JUDGMENT
Abdul Hadi, J.
1. The assessee has preferred this tax case appeal under section 37 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as “the Act”), against the order of the Joint Commissioner dated May 27, 1988, in a suo motu revision under section 34 of the Act, in relation to the assessment year 1982-83.
2. The only question involved in this tax case is whether there is a sale of 80 Honda portable generators at Madras under the Act to the extent of Rs. 5,36,000. The order of the Joint Commissioner set aside the order of the Appellate Assistant Commissioner dated October 30, 1986 and restored the assessment order dated October 14, 1985, passed under section 16 of the Act by the Deputy Commercial Tax Officer, Inter-State Investigation Cell, bringing to tax the abovesaid sales turnover of Rs. 5,36,000 and levying a penalty of Rs. 96,480 thereon.
3. The assessee is no doubt a dealer in generators, etc., at Madras. The gist of the abovesaid assessment order dated January 2, 1986 is as follows :
(a) The assessee was originally assessed to a total and taxable turnover of Rs. 1,37,02,384.31 and Rs. 14,45,484.97 respectively by the Commercial Tax Officer in his proceedings dated March 7, 1984. However it was found by the Revenue that 74 numbers of Honda portable generators were consigned to the assessee-dealer by Perfect Power Systems, New Delhi (vide their three delivery challans bearing Nos. 223, 224 and 225, all dated January 3, 1983). Then, when the dealers were questioned as to whether the receipt of the said Honda generators were accounted by them, the dealers not only denied the purchases, but also said that the goods were not intended to them. Then the matter was investigated by the abovesaid Inter-State Investigation Cell. Their officers contacted at Delhi, the abovesaid Perfect Power Systems on August 29, 1984 along with the Sales Tax Officers of New Delhi and verified their accounts. It was found that the dealer-assessee had booked 80 numbers of the abovesaid generators from Madras to Delhi through Transport Bombay Okara Cargo Movers (P) Ltd., in L.R. 1055, dated February 12, 1983. On enquiry, Shiv Mohan, power of attorney holder of the abovesaid Perfect Power Systems, stated that 74 generators sent through the abovesaid three delivery challans dated January 3, 1983, along with six more (which were earlier sold to some other customer at Madras, but found to be defective and were to be replaced) were despatched from Madras to Delhi, as stated above. The accounts of the assessee for the abovesaid year 1982-83 were then checked, but there was no record therein to show the date of taking delivery of the abovesaid 74 generators from the carriers Prakash Roadways (P) Ltd., who transported them from Delhi to Madras. There was also no record for the return of the abovesaid 74 + 6 numbers of generators to Perfect Power Systems, Delhi. Therefore, it was concluded that the abovesaid 80 generators have been sold locally at Madras, but not accounted and the value thereof was estimated at the abovesaid figure of Rs. 5,36,000 and charged to tax, besides levying the abovesaid penalty after giving the required notice under section 16, for the wilful suppression.
(b) To the said notice, the reply of the assessee was that the said generators never belonged to the assessee at any time and that they were not bought or sold by the assessee. Along with the said reply the assessee also enclosed an affidavit dated November 28, 1985, of the abovesaid Shiv Mohan. The said affidavit stated that the said 74 generators were originally despatched from Delhi to Madras by the abovesaid Perfect Power Systems to explore possible markets in Madras but that as the abovesaid Delhi dealer later found that there was no market, the generators were re-booked by its representative at Madras, along with six more generators collected by him from a customer for replacement in view of defect pointed out. In the abovesaid reply to the abovesaid notice, it was also said that the assessee did not order for the abovesaid 74 generators and that the assessee also intimated the representative of the Perfect Power Systems that it did not require those 74 generators and, therefore, finding no ready market in Madras, he must have re-booked the said generators to Delhi. The said reply also said that the abovesaid delivery challans were not with the assessee, because the assessee had no knowledge of the said despatch from Delhi or re-booking to Delhi and as the matter was attended to by the representative of Perfect Power Systems at Madras. The said reply by the assessee was considered by the assessing officer but however the abovesaid assessment including levy of penalty was made.
4. However, on appeal by the assessee, the Appellate Assistant Commissioner deleted the assessment and levy of penalty on the following reasoning :
From the investigation conducted by the Enforcement Wing Officers, it was found that Perfect Power Systems, Delhi, had despatched 74 numbers of generators (vide Challan Nos. 223 to 225 dated January 3, 1983) through Prakash Roadlines (P) Ltd. (vide L.R. Nos. 899659, 899658 and 899660 dated January 3, 1983). The delivery challans were sent in the name of the assessee. The assessee’s business premises was inspected on January 21, 1983 and after examination of the accounts with reference to the bills received, the inspecting officials found that the abovesaid purchase of generators had not been passed through their regular accounts. The statement of Rajesh Malhotra, a partner of the assessee informed the officials that the said generators were not taken delivery by the assessee. The way-bills available show the consignee’s name as “Perfect Power Systems” only. Therefore, though Perfect Power Systems has despatched the goods in the name of the assessee, Perfect Power Systems itself has taken delivery of the goods at Madras.
