Dipak Kumar Sen, J.
1. Under Section 21(1) of the Bengal Finance (Sales Tax) Act, 1941 (hereinafter referred to as the said Act), the West Bengal Commercial Taxes Tribunal has drawn up a statement of case and has referred the following questions:
(1) Whether, in the facts and circumstances of the case, the deduction claimed under Section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act, 1941, for sales to the registered dealers, namely, M/s. Reliance Supply Agency and Bharati Distributors, aggregating to Rs. 1,16,425 should have been allowed ?
(2) Whether or not upon a true and correct interpretation of Clause (iv) of Section 14 of the Central Sales Tax Act, 1956, 'wire' and 'wire-nails' should be considered as goods of special importance within the meaning of that section ?
2. The facts found and/or admitted in the proceedings below are shortly as follows : M/s. Hind Wire Industries, the assessee, is a manufacturer of wire and wire-nail. In respect of sales tax assessment for the year ended Asar Sudi 1, 2018, corresponding to 14th June, 1961, the assessee disclosed a gross turnover of Rs. 50,70,886.51 and claimed deduction under Section 5(2)(a)(ii) of the said Act, inter alia, in respect of two registered dealers, namely, M/s. Reliance Supply Agency and M/s. Bharati Distributors.
3. The Commercial Tax Officer found that the registration certificate of M/s. Reliance Supply Agency had been cancelled on 19th November, 1962 and that since 31st March, 1958, the said registered dealer had defaulted in submission of its own sales tax returns. On 1st February, 1961, its books of account were seized.
4. The registration certificate of M/s. Bharati Distributors had also been cancelled on 15th November, 1960. A memorandum dated 14th October, 1960, addressed to the said registered dealer came back unserved with the remark 'left' and its business premises were found to be closed on inspection on 18th October, 1960 and 4th November, 1960.
5. On the basis of the aforesaid, the Commercial Tax Officer found that the Bharati Distributors had ceased to carry on bonafide business long before the relevant year and that the transactions of the assessee in respect of the said dealers were paper transactions entered into only to cover up sales to unregistered parties. Accordingly, the claim under Section 5(2)(a)(ii) in respect of the said two dealers were disallowed.
6. Being aggrieved, the assessee preferred an appeal to the Assistant Commissioner of Commercial Taxes, Calcutta, who, however, upheld the order of the Commercial Tax Officer.
7. A revision was filed by the assessee before the Commissioner of Commercial Taxes from the said order of the Assistant Commissioner. The Additional Commissioner, who disposed of the said revision found, inter alia, that in the transactions by and between the assessee and the said two registered dealers, the proceeds were received entirely in cash although large sums were involved. He also confirmed the findings that the registered dealers were not carrying on genuine business for some time-the certificates of registration of both the said dealers were ultimately cancelled, Bharati Distributors were found to be untraceable, its business premises were found to be closed- and that the sales were made to various unregistered dealers but with a view to avoid the incidence of sales tax the proceeds were shown to have been received from the said two registered dealers against their declaration forms. The Additional Commissioner called for the stock book entries showing the actual transfer of stock in favour of the said two registered dealers but the assessee failed to produce the same.
8. A memorandum of the Commissioner of Sales Tax, being Memorandum No. 14091 C. T. dated 1st December, 1959, directing that wires, galvanised barbed wires and wire-nails were to be considered as articles included in Section 14(iv) of the Central Sales Tax Act, 1956 and, therefore, not subject to the State sales tax was produced by the assessee before the Additional Commissioner.
9. The Additional Commissioner declined to interfere with the order, against which revision was sought, on any of the grounds urged.
10. On a final revision the matter came up before the Board of Revenue. The Additional Member of the Board noted the following salient facts :
(a) The transactions were on cash basis though the amounts involved were heavy.
(b) The registered dealers were found not engaged in genuine business and their registrations were cancelled eventually.
(c) Evidence regarding actual transfer of stocks to the registered dealers could not be produced before the Additional Commissioner.
11. On the basis of the aforesaid, the Additional Member was of the opinion that the transactions were contrary to normal trade practices and suspicious. Such suspicion was based on facts and constituted sufficient grounds for disallowing the exemption.
12. The Additional Member also held that wires and wire-nails did not come within Section 14(iv) of the Central Sales Tax Act. The revision petitions of the assessee were rejected.
13. The present reference has been initiated at the instance of the assessee from the aforesaid order of the Board of Revenue.
14. Mr. S.R. Sen, learned counsel for the assessee, did not press question No. (2) on instruction. Accordingly, we decline to answer the same. On question No. (1), Mr. Sen contended that on the facts found the authorities had no ground whatsoever to disallow the deduction claimed under Section 5(2)(a)(ii) of the said Act. He contended further that it had been found that the assessee had sold the goods to dealers who were registered at the material time who had also supplied declaration forms. The fact that the certificates of the said dealers were subsequently cancelled was not relevant to determine whether the assessee was entitled to exemption under the said section.
