Commercial Taxes Officer vs Krishna Oil Industries

J.K. Ranka, J—Instant Sales Tax Revision Petition under Section 86 of Rajasthan Sales Tax Act, 1994 is directed against the order passed by the Rajasthan Tax Board Ajmer Dt. 02/12/2010 in appeal No. 737/2002/Bharatpur whereby the appeal filed by the revenue was dismissed. As per the material available on record, it transpires that a survey operation on the premises of the respondent-assessee firm came to be conducted on 02/05/1997 in the presence of Mr. Satish Chandra Agarwal, who happens to be partner of the firm. The assessee firm is dealing in mustard, mustard oil & Khal. On verification mustard, mustard oil & Khal having been checked with the stock register & physical stock, the authorized officer found difference of about 46 Quintal 54 Kg. of mustard oil in excess and it was observed by the Assessing Officer at the time of assessment that stock to the extent of 46 Quintal 54 Kg. was undisclosed and its value was computed at Rs. 1,25,658/- and accordingly penalty @ 20% under section 77(8) was imposed at Rs. 25,132/- vide order Dt. 02.05.1997, which came to be assailed by the assessee firm in appeal before the Dy. Commissioner (Appeals) who after going through the material available on record was satisfied with the explanation so offered by the assessee firm and observed that the stock was not verified properly and nothing was placed on record to justify as to how such huge stock of 384 Quintals of mustard, 442 Quintals of mustard oil and 252 Quintals of Khal came to be measured and that apart it was also not pointed out by the Assessing Officer as to what method was adopted for measuring the items found at the surveyed place and held the penalty to be improper & illegal and deleted the same vide order Dt. 23.12.2001.

On a further appeal being preferred by the Revenue before the Tax Board, the order of the Dy. Commissioner (Appeals) was upheld. Hence this revision petition.

Counsel for the petitioner contended that at the time of survey of the firm not only its partner but two independent witnesses were also present in whose presence the stock was measured & actual undisclosed stock was noticed to the extent of 46 Quintals 54 Kg of mustard oil. She further contended that at the time of passing of the order by the Assessing Officer, no objection about Rule 50 was raised by the assessee and it is only at a later point of time, this plea was raised before the Appellate Authority, which is not permissible. She further contended that when the stock was physically weighed in the presence of the partner and two independent witnesses, later on it could not have been challenged & contended that view of both the two learned appellate authorities below, i.e. the Dy. Commissioner (Appeals) as well as the Tax Board is improper and contended that substantial questions of law arise out of the order of the Tax Board.

I have considered the arguments advanced by the counsel for the revenue and find that the Tax Board has recorded a specific finding of fact based on the material available on record.

It would be appropriate to quote section 77(8) and Rule 50 of the RST Act:--

Section 77(8)

"The assessing authority or the officer referred to in sub-section (6) may, after having given the dealer an opportunity of being heard and after having held such further enquiry as it may consider fit, impose on him, for the possession of goods not accounted for, whether seized or not under sub-section (6), a penalty equal to the amount of five times of the tax leviable on such goods or thirty per cent of the value of such goods, whichever is less; and such authority or officer may release the goods, if seized, on payment of the penalty imposed or on furnishing such security for the payment thereof as it may consider necessary."

R. 50. Procedure for search and seizure under section 77.--(1) The officer who carries out a search under section 77 of the Act, shall adopt the following procedure:--

(a) The officer should record reasons as to why under the facts and circumstances of the case, search is necessary.

(b) Before making a search, such officer shall call upon two witnesses to attend and witness the search and may issue an order in writing to them to do so.

(c) The dealer or the person incharge of the business place, building or other premises searched, shall be permitted to witness the search.

(d) If any building or place is an apartment in the actual occupancy of a woman, who according to custom does not appear in public, the officer shall afford her every reasonable facility to withdraw.

(e) Search of person may be made, but in case of a woman, it shall carried out by a woman.

(f) A list of goods, articles and documents seized in the course of the search and of the places in which they were found shall be prepared by such officer and shall be signed by the witnesses. A copy of such list shall be tendered to the dealer or the person concerned and a copy thereof shall be forwarded to the Commissioner within twenty four hours after the completion of such search.

(2) The accounts, registers and documents may be examined without calling witnesses by the officer empowered under section 77, but in the case of seizure thereof, the following procedure shall be adopted:--

"(a) Seizure of accounts, registers, and documents shall be made in the presence of two witnesses.

(b) While making seizure of accounts, registers and documents, a seizure-memo shall be prepared by such officer and reasons for seizure shall be recorded therein.

(c) The seizure-memo shall also contain the list of the accounts, registers and the documents seized.

(d) The seizure-memo shall be signed by the officer who effects seizure, by the dealer or the person concerned and by the witnesses.

(e) One copy of the seizure-memo shall be tendered by the officer making seizure to the dealer or the person concerned as a token of receipt and one copy thereof shall be forwarded by him to the Commissioner within twenty four hours after such seizure is made."

It is an admitted fact that the stock register was available at the site and while mustard and Khal were found matching with the stock register & books of account viz-�-viz the actual stock found at 384 Quintals of mustard and 252 Quintals of Khal but there was a difference in the stock of mustard oil whereas as per stock register and books it was 395 Quintals but was found at 442 Quintals 44 Kgs, therefore, in excess by 46 Quintals 54 Kg. The revenue has placed the working of the stock so found but how and what method was adopted has not been specified nor the counsel for the revenue on the basis of the survey note prepared was able to satisfy how such a huge quantity of about 1078 Quintals (384 Quintals mustard, 442 Quintals mustard oil and 252 Quintals of Khal) could be weighed/measured on the same day on 02/05/1997 and even the assessment order was passed on 02/05/1997 by the CTO, AE, Bharatpur when the factory/business premises of the assessee is at Maniya District Dholpur. Admittedly at the time of survey there were no independent witnesses when Rule 50 prescribes about two independent witnesses, therefore, there is clear cut violation of Rule 50, which also vitiates the survey. Therefore, no credence can be placed on the survey report which prima facie appears to be on estimate basis and the Tax Board as well as Dy. Commissioner (Appeals) after going through the material on record have rightly discarded the survey report and such a finding, is finding of fact on the basis of material on record and in my view no substantial question of law can be said to arise out of the order passed by the Tax Board & I do not find any infirmity, illegality or perversity in the order which is being assailed in the present petition. Accordingly, the revision petition being devoid of merit is hereby dismissed in limine.