5. Then, the Appellate Assistant Commissioner also relies on the above referred to affidavit of Shiv Mohan. Further, according to the Appellate Assistant Commissioner, the investigating officials have not proved whether the assessee has actually taken delivery of the abovesaid 74 generators at Madras when they were transported from Delhi. Further he also finds that the investigation file goes to prove that the goods have been returned to Delhi. Therefore, the Appellate Assistant Commissioner came to the conclusion that the connection between the abovesaid transactions with the assessee has not been proved and, therefore, set aside the order of the assessing authority in this regard.
6. However, the Joint Commissioner, after issuing show cause notice under section 34 and receiving the assessee’s objections, and hearing the counsel for the assessee concluded as follows :
Though the assessee produced lorry receipt for having returned the goods back to Delhi, there is no corroborative evidence to link the receipt of 80 numbers of generators at New Delhi by Perfect Power Systems. The gate pass produced did not indicate clearly the place of despatch. It is not possible to believe only the statement of the abovesaid Shiv Mohan. It is to be found that the freight is to be paid by the consignee Perfect Power Systems. But, there is no evidence that it has been paid so by the Perfect Power Systems, therefore, it is to be presumed that the assessee has sold the abovesaid generators locally at Madras.
7. Learned counsel for the appellant argues as follows : There is no material before the department to show that the assessee took delivery of the goods when they were sent from Delhi to Madras. The goods always belonged to Perfect Power Systems as is confirmed by the factual finding of the first appellate authority. The accounts of Perfect Power Systems were verified by the Inter-State Investigation Cell officers during their visit to Delhi and it was found that the goods belonged to Perfect Power Systems only. All the available evidence on record in the form of way-bills, gate pass, freight bill, certificate from carriers and the aforesaid Delhi dealers’ advocate’s letter, point out to the only one conclusion that the generators have not been dealt with in Tamil Nadu at all in any form by the assessee. The Joint Commissioner erred in his inference that the gate pass produced by the assessee did not indicate the place of despatch. This gate pass was issued by the Delhi office of the transporter to Perfect Power Systems to enable them to take delivery of the goods at Delhi. It also clearly indicates the way-bill L.R. No. 1055 and also mentions that the packages were 80 generators. It also shows the freight charges, octroi, etc. The burden is on the department to show by positive evidence that the assessee has effected sale of the abovesaid 80 generators locally at Madras and this burden has not been discharged. At the earliest stage, in reply to the pre-assessment notice, the assessee had clearly stated that the goods were not taken delivery of by them at Madras and so, the representative of Perfect Power Systems himself was obliged to re-book the generators to Delhi.
8. On the other hand, learned Additional Government Pleader (Taxes) appearing for the Revenue very much relies on the abovesaid three delivery challans when the goods were sent initially from Delhi to Madras. She points out that those delivery challans contain a reference to calculation of Central sales tax against form C. So according to her, if the consignment from Delhi to Madras was not actually a sale in favour of the assessee, it is not known why the delivery challans, apart from referring to the name of the assessee, should contain a reference to Central sales tax calculation. Therefore, initially there was sale in favour of the assessee by the Perfect Power Systems. She also submits that the affidavit filed by Shiv Mohan in 1984 was only an afterthought. Further, she also points out that the said affidavit did not refer to the said delivery challan and the reason for raising the same in the absence of specific order. She also submits that it is totally unbelievable that any party would book goods worth more than Rs. 5 lakhs from Delhi to Madras without any specific order and that the receiving party would act passively without protesting against using his name in the delivery challans without his knowledge. Regarding the subsequent alleged return of the goods from Madras to Delhi, it is submitted by learned Additional Government Pleader (Taxes) that there is no proof of return of the goods to Delhi. The gate pass is not a document to be relied upon to prove that 80 generators referred to in the gate pass were the same as the one originally despatched from Madras.
