Sales Tax, U.P. Vs. M/S Mohan Brickfield, Agra
 Insc 796 (13
Pasayat & Lokeshwar Singh Panta
out of S.L.P. (C) No. 19958 of 2005 ARIJIT PASAYAT, J.
Commissioner of Sales Tax, Uttar Pradesh, calls in question legality of the
order passed by a learned Single Judge of the Allahabad High Court allowing the
revision petition filed by the respondent under Section 11 of the Uttar Pradesh
Trade Tax Act, 1948 (in short the 'Act'). The dispute relates to the assessment
year 1984-85. The High Court set aside the order passed by the Sales Tax
Tribunal, Agra (in short the 'Tribunal') in Second
Appeal No.129 of 1989.
Court by the impugned order observed that the rejection of accounts on the ground
that books of accounts were not produced at the time of survey conducted on
29.3.1984 and 30.3.1985 was really of no consequence since no defect was
specifically pointed out in respect of books of accounts produced at the time
factual position in a nutshell is as follows:- Respondent (hereinafter referred
to as 'assessee') at the relevant point of time was carrying on business of
manufacturing and sales of bricks. Two surveys were conducted in the business
premises of the respondent on 29.3.1984 and 30.3.1985. But the books of
accounts were not produced on either of the dates. The Assessing Officer was of
the view that non-production of books of accounts at the time of these surveys
established that books of accounts were not maintained in the regular course of
business and, therefore, were liable to be rejected. It was also noted that
apart from the fact that books of accounts were not produced as noted above,
two other factors existed to discard the books of accounts.
the respondent-assessee had indicated the Fukai period of seventy two days, but
had shown lesser production.
selling rate was found to be lesser than the rate prevailing during the year in
question when compared to sales at kilns in the same vicinity. No explanation
was offered as to how this was possible. It was noted that the assessee did not
disclose the capacity of the kiln. Therefore, taking into account the
productions and rates in similar cases, the Assessing Officer took the
established norm of production to be one lakh bricks in six days and
accordingly fixed the production at 12 lakhs bricks. Accordingly, assessment
was completed to the best of judgment.
appeal was preferred by the assessee before the Assessment Commissioner
(Judicial), Range I. The said authority with reference to the material on
record found as follows:
allowance for weightage for after adjusting the opening and closing stock of
bricks outside kiln that 76000 and 2,08,000 respectively. The sale of burn
bricks was determined to be 13,68000 breaking allowance 58000 was given and the
sale was determined at 10,10,000 bricks.
the year 1983-84 the average sale was determined at Rs.280/- by the appellate
authority. Taking that into account the sale rate was fixed at Rs.320/- for the
year in question.
appeal was preferred by the assessee against the Assistant Commissioner's order
before the Tribunal. The Commissioner of Sales Tax also preferred appeal. Both
the appeals were taken up together. The Tribunal found that the rejection of
accounts was justified. Though reliance was placed on certain decisions of the Allahabad
High Court to contend that when books of accounts were produced at the time of
assessment which were free from defect, it cannot be held that they were not
maintained in the regular course of business, merely on the ground that at the
time of survey they were not produced. Tribunal found that that was not the
only reason for rejection of the accounts and other factors relating to rates
and low production were reflected. However, the sale of bricks was fixed at
nine lakh bricks. Accordingly the appeal filed by the assessee was partly
allowed and the revenue's appeal was dismissed.
filed revision application before the High Court. As noted above, by the
impugned judgment the learned Single Judge allowed the same.
support of the appeal learned counsel for the appellant submitted that the High
Court proceeded on erroneous premises to hold that the only ground for
rejection of books of accounts was non-production of books of accounts at the
time of survey. As elaborately dealt with by the Tribunal, that was not the
only ground. Even otherwise the High Court's view if accepted will render
Sections 12 and 13 of the Act redundant. It is also pointed out that Section 11
of the Act confers limited jurisdiction on the High Court to interfere only on
the question of law. The High Court should not have interfered with the
findings of fact while exercising the revisional jurisdiction.
learned counsel for the assessee on the other hand supported the order of the
shall first deal with the power of the High Court in dealing with the revision
petition. Section 11 of the Act reads as follows:
by High Court in special cases.
