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2009 DIGILAW 849 (ORI)

STATE OF ORISSA v. BANITA

2009-10-30

C.R.DASH, I.MAHANTY

body2009
JUDGMENT C. R. DASH, J. - The question referred to by the Orissa Sales Tax Tribunal under section 24(1) of the Orissa Sales Tax Act, 1947 (before amendment by Act 8 of 2000) runs thus : "Whether, on the facts and in the circumstances of the case, learned Sales Tax Tribunal is justified to conclude that the assessee has no dealing on pure silk sarees merely because such pure silk sarees costs Rs. 250 per piece during that period and thereby annulling the assessment made for the year 1986-87 under section 12(8) of the Orissa Sales Tax Act, 1947 which is contrary to the facts admitted by the assessee ?" In view of the amendment of the Orissa Sales Tax Act, 1947 (hereinafter referred to as, "the Act"), the reference numbered earlier as SJC No. 131 of 1995 has been registered as revision and renumbered as TREV No. 120 of 2001. It is submitted at the Bar that irrespective of the nomenclature, an order of the Tribunal can be impugned before the High Court under section 24 of the Act only on the ground that the Tribunal has either failed to decide or decided erroneously any question of law. Such being the admitted position, the question of law raised in the reference as quoted supra is reiterated before us by Mr. R. P. Kar, learned counsel for the Revenue in course of hearing of this revision. The facts relevant to the question referred to supra may be stated in short. On the basis of new case report No. 42 dated September 22, 1986 submitted by the Inspector of Sales Tax, Vigilance Wing, Cuttack (hereinafter referred to as "Inspecting Officer") assessment proceedings under section 12(5) of the Act for three assessment periods, viz., 1984-85, 1985-86 and 1986-87 were initiated against the opposite - party. This revision is concerned with the assessment period 1986-87 only. The Inspecting Officer visited the business premises of the opposite - party on August 7, 1986. He happened to detect 39 pieces of pure silk sarees (which are the subject-matter of dispute in the present revision) among other articles in the stock of the opposite - party kept for sale. This revision is concerned with the assessment period 1986-87 only. The Inspecting Officer visited the business premises of the opposite - party on August 7, 1986. He happened to detect 39 pieces of pure silk sarees (which are the subject-matter of dispute in the present revision) among other articles in the stock of the opposite - party kept for sale. In course of the inspection, the Inspecting Officer recorded a statement of the opposite - party who is alleged to have admitted that there were 39 pieces of pure silk sarees in the stock for sale which he (opposite - party) sells at Rs. 250 per piece. The inspecting officer on the basis of the aforesaid statement of the opposite - party and other materials collected by him during inspection submitted the new case report No. 42 dated September 22, 1986 alleging suppression of regular business transaction of embroidery sarees and pure sarees by the opposite - party. In course of assessment contents of new case report was confronted to the opposite - party. The opposite - party denied to have any dealings in pure silk sarees during the relevant period under assessment, i.e., 1986-87. He also produced his books of account before the assessing officer in course of assessment and explained that though he (opposite - party) is dealing mainly in cotton saree and other artificial silk sarees, he is using the term "pure silk" like other fellow businessman to attract consumers. The learned assessing officer on consideration of the material on record eschewed the explanation offered by the opposite - party and held him guilty of suppression during the relevant assessment period, i.e., 1986-87 on the basis of the following materials : (I) admission by the opposite - party before the Inspector of Sales Tax (Vigilance) on August 7, 1986 to the effect that he deals in pure silk sarees. (II) detection of 39 pieces of pure silk sarees by the aforesaid Inspecting Officer on physical verification of stock-in-trade in the business premises of the opposite - party. (III) sale memos produced by the opposite - party showing sale price of each sarees which varies between Rs. 235 to Rs. 860. The opposite - party assailed the order of the assessing officer in first appeal before the learned Assistant Commissioner, Commercial Taxes who confirmed the order appealed so far as the assessment year 1986-87 is concerned. (III) sale memos produced by the opposite - party showing sale price of each sarees which varies between Rs. 235 to Rs. 860. The opposite - party assailed the order of the assessing officer in first appeal before the learned Assistant Commissioner, Commercial Taxes who confirmed the order appealed so far as the assessment year 1986-87 is concerned. The opposite - party then preferred a second appeal before the Sales Tax Tribunal. The Tribunal on consideration of the materials on record held thus : "... As regards the assessment for the year 1986-87 is concerned the assessment depends on the fact of detection of 39 numbers of saree found in the stock of the dealer. On examination of the saree I feel that the same are not of pure silk made. Besides this an enquiry was caused to ascertain the lowest price of pure silk saree during the year 1986-87 and it was ascertained that during the year 1986-87 pure silk sarees were not available in the market at a cost of Rs. 250 per piece. In view of this I feel that merely because the words 'pure silk' were printed on the body of the sarees, the nature of sarees cannot be changed from the artificial silk saree to pure silk saree particularly when the price was Rs. 250 only. Law envisages that tax be imposed on pure silk saree but not on artificial silk saree. In view of this there is no material to conclude that the dealer was carrying on business in pure silk saree and as such it would not be proper to assess him to tax for possession of artificial silk saree only. 250 