9. We have considered the rival submissions. The sole question to be seen in this case is, whether there is material for concluding that the assessee has effected sale of the abovesaid 80 generators of the value of Rs. 5,36,000 under the Act. According to the Revenue, there was an original sale of 74 generators from the above referred to Delhi manufacturer and dealer, Perfect Power Systems, to the assessee and thereafter the abovesaid 74 generators plus another six generators were sold locally by the assessee and in respect of this latter local sale of 80 generators, tax as well as penalty has been levied, as stated above. But according to the assesses, neither it originally purchased the abovesaid 74 generators from Perfect Power Systems, nor did it subsequently sell the above referred to 80 generators locally. According to learned counsel for the assessee, since the assessee has not effected the alleged latter sale locally under the Act, of the abovesaid 80 generators, there cannot be any tax or penalty thereon. In other words, according to the said learned counsel, the department has not discharged its burden to prove this alleged latter local sale under the Act. According to the assessee the abovesaid 74 generators originally were sent from Delhi to Madras by the abovesaid Perfect Power Systems of Delhi and its representative at Madras took delivery of the said goods at Madras and when he found that the assessee was not willing to purchase the same and that there was no ready market at Madras for the sale of the said generators, transhipped it back to Delhi to Perfect Power Systems. According to the assessee, the relevant consignment note dated February 12, 1983 of Bombay Okara Cargo Movers (P) Ltd., which transported the abovesaid 80 generators from Madras to Delhi, the gate pass dated March 2, 1983, the abovesaid carrier’s bill No. 1503 dated March 2, 1983 relating to transport charges and also the certificate from carriers dated August 20, 1984 stating that those generators were delivered to Perfect Power Systems and the advocate’s letter dated December 28, 1984, all show that the abovesaid 80 generators were given back to Perfect Power Systems at Delhi.
10. The main emphasis of learned counsel for the Revenue is that the abovesaid three delivery challans dated January 3, 1983, apart from referring to the name of the assessee, contain a reference to Central sales tax calculation and, therefore, according to her, there was initially a sale of 74 generators by Perfect Power Systems, Delhi, in favour of the assessee. Thus, even for the original alleged sale in favour of the assessee, the only set of documents mainly relied on by the Revenue is the abovesaid challans. But the Appellate Assistant Commissioner says that from a factual perusal of the way bills available, which accompanied the said delivery challans, the consignee’s name has been noted as Perfect Power Systems “self” and so, though Perfect Power Systems has despatched the goods in the name of the assessee, it itself has taken delivery of the consignment at Madras through its representative. Further, the Appellate Assistant Commissioner says that even on the date of inspection of the assessee’s business premises on January 21, 1983, the partner of the assessee-firm Rajesh Malhotra has given a statement, informing the inspecting officials that the said generators were not taken delivery of by the assessee and that they had no knowledge about the said receipt of consignment. It must also be noted that the delivery challans were not recovered from the assessee. Presumably, they were recovered from check-post, while the goods were transported from Delhi to Madras.
11. Learned counsel for the Revenue also argues that it is very difficult to believe that for exploration of market, goods worth more than Rs. 5,00,000 were sent from Delhi to Madras without any specific order from any buyer at Madras. Though, normally such a thing may not take place, that possibility cannot be ruled out, particularly when the consignment by Perfect Power Systems is in favour of “self” and it is found that the representative of Perfect Power Systems had taken delivery of the goods at Madras.
12. At any rate, even if it could be presumed that there was an original sale of 74 generators from Perfect Power Systems to the assessee, that by itself will not prove that the assessee effected subsequent sale of the abovesaid 74 generators plus the other abovesaid six generators, in all 80 generators, and that too, locally under the Act. There is no material to prove or infer this sale, which alone is the subject-matter in this appeal. On the other hand, the assessee has produced the above referred to documents, viz. :
1. The above referred to carrier, Bombay Okara Cargo Movers (P) Ltd.,’s consignment note (L.R. or G.R. No. 1055) dated February 12, 1983, which shows consignor and consignee, only as Perfect Power Systems, with reference to the abovesaid 80 generators.
2. Gate pass dated March 2, 1983 of the said carrier referring to the abovesaid G.R. No. 1055.
3. The said carriers bill dated March 2, 1983 for the freight and octroi charged for the transport of the said 80 generators from Madras to Delhi.
4. Letter from the said carriers to Perfect Power Systems, Delhi, dated August 20, 1984 confirming the delivery of the said goods at Delhi.
5. The Advocate Mr. S. K. Kapoor’s letter dated December 28, 1984 to the Sales Tax Officer, Vigilance and Enforcement Branch, Sales Tax, New Delhi, stating about the receipt of the abovesaid goods at Delhi pursuant to the abovesaid G.R. No. 1055.
All these clearly shows that the abovesaid 80 generators were delivered back to Perfect Power Systems at Delhi.
13. Even the assessing officer’s order observes as follows :
“The matter was taken up for investigation by this cell. The Inter-State Investigation Cell officers during their visit to Delhi visited the place of business of the consignors Tvl. Perfect Power Systems at 1/25, Asaf Ali Road, New Delhi, on August 29, 1984 with the sales tax officers of New Delhi and verified their accounts. It was found out that Tvl. Sales Service Co., Madras have booked 80 numbers of Honda portable generators through Tvl. Transport Bombay Okara Cargo Movers (P) Ltd., in L.R. No. 1055 dated February 12, 1983.”