Any person aggrieved by an order made under sub-section (4) or sub-section (5)
of Section 10, other than an order under sub- section (2) of that section
summarily disposing of the appeal, or by an order passed under Section 22 by
the Tribunal, may, within ninety days from the date of service of such order,
apply to the High Court for revision of such order on the ground that the case
involves any question of law.
Any person aggrieved by an order made by the Revising Authority or an
Additional Revising Authority refusing to state the case under this section, as
it stood immediately before April 27, 1978, hereinafter referred to as the said
date, may, where the limitation for making an application to the High Court
under sub-section (4), as it stood immediately before the said date, has not
expired, likewise apply for revision to the High Court within a period of
ninety days from the said date.
Where an application under sub-section (1) or sub-section (3), as they stood
immediately before the said date, was rejected by the Revising Authority or an
Additional Revising Authority on the sole ground that the period of one hundred
and twenty days for making the reference, as specified in the said sub- section
(1), has expired, such applicant may apply for revision of the order made under
sub-section (2) of Section 10, to the High Court within sixty days from the
said date on the ground that the case involves any question of law.
The application for revision under sub- section (1) shall precisely state the
question of law involved in the case, and it shall be competent for the High
Court to formulate the question of law or to allow any other question of law to
Every application for making a reference to the High Court under sub-section (1)
or sub- section (3), as they stood immediately before the said date, pending
before the Revising Authority or an Additional Revising Authority on the said
date, shall stand transferred to the High Court. Every such application upon
being so transferred and every application under sub-section (4) as it stood
immediately before the said date, pending before the High Court on the said
date, shall be deemed to be an application for revision under this section and
disposed of accordingly.
Where the High Court has before the said date, required the Revising Authority
or an Additional Revising Authority to state the case and refer it to the High
Court under sub- section (4), as it stood immediately before the said date,
such authority shall, as soon as may be, make reference accordingly. Every
reference so made, and every reference made by such authority before the said
date in compliance with the requirement of the High Court under sub-section
(4), as it stood before the said date, shall be deemed to be an application for
revision under this section and disposed of accordingly.
Where the Revising Authority or an Additional Revising Authority has, before
the said date, allowed an application under sub- section (1) or sub-section
(3), as they stood immediately before the said date, and such authority has not
made reference before the said date, it shall, as soon as may be, make
reference, to the High Court. Every such reference, and every reference already
made by such authority before the said date and pending before the High Court
on the said date, shall be deemed to be an application for revision under this
section and dispose of accordingly.
Where an application under this section is pending, the High Court may, on an
application in that behalf, stay recovery of any disputed amount of tax, fee or
penalty payable, or refund of any amount due, under the order sought to be revised
that no order for the stay of recovery of such disputed amount shall remain in
force for more than thirty days unless the applicant furnishes adequate
security to the satisfaction of the Assessing Authority concerned.
The High Court shall, after hearing the parties to the revision, decide the
question of law involved therein, and where as a result of such decision, the
amount of tax, fee or penalty is required to be determined afresh, the High
Court may send a copy of the decision to the Tribunal for fresh determination
of the amount, and the Tribunal shall thereupon pass such orders as are
necessary to dispose of the case in conformity with the said decision.
All applications for revision or orders passed under Section 10 in appeals
arising out of the same cause of action in respect of the same assessment year
shall be heard and decided together.
that where any one or more of such applications have been heard and decided
earlier, if the High Court, while hearing the remaining applications, considers
that the earlier decision may be a legal impediment in giving relief in such
remaining application, it may recall such earlier decisions and may thereafter
proceed to hear and decide all the applications together.
The provisions of Section 5 of the Limitation Act, 1963, shall, mutatis
mutandis, apply to every application, for revision under this section.
