PETITIONER: SALES TAX OFFICER, GANJAM & ANR. Vs. RESPONDENT: M/S. UTTARESWARI RICE MILLS DATE OF JUDGMENT18/09/1972 BENCH: KHANNA, HANS RAJ BENCH: KHANNA, HANS RAJ REDDY, P. JAGANMOHAN CITATION: 1972 AIR 2617 1973 SCR (2) 310 ACT: Orissa Sales Tax Act, 1947, s. 12(8)-Notice for assessment of escaped turnover-If should indicate reasons for reopening assessment. HEADNOTE: On receipt of certain information, and,, as a result of information disclosed in documents seized from the respondent, the appellant issued a notice under s. 12 (8) of the Orissa Sales Tax Act. 1947, in the Form prescribed under r. 23 made under the Act, for reassessing the turnover of the respondent. The High Court, quashed the notice on the ground that the appellant had not indicated any reason for issuing the notice. Allowing the appeal to this HELD: (1) Although the opening words used in the section are "if for any reason" and not "if the sales tax authority has reason to believe" the difference in phraseology does not make any difference. A reason cannot exist in vacuum, and in the context, it should be the sales-tax authority issuing the notice who should have reason to believe that the turnover of a dealer has escaped assessment or has been under assessed. The words used in the prescribed Form also are "whereas I have reason to believe that your turnover has escaped assessment....... Any view which would make the opening words of the section unworkable should be avoided. [317 C-E] (2) The ingredients of s. 12 (8) of the Orissa Sales-tax Act, 1947, are: (i) there must exist reason for the belief that, (a) the turnover of, a dealer for any period to which the Act applies has escaped assessment or has been under-assessed; or, (b) the tax has been compounded when composition is not permissible under the Act and the rules made thereunder; (ii) in cases mentioned in cl. (i) the sales;-tax authority may at any time within 36 months from the expiry of the year to which the above mentioned period relates call for a return under s. 11 (1) of the Act; (iii) after taking the steps mentioned in cls. (i) and (ii) above, the sales tax authority may proceed to assess the amount of the tax due from the dealer in the manner laid down in s. 12 (5) of the Act; (iv) the sales tax authority may also direct in cases where escapement or under-assessment or composition is due to the dealer having concealed particulars of his turnover or having without sufficient cause furnished incorrect particulars thereof that the dealer shall pay penalty in addition to the tax assessed; and (v) such penalty shall not exceed one and a half times the amount of the tax so assessed. [316 F-H; 317 A-C] The proceedings for assessment or re-assessment under the section start with the issue of a notice and it is only after the service of the notice that the assessee whose turnover is sought to be assessed or re-assessed becomes a party to the proceedings. Therefore, it is not necessary to intimate to the assessee the nature of the alleged escapement in the notice issued to him under the section. To hold that the, reasons which led to the issue of the said notice should be incorporated in the notice and that the failure to do so invalidated the notice would be tantamount to reading something into the statute which, in fact, is not there. However, if the sales-tax officer is in 311 possession of material which he proposes to use against the dealer in proceedings for re-assessment the said officer must, before using that material, bring it to the notice of the dealer and give him an adequate opportunity to explain and answer the case on the basis of that material. [319 B; 320 C; 321 F-H] B. Patnaik Mines (P) Ltd. v. N K. Mohanty Sales Tax Officer, I.L.R. [1967] Cuttack 446, overruled. Commissioner of Income Tax, Bengal v. Messrs Mahaliram Ramjidas [1940] 8 I.T.R. 442, (P.C.) applied. K. S. Rashid and Son v. Income Tax Officer, [1964] 52 I.T.R. 355. (S.C.) and S. Narayanappa and Ors., v. Commissioner of Income Tax, Bangalore, [1967] 63 I.T.R. 219, (S.C.) followed. (3) The fact that it is mentioned in the notice that penalty may also, be imposed would not make any difference to the validity of the notice. The question of imposition of penalty will only arise at the time of making.. an order for re-assessment. At that stage, the sales-tax officer would go. into the question whether the escapement or under- assessment has been due to the fact that the dealer concealed particulars of his turnover or without sufficient cause furnished incorrect particulars. In such an event he would have to give an opportunity to the dealer to show cause why penalty, in addition to the tax should not be imposed. [320 A; 321 A-C] (4) The existence of the reason that the turnover of the dealer had, escaped assessment or has been under-as is a sine qua non for the issue of the notice. In the present case, the appellant had brought material on record to indicate that there did exist such reasons. [322 B] JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1190 and
1191 of 1969.