15. In support of his contentions, Mr. Sen cited a decision of the Supreme Court in Gopiram Bhagwandass v. State of Bihar [1971] 28 S.T.C. 322 (S.C.). This is a case under the Bihar Sales Tax Act, 1947. The facts here were that the assessee sought to deduct certain amounts from the total turnover on the ground that sales had been made to registered dealers. The declarations from the said dealers were produced. The Additional Superintendent of Sales Tax disallowed the deductions on the ground that the said registered dealers were bogus and had not been shown to be genuine and observed that the assessee had failed to exercise the required degree of diligence and had not taken adequate steps to satisfy that the transactions were with genuine dealers. The Additional Superintendent held further that the declarations could not be said to be true. On appeal the Appellate Commissioner held that there was no evidence on record to suggest that the assessee had exercised ordinary prudence in trying to find out whether the purchasing dealers were firms in existence. On further appeal the Commercial Taxes Tribunal held that the assessee had not exercised proper diligence and satisfied itself about the transactions and, therefore, its claim for deduction could not succeed. A petition to the High Court asking for questions of law to be referred was rejected. On the aforesaid, the Supreme Court held that the orders of the departmental authorities, including the Tribunal, disclosed that prima facie the assessee had complied with the requirements of the statute and the Rules, for the purpose of claiming deductions. Whether, in the event of the purchasing dealers being found to be bogus and fictitious persons, the assessee would lose the benefit of the deductions claimed by him in the absence of any collusion or mala fides would be a question of law and would require examination by the High Court. The Supreme Court allowed the appeals of the assessee and set aside the order of the High Court. It was ordered that the High Court would direct the Tribunal to state a case and refer the questions.
16. Mr. Sen also cited a decision of this court in Jugal Kishore Radhakishan v. Additional Member, Board of Revenue [1978] 41 S.T.C. 250. This decision was cited for the propositions as follows:
(a) When an assessee claims deduction under Section 5(2)(a)(ii) of the said Act and files declaration forms in support of his claim, he has discharged his onus and the onus of proving that the transaction is not genuine shifts to the Commercial Tax Officer.
(b) Production of declaration forms raises a strong presumption in support of the assessee's claim for deduction.
(c) This, however, is not conclusive and it will be open to the Commercial Tax Officer to rebut the presumption.
(d) The mere fact that certificates of registration of the purchasing dealers had been cancelled subsequent to the dates of the transaction could not have any retrospective effect so as to affect the legality or validity of the transactions of sale.
17. Mr. Sen lastly cited Jasodalal Ghosal Pvt. Ltd. v. Commercial Tax Officer [1975] 35 S.T.C. 383, where similar propositions were reiterated by this court.
18. On the strength of the above authorities, Mr. Sen submitted that, in the instant case, the assessee had prima facie satisfied the conditions for claiming exemption under Section 5(2)(a)(ii) of the said Act and the onus which shifted on to the sales tax authorities were not properly discharged by them.
19. Mr. Sanjay Bhattacharya, learned counsel for the sales tax department, contended, on the other hand, that the findings of fact which had not been challenged were sufficient to entitle the authorities to reject the claim for deduction. He cited a decision of the Supreme Court in Commissioner of Income-tax, West Bengal II v. Durga Prasad More [1971] 82 I.T.R. 540 (S.C.), in support of his contentions.
20. It appears to us that the Commercial Tax Officer after considering the facts and circumstances came to the conclusion that the transactions in respect of which the assessee claimed exemption were paper transactions made to cover up sales to unregistered parties. This finding was confirmed by the Additional Commissioner who held that the sales were actually made to various unregistered dealers but were shown to have been made to alleged registered dealers. The Additional Member, no doubt, has not come to a similar finding found separately in his order, but he did not in any way negative the findings of the authorities below.
21. In view of the aforesaid findings and in view of the form in which the question has been referred, it is not possible for us to investigate further into the matter in order to ascertain whether the sales tax authorities acted on sufficient evidence or whether their conclusion was perverse or based on irrelevant material. The finding, as we have already noted, remains undisturbed that the sales in question were in fact made to unregistered parties.
22. The cases cited by Mr. Sen does not take the matter any further inasmuch as no question has been raised as to whether the sales tax authorities discharged their burden or rebutted the prima facie case of the assessee. There were facts before the authorities on which a conclusion adverse to the case of the assessee could be made.
23. For the reasons above, we answer question No. (1) in the negative and in favour of the sales tax authorities. In the facts and circumstances of the case, there will be no order as to costs.
24. In conclusion, we feel it necessary to record some observations about the statement of case drawn up in the instant case. None of the orders passed at various stages of the proceedings have been mentioned or referred to in the statement. Relevant and material facts have not been set out. Conclusions and findings of fact by the Board are also absent and no distinction appears to have been made between the fact admitted or found, the conclusions of fact deduced therefrom and the conclusion of the Board on law on which the finding is based. Only part of the arguments advanced at the final hearing before the Board have been set out in the statement.
25. The Act has been in force since 1941 and it is expected that after over 30 years, the authorities concerned would be sufficiently aware as to what a statement of case should contain. Statements drawn up by the Income-tax Appellate Tribunal may serve as useful guides.
26. We expect that the authorities concerned will take note of these observations and take steps so that in future proper statements are drawn up. This will lead to better utilisation of judicial time.
C.K. Banerji, J.