only. Law envisages that tax be imposed on pure silk saree but not on artificial silk saree. In view of this there is no material to conclude that the dealer was carrying on business in pure silk saree and as such it would not be proper to assess him to tax for possession of artificial silk saree only. I am therefore inclined to accept the contention of the learned advocate and accordingly the taxable turnover determined by the forums below for imposition of tax during the year 1986-87 is also annulled." It is pertinent to mention here that in course of hearing of the second appeal learned counsel appearing for the dealer (present opposite - party) produced before the Tribunal one pure silk saree and one piece of saree found by the Inspecting Officer on the date of his inspection, i.e., August 7, 1986 and he advanced the submission that 39 pieces of sarees alleged to be of pure silk make are only artificial silk sarees with the label "pure silk", and such a course had been adopted by the dealer (opposite - party here) for promotion of sale only. The learned Tribunal on inspection and comparison of both the pieces of sarees found that the disputed sarees are much more inferior in quality compared to the pure silk saree. On such facts, inter alia, learned Tribunal seems to have passed the order quoted supra. The statement of case by the Tribunal for reference has dwelt solely on the admission by the opposite - party before the Inspecting Officer. The learned Tribunal in the impugned order on the other hand has come to the conclusion that the opposite - party was not dealing in pure silk sarees during the relevant assessment period, i.e., 1986-87. Such conclusion is based on following materials : (i) admitted fact that the opposite - party was selling the disputed sarees at Rs. 250 per piece. (ii) as ascertained from the market, pure silk saree was not available at Rs. 250 per piece in the market during the relevant period. (iii) on physical verification it was found by the Tribunal that the disputed saree is much more inferior in quality compared to the pure silk saree. Mr. 250 per piece. (ii) as ascertained from the market, pure silk saree was not available at Rs. 250 per piece in the market during the relevant period. (iii) on physical verification it was found by the Tribunal that the disputed saree is much more inferior in quality compared to the pure silk saree. Mr. R. P. Kar, learned counsel for the Revenue, submits that the order passed by the Tribunal is perverse inasmuch as learned Tribunal has not taken into consideration the admission made by the opposite - party before the inspecting officer on August 7, 1986 and factum of detection of 39 pieces of pure silk sarees in course of physical stock-in-trade from the business premises of the opposite - party. It is further contended by Mr. Kar that in reaching his conclusion the Tribunal has erred in taking into consideration the make and texture of sarees produced by the opposite - party before him in course of hearing of the second appeal after eight and half years of the detection by the Inspector of Sales Tax (Vigilance). Mr. M. Agrawal, learned counsel for the opposite - party oppugns such contentions on the ground that the alleged admission of the opposite - party before the inspecting officer is not sacrosanct inasmuch as from the very beginning the opposite - party has been consistent in his assertion that he is not dealing in pure silk sarees. He further submits that the sarees detected by the inspecting officer from the business premises of the opposite - party cannot be made exigible to tax as pure silk saree, without further materials to prove that those sarees are actually pure silk sarees but, however, there is no material worth the credence to conclude that the sarees kept for sale by the opposite - party on the relevant date of inspection are pure silk sarees. He further submits that the Tribunal being the final forum of facts, has got every authority and jurisdiction to satisfy itself about the legality of the assessment; the saree in question was produced by the opposite - party before the Tribunal in presence of the State Representative and Tribunal in presence of State Representative without objection by him, has examined the saree; the Tribunal has further compared that saree with a pure silk saree and has come to the conclusion that the saree alleged to be detected from the stock-in-trade of the opposite - party is of inferior quality and is not a pure silk saree; and above all in reaching such a conclusion, the Tribunal has further relied on the minimum price of pure silk saree available in the market then. In view of such fact, it is submitted by learned counsel for the opposite - party that the conclusion arrived at by the learned Tribunal is not perverse and there subsists no question of law to answer the reference. The honourable Supreme Court in the case of Sree Meenakshi Mills Ltd., Madurai v. Commissioner of Income-tax, Madras [1957] 31 ITR 28; AIR 1957 SC 49 while dealing with section 66 of the Income-tax Act, 1922 has discussed in detail as to when a reference to the court can be made. The position as enunciated by the honourable Supreme Court in the case supra for making a reference under section 66 of the Income-tax Act may be summed up thus : (1) When the point for determination is a pure question of law such as construction of a statute or document of title, the decision of the Tribunal is open to reference to the court under section 66(1). (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those findings is a question of law which can be reviewed by the court. (2) When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final its decision as to the legal effect of those findings is a question of law which can be reviewed by the court. (3) A finding on a question of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse, and (4) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact; Viewed in the light of the aforesaid proposition of law (which also applies to the present case) it is to be seen whether the question referred by the Tribunal