Appeal by special leave from the judgment and order dated
June 24, 1968 of the Orissa High Court at Cuttack in O.J.C.
Nos.. 464 and 463 of 1967.
T. A. Ramchandran, S. P. Nayar, B. D. Sharma and R. N.
Sachthey, for the appellants (in both the appeals).
Gobind Das and B. Parthasarathi, for the respondents (in
both the appeals).
The Judgment of the Court was delivered by
KHANNA, J. Whether notice issued under section 12(8) of the
Orissa Sales Tax Act, 1947 (Act 14 of 1947) (hereinafter
referred to as the Act) should be quashed on the ground that
it does not mention the reasons for the issue of the notice
is the main question which arises for determination in these
two appeals, Nos. 1190 and 1191 of 1969, which have been
file& by special leave against the common judgment of the
Orissa High Court allowing writ petitions filed by the
respondents against the appellants.
312
For sake of convenience we may give the facts giving rise to
appeal No. 1190 of 1969 as it is the common case of the
parties that the decision in that appeal would govern the
other appeal also. The respondent in appeal No. 1190 is a
dealer registered under the Act. The matter relates to the
assessment for 1963-64. The date of the order of assessment
is not on file but it is stated that it was made sometime in
the later part of 1964. On March 30, 1967 the Sales Tax
Officer, Intelligence Wing, Vigilance, Berhampur made a
search of the business premises of the respondent and seized
several account books. On the following, day further search
was made and some additional account books were taken into
possession. Later on that day, viz, March 31, 1967 the
Sales Tax Officer issued the following notice under section
12(8) of the Act to the respondent:
“Notice to a dealer under section 12(8) of the
Orissa Sales Tax Act
[See rules 22, 23 and 28(2)]
To
M/s Utteswar Rice Mills (Dealer)
At/P.O. Berhampur, GA-1 2127-A (Address) ……….
……….
“Whereas I have reason to believe that your
turnover for the quarter ending 1963-64 on
which Sales Tax was payable under the Orissa
Sales Tax Act, 1947 has escaped;
assessment/has been under assessed.
You are hereby required to submit within one
calendar month from the date of receipt of
this notice a return in Form IV (enclosed)
showing the particulars of your turnover for
the year ending 1963-64.
“You are also hereby required to attend in
person or by agent at my office at Berhampur
on 11-5-67 at 1 1 A.M. and thereto produce or
cause to be produced the accounts and
documents specified on the reverse and also to
show cause why in addition to the amount of
tax that may be assessed on you a penalty not
exceeding one and a half time that amount
should not be imposed on you under sub-section
(5) of section 12 of the Act.
In the event of your failure to comply with
all the terms of this notice I shall proceed
to assess you under
313
section 12 of the Act to the best of my
judgment without further reference to you.
Sd/- Illegible
Signature
Sales Tax Officer
Intelligence Wing, Vigilance
Berhampur”
Place-Berhampur
Date-31-3-67.
The notice was received by an employee of the respondent.
Appearance was thereafter put in on behalf of the respondent
before the Sales Tax Officer and a copy of the old return
which had been earlier filed in accordance with section 11
of the Act was again filed before the Sales Tax Officer.
According to the respondent, appearance was put in on its
behalf on several occasions with a view to know the reason
for the issue of the above notice, but the respondent was
not informed of that reason. It is further stated that the
Sales Tax Officer recorded the statements of a number of
witnesses behind the back of the respondent with the
intention of making reassessment under section 12 of the
Act. Request was made on behalf of the respondent to the
Sales Tax Officer for being furnished with co-pies of those
statements so that the respondent might be in a position to
know the reason for the issue of the notice. Copies of
those statements were, however, not supplied and the appli-
cation filed by the respondent for obtaining copies of the
statements was rejected by the Sales Tax Officer. It was
mentioned by the Sales Tax Officer that the question of
grant of copies of the statements would be considered if the
statements were used against the respondent. The respondent
filed a revision petition against the order rejecting that
application, but the revision petition too was dismissed.
The respondent thereafter filed petition under articles 226
and 227 of the Constitution in the High Court on December
26, 1967.