For the purpose of this section, the expression "any person"
includes the Commissioner and the State Government." The parameters of
exercising power under the said provision were considered by this Court in
Commissioner of Sales Tax, U.P. v. Kumaon Tractors & Motors (2002 (9) SCC
379). It was inter alia noted as follows:
x x x x x It appears that the High Court ignored the provisions of Section 11
of the Trade Tax Act which confers limited jurisdiction to interfere with the
order of the Tribunal only on the question of law, that too the said question
of law is required to be precisely stated and formulated. Instead of deciding
the question of law, the High Court simpliciter re- appreciated the evidence
and ignored the material documents maintained and produced by the assessee,
that is, books of accounts, bills and Form 'C' submitted by it. In this view of
the matter, the impugned order cannot be sustained." Apart from the fact
that the High Court proceeded on erroneous premises to hold that rejection of
accounts was only on the ground of non-production of accounts at the time of
survey, the conclusions are also not otherwise sustainable.
12 and 13 of the Act are relevant for the purpose.
read as follows:
Accounts to be maintained by dealers.
Every dealer including a dealer exempted from tax on payment of fee under any
provision of the Act, shall keep and maintain a true and correct account
showing the value of the goods sold and bought by him, and in case the accounts
maintained in the ordinary course do not show the same in an intelligible form,
he shall maintain true and correct account in such form, as may be prescribed
in this behalf Provided that this section shall not apply to such dealers as
are not liable to taxation under this Act.
manufacturer liable to pay tax under this Act shall, in addition to the
accounts referred to in sub-section (1), maintain stock books in respect of raw
materials as well as the products obtained at every stage of production:
that in the case of any class of manufacturers, the aggregate of whose
turnover, as referred to in Clauses (a) to (d) of sub-section (2) of Section 3,
in an assessment year does not exceed five lakh rupees, the Commissioner, and
in any other case the State Government, may relax the requirements of this
sub-section subject to such conditions and restrictions as he or it may deem
fit to specify.
The accounts and the stock books required to be maintained under sub-section
(1) or sub- section (2) shall be preserved by the dealer or, as the case may
be, by the manufacturer for such period as may be prescribed."
"Section 13: Power to order production of accounts and powers of entry and
Any officer empowered by the State Government in this behalf may, for the
purposes of this Act, require any dealer to produce before him any book,
document or account relating to his business and may inspect, examine and copy,
the same and make such enquiries from the dealer relating to his business, as
may be necessary:
that books, documents and accounts of a period more than four years prior to
the assessment year shall not be so required, unless in any special case, for
reasons to be recorded, such officer considers it necessary.
All books, documents and accounts maintained by any dealer in the ordinary
course of his business, the goods in his possession, and his place of business
or vehicle shall be open to search and inspection at all reasonable times by
such officers, as may be authorised by the State Government in this behalf.
the officer authorized under sub-section (2) has reasonable grounds for
believing that any dealer is trying to evade liability for tax or other dues
under this Act and that anything necessary for the purpose of an investigation
into his liability may be found in any account, register or documents, he may
seize such account, register or document, as may be necessary. The officer
seizing the account, register or document shall forthwith grant a receipt for
the same and shall be bound to return them to the dealer or the person from
whose custody they were seized, within a period of ninety days from the date of
such seizure, after having such copies or extracts taken therefrom as may be
considered necessary; provided the dealer or the aforesaid person gives a
receipt in writing for the account, register or document returned to him. The
officer may, before returning the account, register or document, affix his
signature and his official seal at one or more places thereon, and in such case
the dealer or the aforesaid person will be required to mention in the receipt
given by him, -the number of places where the signature and seal of such
officer have been affixed on each account, register or document.
Notwithstanding anything contained in sub-section (3), the officer seizing any
account, register or other document under that subsection may for reasons to be
recorded by him in writing and with the prior approval of the Commissioner,
retain such account, register or document for such period not extending beyond
thirty days from the date of completion of all the proceedings under this Act
in respect of the years for which they are relevant, as he deems necessary.
