suppressed the turnover to result in best of judgment assessment. https://hcservices.ecourts.gov.in/hcservices/ 14. In such circumstances, we are of the considered view that the Revenue has not shown sufficient grounds to interfere with the order of the Sales Tax Appellate Tribunal. Accordingly, the Tax Case Revision stands dismissed. No costs. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar csh/nvsri To 1.The Deputy Commissioner(CT),Coimbatore Division, Coimbatore-18 2.The Appellate Assistant Commissioner(CT) Coimbatore 3. The Secretary,Tamil Nadu Sales Tax Appellate Tribunal Additional Bench, Coimbatore-18. 4.The Deputy Commercial Tax Officer, Coonoor. +1cc to Spl. Govt. Pleader Sr 48323 +1cc to MR.S.Ramanthan, Advocate Sr 48055 NG(CO) km/28/10 Tax Case(Revision)No.631 of 2006 https://hcservices.ecourts.gov.in/hcservices/