The High Court accepted the writ petition on the ground that
the Sales Tax Officer had not indicated any reason for
issuing notice under section 12(8) of the Act. This fact,,
in the opinion of the High Court, was sufficient to warrant
quashing of the notice. The High Court in this context
relied upon its earlier decision in the case of B. Patnaik
Mines (P) Ltd. v. N. K. Mohanty Sales Tax Officer(1). It
was held in the earlier case that the Sales Tax Officer had
no jurisdiction under section 12(8) of the Act to issue
notice for making a fishing equiry
(1) I.L.R. [1967] Cuttack 446.
314
without indicating therein the reason for the alleged under
assessment.
In appeal before us Mr. Ramachandran on behalf of the
appellants has referred to the provisions of section 12(8)
of the Act and has argued that it is not essential to give
the reasons in the notice issued under the above provision
of law. The impugned notice, according to the learned
counsel, cannot be quashed for non-mention of the reasons.
The above stand has been controverted by Mr. Gobind Das on
behalf of the respondent and according to him, the failure
of the Sales Tax Officer to mention the reasons which led to
the issue of the impugned notice would vitiate the notice.
There is, in our opinion, considerable force in the stand
taken in this respect by the learned counsel for the
appellants. Section 12 of the Act deals with assessment of
tax. Sub-sections (5) and (8) of the above section read as
under :
“(5) If upon information which has come into
his possession, the Commissioner is satisfied
that any dealer has been liable to pay tax
under this Act in respect of any period and
has nevertheless without sufficient causes
failed to apply for registration, the
Commissioner shall, after giving the dealer a
reasonable opportunity of being heard, assess,
to the best of his judgment, the amount of
tax, if any, due from the dealer in respect of
such period and all subsequent periods and the
Commissioner may direct that the dealer shall
pay, by way of penalty, in addition to the
amount so assessed, a sum not exceeding one
and a half times that amount:
Provided that no penalty shall be levied for
the quarter during which the dealer first or
again becomes liable to pay tax under this
Act.
(8) If for any reason the turnover of a
dealer for any period to which this Act
applies has escaped assessment or has been
under-assessed or where the tax has been
compounded when composition is not permissible
under this Act and the rules made thereunder,
the Commissioner may at any time within thirty
six months from the expiry of the year to
which that period relates call for a return
under sub-section (1) of section 11 and may
proceed to assess the amount of tax due from
the dealer in the manner laid down in sub-
section (5) of this section and may also
direct, in cases where escapement or under
assessment or composition is due to the dealer
having concealed particulars of his turnover
or having without sufficient cause furnished
incorrect particulars thereof, that the dealer
shall pay, by way of penalty, in addition
315
to the tax assessed under this sub-section, a
sum not exceeding one and a half times of the
said tax so assessed.”
The Orissa Sales Tax Rules, 1947 (hereinafter
referred to as the rules) have been framed by
the State Government in exercise of the powers
conferred by section 29 of the Act. According
to sub-section ( 1) of that section, ‘the
State Government may subject to the condition
of previous publication make rules for
carrying out the purposes of the Act. Sub-
section (2) of that section mentions the
subjects, without prejudice to the generality
of power given by sub-section ( 1 ), regarding
which rules may prescribe. Section 29-A
requires that all rules made under section 29,
and notifications issued under section 3-B,
sub-section (1) of section 5 and section 6
shall, as soon as possible after they are made
or published, as the ,case may be, be laid
before the Assembly for a total period of
fourteen days which may be comprised in one or
more sessions. Rule 23 may be reproduced
below :
“23. Calling for return when turnover has
escaped assessments or has been
under-assessed-(1) If for any reason the
turnover of sales or the turnover of purchases
of a dealer has escaped assessment or has been
under-assessed or has not been assessed due to
the tax having been compounded when
composition is not permissible under the Act
and those rules and it is proposed to assess
it the Commissioner shall serve on the dealer
a notice in Form VI within one calendar
month from the date of receipt of such notice.
(2) Such notice may also require the dealer
to attend in person or by his agent at the
office of the authority issuing the notice on
the date specified therein and to produce or
cause to be produced the accounts and
documents specified in the notice.”
The relevant part of Form VI referred to in
rule 23 is in the following words
FORM VI
To
……………….(dealer)
……………….(Address)
……………….
………………..
3-L498 Sup CI/73
316
Whereas I have reason to believe that your turnover of sales
and/or purchases for the quarter/year ending on which tax
payable under the Orissa Sales Tax Act has escaped
assessment has been under-assessee has not been assessed due
to the tax having been compounded when composition is not
permissible.