The Joint Commissioner, no doubt, says something contra, thus :
“The departmental officers have gone to New Delhi to investigate the matter along with the Delhi sales tax authorities and they found that no records pertaining to the receipt back of the 80 generators is available in the office of Messrs. Perfect Power Systems, New Delhi.”
14. While the assessing officer has stated that the Investigation Cell Officers earlier verified the accounts of Perfect Power Systems at Delhi and found that the abovesaid 80 generators were booked from Madras to Delhi on February 12, 1983, it is not known how the Joint Commissioner says that when the “departmental officers” went to Delhi to investigate the matter, they found that no records pertaining to the receipt back of 80 generators were available in the office of Perfect Power Systems, New Delhi. Only in this regard, learned counsel for the assessee says that this investigation could only be a subsequent one, that is, after the above referred to visit of Inter-State Investigation Cell Officers on August 29, 1984, and contends that simply because the records were thus subsequently not available, a different conclusion cannot be arrived at by the Joint Commissioner. We see force in this argument. The abovesaid advocate’s letter dated December 28, 1984 also says that earlier the account books of Perfect Power Systems were verified as stated above and that later they were not available since they were lost in mob fury on October 31, 1984.
At any rate, it is enough for us to say that the assessing officer himself has factually found that the accounts of Perfect Power Systems were earlier verified and it was found that the abovesaid 80 generators were booked from Madras to Delhi. No doubt, in his assessment order it is also said, as already seen that the said goods were “booked” by the Sales Service Co. (assessee). But, actually the abovesaid consignment Note No. 1055 (L.R. 1055) only shows both consignor and consignee therein as same, namely the aforesaid Perfect Power Systems, Delhi.
15. So, the Joint Commissioner’s order stating that there is no corroborative evidence to link the receipt of 80 generators at Delhi, cannot at all be sustained in the light of the above referred to documents. If the said goods have been returned to Delhi, thus, the Revenue cannot contend that the assessee has effected sale of those goods within the State of Tamil Nadu, under the Act.
16. No doubt, learned Additional government Pleader (Taxes) also sought to argue that the assessee has not produced any material to correlate the abovesaid 80 generators alleged to have been despatched to Delhi as those that were originally sent from Delhi to Madras by Perfect Power Systems to the assessee. But, such a plea or reasoning has not been advanced at all by the Joint Commissioner. So, we cannot entertain such an argument from the said learned counsel for the first time before us.
17. The net result is, we have no other alternative except to hold that the Revenue has not discharged its burden of proving that the assessee has effected sale of the abovesaid 80 generators within the State of Madras, as alleged by it. In this connection, regarding the abovesaid burden of proof, we may also point out the following observations of this Court in the decision, Deputy Commissioner of Commercial Taxes v. Subramaniam Chettiar reported in [1977] 40 STC 434 made in the context of recovery of certain slips discovered by the department and relied on by it for reopening the assessment of a dealer :
“Thus it will be seen that the Tribunal on a perusal of the slips relied on by the department has come to the conclusion that the slips themselves did not show that the amounts mentioned therein related to any transaction of purchase or sale. In that context, the Tribunal proceeded to state that having regard to this feature of the slips on which reliance was placed it was for the department to prove that those transactions related to sales or purchases. In our opinion, this view of the Tribunal is absolutely unexceptionable. If there had been any intrinsic evidence to show, however limited it may be in the slips themselves, that the transactions related to sales or purchases, certainly the burden was on the dealer thereafter to establish that either they did not relate to transactions of sales or purchases, or even if they relate to transactions of sales or purchases, they are not liable to tax under the Act as provided for in section 10. Once it is found as a fact by the Tribunal that there was no inkling of evidence in the slips themselves to show that the transactions referred to or related to sales or purchases it was certainly for the department which relies on the slips for including the amounts mentioned therein in the taxable turnover to establish that the said transactions evidenced by the slips related to sales or purchases.
The learned Additional Government Pleader very strongly relied on section 10 of the Tamil Nadu General Sales Tax Act, 1959, in support of this revision petition. Section 10 merely states :
‘The burden of proving that any dealer or any of his transactions is not liable to tax under this Act shall lie on such dealer.’
The word ‘transactions’ occurring in the section certainly cannot mean any transaction whatever, and read in the context of the section occurring in the Tamil Nadu General Sales Tax Act, the word ‘transaction’ can only mean transaction of sale or purchase. Once it is found by the Tribunal that the slips did not evidence any transaction of sales or purchases, there is no question of section 10 being attracted.”
18. Therefore, the appeal is allowed, the order of the Joint Commissioner is set aside and that of the Appellate Assistant Commissioner is restored.
No costs.
19. Appeal allowed.