is one of fact or it is a mixed question of fact and law as asserted by Mr. R. P. Kar, learned counsel for the Revenue. In reaching the conclusion that the opposite - party had dealings in pure silk sarees learned assessing officer has relied on the material fact as quoted in paragraph 5 supra. So far as detection of 39 pieces of pure silk sarees by the inspecting officer on physical verification of stock-in-trade in the business premises of the opposite - party on the relevant date is concerned, there is admittedly no material to sustain the conclusion that those are pure silk sarees except the admission by the opposite - party before the inspecting officer on August 7, 1986. The assessing officer has relied on some sale memos produced by the opposite - party before him showing sale prices of sarees sold by him that vary between Rs. 235 to Rs. 860. There is, however, nothing on record to show or suggest that the opposite - party has sold any saree like the bulk detected with the label of "pure silk" saree at a price more than Rs. 250 per piece. The finding of the assessing officer on this aspect regarding variance of sale price of sarees between Rs. 235 to Rs. 860 is too far-fetched inasmuch as there is nothing to connect the sale memos with a higher price tag with the sale of sarees like the bulk detected with the label of "pure silk". 250 per piece. The finding of the assessing officer on this aspect regarding variance of sale price of sarees between Rs. 235 to Rs. 860 is too far-fetched inasmuch as there is nothing to connect the sale memos with a higher price tag with the sale of sarees like the bulk detected with the label of "pure silk". In view of such position, the findings of the learned assessing officer have no basis except the alleged admission of the opposite - party recorded on August 7, 1986 and it is fairly submitted by Mr. R. P. Kar, learned counsel for the Revenue that the aforesaid alleged admission by the opposite - party before the inspecting officer is the sole basis of assessment and the same is also the sole basis of reference to this court by the Tribunal as found from the question for reference. The learned authorities or for a below taking into consideration the number of facts and especially the admission of the opposite - party as recorded by the inspecting officer on August 7, 1986 have come to two divergent conclusions. As discussed supra making the aforesaid statement/admission of the opposite - party the sole basis for consideration, learned assessing officer and the first appellate authority have concluded that the opposite - party was dealing in pure silk sarees during the relevant period of assessment, i.e., 1986-87. The Tribunal on the other hand, taking some more materials as discussed supra into consideration has held that the opposite - party was not dealing in pure silk sarees during the relevant period. Such conclusions are the outcome of inference from a bundle of facts, the probative effect of which we refrain ourselves from discussing in view of the nature of the present lis and scope of our revisional jurisdiction. The resultant inference as to whether the opposite - party was dealing in pure silk saree during the relevant period of assessment is itself is a question of fact. It is well-settled in law as discussed by the honourable Supreme Court in the case of Sree Meenakshi Mills Ltd. [1957] 31 ITR 28; AIR 1957 SC 49 that where a finding is given on a question of fact based upon any inference from facts, that is not always a question of law. It is well-settled in law as discussed by the honourable Supreme Court in the case of Sree Meenakshi Mills Ltd. [1957] 31 ITR 28; AIR 1957 SC 49 that where a finding is given on a question of fact based upon any inference from facts, that is not always a question of law. The proposition that an inference from facts is one of law will be correct in its application to mixed questions of law and fact, but not to pure questions of fact. The assertion by Mr. R. P. Kar, learned counsel for the Revenue, to the effect that the Tribunal has reached the conclusion on no evidence does not commend to us in view of our discussion supra. The further assertion by the Revenue that the Tribunal has erred in acting ad libitum in reaching the conclusion by comparing one of the alleged detected sarees with one of the pure silk sarees produced by the learned counsel for the opposite - party before the Tribunal is also too far-fetched inasmuch as such a course has been adopted by the Tribunal to reach a just decision about the legality of the assessment order and such fact has been collected and verified in presence of the representative of the Revenue in course of hearing admittedly, without any objection by the State Representative present at the time of hearing of the second appeal. In view of such fact it cannot also be said that the Tribunal has stepped out of its jurisdiction in the matter. Another peculiar feature which rather reinforces our view is the statement of the reference by the learned Tribunal which is entirely based on facts only and the question that is raised in the reference is nothing but inference of facts from facts as suggested by the question of reference formulated by the Tribunal. Further learned Tribunal in formulating the question for reference has acted as if it has sat to review the earlier order, forgetting to find out as to whether any question of law actually arises out of the order impugned. In view of our discussion supra we are of the view that the reference made by the Tribunal and for that matter the contentions raised by the learned counsel for the Revenue in the revision are pure question of facts and they are not mixed questions of fact and law. In view of our discussion supra we are of the view that the reference made by the Tribunal and for that matter the contentions raised by the learned counsel for the Revenue in the revision are pure question of facts and they are not mixed questions of fact and law. In the result, the reference is discharged and for that matter the revision is dismissed. I. MAHANTY, J. - I agree.