You are hereby required to submit within one calendar month
from the date of. receipt of this notice a return in Form IV
(enclosed) showing the particulars of your turnover for the
quarter ending
You are also hereby required to attend in person or by agent
at my office at …. on …. at …. A.M./ P.M. and there to
produce or cause to be produced the accounts and documents
specified on the reverse, and also show cause why in
addition to the amount of tax that may be assessed on you a
penalty not exceeding one and a half times that amount
should not be imposed on you under sub-section (5)/sub-
section (8) of section 12 of the Act.
In the event of your failure to comply with all the terms of
this notice I shall proceed to assess you under section 12
of the Act to the best of my judgment without further
reference to you.
Place........... Signature Date............ Designation
Section 12(8) of the Act reproduced above may be analysed
its under :
(i) There must exist reason for the belief
that
(a) the turnover of a dealer for any period
to which the Act applies has escaped assess-
ment or has been under-assessed; or
(b) the tax has been compounded when compo-
sition is not permissible under the Act and
the rules made thereunder.
(ii) In cases mentioned in clause (i) the
sales tax authority may at any time within 36
months from the expiry of the year to which
the above mentioned period relates call for a
return under section 1 1 ( 1 ) of the Act.
(iii) After taking the steps mentioned in
clauses (i) and (ii) above, the sales tax
authority may proceed to assess the amount of
the tax due from
317
the dealer in the manner laid down in section
12(5) of the Act..
(iv) The sales tax authority may also direct
in cases where escapement or under-assessment
or composition is due to the dealer having
concealed particulars of his turnover or
having without sufficient cause furnished
incorrect particulars thereof that the dealer
shall pay penalty in addition to the tax
assessed.
(v) Such penalty shall not exceed one and a
half times the amount of the tax so assessed.
Although the opening words used in section 12(8) are “if for
any reason” and not “if the sales tax authority has reason
to believe”, the difference in phraseology, in our opinion,
should not make much material difference. A reason cannot
exist in vacuum. Somebody must form the belief that reason
exists and looking to the context in which the words are
used, we are of the view that it should be the sales tax
authority issuing the notice who should have reason to
believe that the turnover of a dealer has escaped assessment
or has been under-assessed. The approach in this matter has
to be practical and not pedantic. Any view which would make
the opening words of section 12(8) unworkable has to be
avoided. It may be noted in this context that in Form VI
appended to the rules, which has been prepared in pursuance
of rule 23, the words used are “whereas I have reason to
believe that your turnover…… has escaped assessment
In the case of Commissioner of Income Tax, Bengal v. Messrs
Mahaltram Ramjidas(1) the Judicial Committee dealt with the
provisions of section 34 of the Indian Income Tax Act, 1922
as it then existed. The section read as under:
“34, If for any reason income, profits or
gains chargeable to income-tax has escaped
assessment in any year or has been assessed at
too low a rate, the Income-tax Officer may, at
any time within one year of the end of that
year, serve on the person liable to pay tax on
such income, profits, or gains, or in the case
of a company, on the principal officer
thereof, a notice containing all or any of the
requirements which may be included in a notice
under sub-section (2) of section 22 and may
proceed to assess or reassess such income,
profits or gains, and the provisions of this
Act shall so far as may be, apply accordingly
as if the notice were a notice issued under
that sub-section
(1) (1940) 8 I.T.R. 442.
318
Provided that the tax shall be charged at the
rate at which it would have been charged had
the income, profits or gains not escaped
assessment or full assessment, as the case may
be.”
The opening words of section 34 of the Indian Income Tax
Act, as it then existed were similar to those of section
12(8) of the Act. The Judicial Committee while dealing with
the language of section 34 observed :
“Section 34 is unhappily and even
ungrammatically phrased. It is expressed
impersonally, and it fails to state by whom
and by what procedure it is to be established
that income, profits or gains have escaped
assessment or have been assessed at too low a
rate. There is fortunately no dispute that
the person who must make that decision is the
Income-tax Officer, for, apart from the
assessee, no one else is in a position to say
whether income has been assessed or at what
rate it has been assessed. The omission to
prescribe expressly what the nature of the
decision should be and by what procedure it
must be reached is all the more surprising
because in other sections of the Act the
legislature has been careful to define what is
necessary in these respects. This
circumstance was founded on by the learned
Counsel for the respondents, who pointed out
that where some fact had to be established
merely prima facie to the satisfaction of the
Income-tax Officer in the bona fide exercise
of his discretion, this was expressed by such
phraseology as “When it appears to be Income-
tax Officer,” or “if the Income-tax Officer
has reason to believe”. On the other hand,
when the statute requires that the Income-tax
Officer shall make a decision, which is final
so far as he is concerned, upon a matter of
fact, the usual expression is “if he is satis-
fied”.