For the purposes of this section, the officer authorised thereunder may enter
and search any place of business or vehicle, or any other building or place
where he has reason to believe that the dealer keeps or is, for the time being,
keeping, any books, registers, documents, accounts or goods relating to his
that no residential accommodation (not being a place of business-cum-residence)
shall be entered into, inspected or searched by such officer unless specially authorised
in this behalf by the Commissioner in writing.
An officer authorised to act under sub- section (2) (i) shall have the power to
seal the place of business or vehicle, or any box, almirah or other receptacle
found on such place of business or vehicle in which he has reason to believe
that any account, register or other documents or goods are kept or contained,
if the owner or the person in occupation or incharge of such place of business
or vehicle or box, almirah or other receptacle leaves the place or is not
available or fails or refuses to open it when called upon to do so;
where the owner or other person in occupation or incharge of the place of
business or vehicle or of the box, almirah or other receptacle found on the
place of business or vehicle is present but leaves the place or after an
opportunity having been given to him to do so, fails to open, as the case may
be, such place of business or vehicle or box, almirah or other receptacle, may
break open the same and prepare a list of the goods and documents found
[* * *] (4-C) No person shall tamper with any seal put under sub-section (4-A).
Any officer empowered under sub-section (1) may require any person, (a) who
transports or holds in custody, for delivery to or on behalf of any dealer, any
goods, to give any information likely to be in his possession in respect of
such goods or to permit inspection thereof, as the case may be, (b) who
maintains or has in his possession any account, book or document relating to
the business of a dealer, to produce such account, book or document for
Every person transporting goods by any public service motor vehicle or by any
vessel and every forwarding agent shall submit to assessing authority of the
area from which the goods are despatched, such returns, as may be prescribed,
of all goods transported or forwarded him. The Assessing Authority concerned
shall have the power to for and examine the books of account or other documents
in the possession of such transporter or agent with a view to verify the correctness
the returns submitted, and that transporter or agent shall be bound furnish the
books of account or other documents, when so called.
The provisions of Sections 100 and 165 of the Code of Criminal Procedure, 1973
shall, 'as far as may be', apply in relation to any entry, search or inspection
under this section, as they apply in relation any inspection or search under
the said Code.
calculating the period specified in sub-section the period during, which
proceedings under this Act remain stayed under the orders of any Court or
authority shall be excluded." Power to order production of accounts and
powers to entry and inspection are provided in Section 13. An officer empowered
by the State Government for the purpose of the Act may require any dealer to
produce before him any book, document of the business and may inspect and make
such enquiries from the dealer relating to his business as necessary. Section
7(3) empowers the Assessing Officer to make an assessment to the best of his judgment
if no return is submitted or return submitted by the assessee appears to him to
be incorrect or incomplete.
noted above, Section 12 mandates a dealer to keep and maintain true and correct
accounts. Obviously, the books of accounts are to be kept at the place of
business. If they are not kept at the place of the business, the power of
inspection in terms of Section 13 becomes redundant. Sub- section (4) of
Section 13 empowers the officer of the authority to enter and search any place
or any other building or place where he has reason to believe that the dealer
keeps or for the time being keeps any documents and accounts relating to his
expression "place of business" is defined in Section 2(c)(1). The
definition is an inclusive one and includes any place where a dealer keeps his
books of accounts.
being so, non-production of the books of accounts at the time of survey is a
factor which can be taken into consideration by the Assessing officer while
examining the return to find out whether the same is incorrect or incomplete.
of books of accounts at the time of assessment does not take away the effect of
non-production at the time of survey. Such non-production is a relevant factor
which can be considered by the Assessing Officer while considering whether the
books of accounts are to be accepted as to have been maintained in the regular
course of business.
incumbent upon the assessee to offer plausible explanation as to why they were
not produced at the time of survey. The burden is on him to show as to why no
adverse inference should be drawn.
at from any angle, the order of the High Court is indefensible and is set
appeal is allowed. No costs.