It was further observed
“The section, although, it is part of a taxing
Act, imposes no charge on the subject, and
deals merely with the machinery of assessment.
In interpreting provisions of this kind the
rule is that that construction should be
preferred which makes the machinery workable,
ut res valeat potius quam pereat.”
In view of the criticism levelled against the wording of
section 34 of the Indian Income Tax Act, the above section
was amended by Amendment Act of 1939 Despite the amendment
made in section 34 of the Indian Income Tax Act, the Orissa
Legislature,
319
it would appear, has used phraseology in section 12(8) of
the Act similar to that of section 34 of the Indian Income
Tax Act, 1922 as it existed before the said amendment.
The above decision of the Judicial Committee is Also an
authority for the proposition that it is not necessary to
intimate to the assessee the nature of the alleged
escapement in the notice which is issued to him under
section 34 (as it then existed) of the Indian Income Tax
Act, 1922. The notice which was issued in that case did not
give any particulars and was in the following words :
“Whereas I have reason to believe that your
income from business and other sources which
should have been assessed in the financial
year ending the 31st March, 1933, has wholly
escaped assessment and I therefore propose to
assess the said income that has escaped
assessment. I hereby require you to deliver
to me, not later than the 9th March, 1934, or
within 30 days of the receipt of this notice,
it return in the attached form of your income
from all sources which was assessable in the
said year ending the 31st March, 1933.”
It was observed while dealing with the
validity of the above notice
” Accordingly their Lordships are of opinion
that the Income-tax Officer is not required by
the section to convene the assessee,.or to
intimate to him the nature of the alleged
escapement, or to give him an opportunity of
being heard, before he decides to operate the
powers conferred by the section. In the
opinion of their Lordships the view which the
learned Judges of the High Court have taken of
the section is too narrow, and the notice sent
to the respondents on 8th February, 1934, is
in form a competent preliminary to a new
assessment.”
In the case of K. S. Rashid and Son and Others v. Income Tax
Officer(1) this Court expressed the view that the assessee
was not entitled to a copy of the reasons which were
recorded by the income tax officer when he issued the
notice under section 34 of the Indian Income Tax Act,
1922. In the later case of S. Narayanappa and Others v.
Commissioner of Income Tax Bangalore (2 ) an argument was
advanced that the income tax officer should have indicated
to the assessee the reasons which
(1) [1964] 52 I.T.R. 355. (2) [1967] 63 I.T.R. 219
320
led him to initiate the proceedings under section 34 of the
Act. This contention was repelled in the following words :
“It was also contended for the appellant that
the Income-tax Officer should have
communicated to him the reasons which led him
to initiate the proceedings under section 34
of the Act. It was stated that a request to
this effect was made by the appellant to the
Income-tax Officer, but the Income-tax Officer
declined to disease the reasons. In our
opinion, the argument of the appellant on this
point is misconceived. The proceedings for
assessment or reassessment under section 34(1)
(a) of the Income-tax Act start with the
issue of a notice and it is only after the
service of the notice that the assessee, whose
income is sought to be assessed or reassessed,
becomes a party to those proceedings. The
earlier stage of the proceedings for recording
the reasons of the Income-tax Officer and for
obtaining the sanction of the Commissioner are
administration in character and are not quasi-
judicial. The scheme of section 34 of the Act
is that, if the conditions of the main section
are satisfied, a notice has to be issued to
the assessee containing all or any of the
requirements which may be included in a notice
under subsection (2) of section 22. But
before issuing the notice, the proviso
required that the officer should record his
reasons for initiating action under section 34
and obtain the sanction, of the Commissioner
who must be satisfied that the action under
section 34 was justified. There is no
requirement in any of the provisions of the
Act or any section laying down as a condition
for the initiation of the proceedings that the
reasons which induced the Commissi
oner to
accord sanction to proceed under section 34
must also be communicated to the assessee.”
As the provisions of section 12(8) of the Act and section 34
of the Indian Income Tax Act, 1922 are substantially
similar, the dicta laid down in cases under section 34 of
the Indian Income-Tax ‘Act has, in our opinion, a direct
bearing.
Mr. Govind Das has tried to distinguish the cases under
section 34 of the Indian Income Tax Act on the ground that,
unlike section 12(8) of the Act which also provides for the
imposition of penalty, there was no mention of penalty in
section 34 of the Indian Income Tax Act. This circumstances
in our opinion, makes no substantial difference and cannot
prevent the applicability of the dicta laid down in cases
under section 34 of the Indian
321
Income Tax Act, 1922 to cases under section 12(8) of
the Act The question of imposition of penalty can only arise
at the time of making an order for reassessment. Mr.
Ramachandran an behalf of the appellants has frankly stated
that it would be only at that stage that the sales tax
officer would go into the question as to whether the
escapement or under-assessment or composition has been
due to the fact that the dealer concealed particulars of his
turnover or without sufficient cause furnished incorrect
particulars thereof. The sales tax officer in such an
event, it is not disputed, would have to give opportunity to
the dealer to show, cause why penalty in addition to the tax
should not be imposed upon him.
Reference has also been made by Mr. Gobind Das to the
fact that notice issued to the respondent on March 31, 1967
related not merely to the escaped assessment or
under-assessment, it also called upon the
respondent to show cause why penalty should not be imposed
upon him. It is urged that such a combined notice is
invalid even though it may be in accordance with Form VI
prescribed by the rules. Calling upon the respondent to show
cause why penalty should not be imposed upon him, according
to the learned counsel, is premature at this stage. In this
respect we find that no such ground was taken by the
respondent in the writ petition before the High Court. As
such, it is not necessary for the purpose of this case to
express an, opinion on the, point as to whether a notice
under section 12(8) should be struck down, on the aforesaid
ground.There is nothing in the language of section 12(8)
of the Actwhich either expressly or by necessary
implication postulates therecording of reasons in the
notice which is issued to the dealerunder the above
provision of law. To hold that reasons which led to the
issue of the said notice should be incorporated in thenotice
and that failure to do so would invalidate the notice, would
be tantamount to reading something in the statute which, in
fact, is not there. We are consequently unable to accede to
the contention that the notice under the above provision, of
law shouldbe quashed if the reasons which led to the
issue of the notice are not mentioned in the notice. At the
game time, we would liketo make it clear that if the sales
tax officer is in possession of material which he
proposes to use against the dealer in proceedings for
reassessment, the said officer must before using that
material bring it to the notice of the dealer and give him
adequate opportunity to explain and answer the case on the
basis of that material.
Mr. Gobind Das has also argued that the existence of a
reason that the turnover of a dealer has escaped
assessment or has been
322
under-assessed in cases, not dealing with composition is a
condition precedent to the issue of a notice under section
12(8) of the Act. It is urged that such reason is not shown
to have existed in the present case. Although we agree with
the learned counsel that the existence of the reason that
the turnover of a dealer has escaped assessment or has been
under-assessed is a sine qua non for the issue of the
notice, we are, unable to accept the contention that the
said reason has been shown to be nonexistent in the pretent
case. Although the High Court did not go into this aspect
of the matter, we find that the appellant has brought mate-
rial on the record to indicate that there did exist such
reasons. Affidavit of Shri Prakash Chandra Mohanty, Sales
Tax Officer, Intelligence Circle was filed in opposition to
the petition, Shri Mohanty is the successor of Shri Patnaik
who had issued the notice under section 12(8) of the Act to
the respondent. According to the affidavit of Shri Mohanty,
the material on record indicates that Shri Patnaik issued
the impugned notice after he had obtained information about
certain clandestine dealings of the respondent. It was
further stated that the seized documents disclosed prima
facie material to hold that the respondent had failed to
disclosehis entire turnover. It was also mentioned that
the details of the material which led to the initiation of
proceedings under section 12(8) of the Act had been recorded
in the relevant case file. The said file, it would appear
from the affidavit of Shri Mohanty, was kept ‘available for
reference by the High Court at the time of hearing. No
reference, it would seem, was however made to that file
because the High Court did not feet the necessity of doing
so.
In our opinion the view taken by the High Court in the
judgment under appeal as well as in the earlier case of B.
Patnaik Mines (P) Ltd. v. N. K. Mohanty Sales Tax Officer
(supra) was not correct. We accordingly accept the two
appeals, set aside the judgment of the High Court and
dismiss the writ petitions. Looking to all the
circumstances, we leave the parties to bear their own costs
of this Court as well as in the High Court.
V.P.S. Appeals allowed.
323