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Judgment
Radha Mohan Prasad, J.—This writ application is directed against the assessment order dated 10.7.1985 (Annexure 1) passed by the Assessment Sub-Committee of Arrah Agricultural Produce Market Committee, Bhojpur determining the amount payable by the Petitioner as market fees during the period 1980-81, 1981-82, 1982-83 and 1983-84 on the basis of the best judgment assessment in exercise of the power u/s 27A of the Bihar Agricultural Produce Markets Act, 1960 (hereinafter referred to as ''the Act'') and the consequential demand notice, contained in Annexure 2.
The case of the Petitioner is that the petitioning firm holds a licence to deal in mustard oil and vegetable oil and as such, maintained regular books of account for those commodities. It is stated that they also deal in a very small quantities in other items which is clear from the stock found at the time of inspection. For the purchase and sale made by the petitioning firm they are required to maintain account and submit return and pay market fee under the Act. The Petitioner claims to have filed the returns for the periods in question and deposited the Market fee also on the basis of the returns submitted by the firm. However, the Market Committee, after giving notice to them in terms of the provisions contained in Section 27A of the Act which deals with the accounts of purchase and sale and assessment of market fee, passed the impugned order (Annexure 1) on the basis of the best judgment assessment for payment of Rs. 1,44,000/- an additional market fee for the periods in question and Rs. 50,000/- as penalty and, accordingly, the impugned demand notice contained in Annexure 2 was issued.
The present writ application was initially filed assailing the validity of the said order mainly on the ground that the impugned assessment was made by a committee which did not have the required quorum. As the said question has already been answered against the Petitioner in a decision of this Court in the case of Ram Autar Santosh Kumar v. State of Bihar reported in 1986 PLJR 818, learned Counsel has not pressed it. The other question raised in the writ application is that the best judgment assessment made on the basis of the inspection report of 27th June, 1985 which does not relate to the periods in question is bad in law inasmuch as the authorities were not justified in relying upon the said report for making assessment for the period prior to that.
No counter affidavit had been filed earlier. However, when the matter was taken up last on 20.9.1996, Mr. Yadav, learned Counsel appearing for the Market Committee prayed for time to enable him to take instructions in the matter and file counter affidavit. Accordingly, the matter was adjourned. Today, a counter affidavit has been filed on behalf of Respondents No. 1 and 2 in which the aforementioned relevant facts have not been disputed. It is, however, stated that the question regarding quorum has now been settled by the Full Bench of this Court in the case of Ram Autar Santosh Kumar v. State of Bihar reported in 1986 PLJR 818 (FB). With respect to the other question it is stated that in spite of service of notice, the Petitioner did not produce necessary books of account for the relevant periods. It is stated that the petitioning firm is a trader and licence has been granted by the Market Committee to them for dealing in the agricultural produce. According to the Respondents, as per item No. (x) of the licence granted under Rule 98(i) of the Bihar Agricultural Produce Markets Rules, 1975 (hereinafter referred to as ''the Rules'') the petitioning firm is required to maintain books, register and records in the manner required by the Act, Bye-laws or as per the instructions given by the Market Committee. In paragraph 15 of the counter affidavit it is stated that the return submitted by the petitioning firm was not correct, as per inspection report arid, therefore, the assessment proceeding was drawn against the petitioning firm in terms of the provision contained in Section 27A of the Act. According to the case of the Respondents in the counter affidavit, although the Petitioner was given several opportunities to produce the necessary books of account of the relevant periods and also to appear and explain the return submitted by them, they neither produced the records nor they did appear and, a� such, the Assessment Sub-Committee proceeded to pass the impugned order on the basis of the best judgment assessment.
Mr. N.K. Agrawal, learned Counsel appearing for the Petitioner submitted that the impugned order on the best judgment assessment has been passed by the Assessment Sub-Committee merely on the basis of surmises, conjectures and on irrelevant consideration, besides against the statutory provisions as well as the settled principle of law. According to Mr. Agrawal the impugned order has been passed solely on the basis of the inspection report dated 27th June, 1985 which was submitted by the Secretary of the Market Committee on the basis of the alleged surprise inspection of the stock register of that date. According to the learned Counsel, in the absence of any other relevant material/evidence, the Committee was not justified in making exorbitant enhancement of the market fee and also imposing penalty over the same. It was submitted by him that the assessment authority was not justified in taking into consideration the aforementioned alleged information derived from the aforementioned inspection report as it did not relate to the period for which the fresh assessment has been made. In support of this learned Counsel placed reliance on a decision of this Court in the case of Laxmi Stores Vs. State of Bihar, . In the said case the Division Bench of this Court was dealing with the provisions of Section 18(1) of the Bihar Sales Tax Act which the provision relating to the best judgment assessment is in pari materia with the provisions contained in the Act.
Mr. K.P. Yadav, learned Counsel appearing for the Market Committee submitted that u/s 27A the Assessment Sub-Committee has been vested with the power to levy the fee u/s 27 of the Act on the basis of the return furnished under Sub-section (2) or where the trader fails to submit a return as prescribed in Sub-section (2) or the sub-committee has reason to believe that any such return is incorrect, it shall after giving a notice in Form ''C'' to the trader concerned require him on a date and at a time and place to be specified therein, to attend either in person or through an authorised representative or to produce or cause to be produced any account or other evidence on which the trader may rely in support of return to make the assessment. He further submitted that under Sub-section (7) of Section 27A of the Act if a trader fails to comply with all the terms of the aforementioned notice as contemplated under Sub-section (5) or if the accounts and other evidence produced by the trader are in the opinion of the Sub-Committee incorrect, incomplete or unreliable, either wholly or partly, the Sub-Committee has been vested with the power to, make assessment to the best of its judgment, the amount of market fee leviable on the trader. Under Sub-section (8) the Committee has also been vested with the power to impose penalty equal to the fee so levied. Thus, according to him, when despite repeated notices and opportunities given to the petitioning firm, they did not produce the relevant records and the books of account etc., the Committee was left with no option but to proceed to make assessment in terms of the provisions contained in Sub-section (7) on the basis of the best judgment assessment. It was also contended by Mr. Yadav that the conduct of the Petitioner has compelled the authority to make the best judgment assessment after taking into consideration the materials before it such as the inspection report which was submitted by the Secretary after the surprise inspection of the premises of the petitioning firm made by him. According to Mr. Yadav, there is no illegality or irregularity committed by the assessing authority in passing the impugned order as the Committee processeded to decide on the basis of the information gathered from the inspection report and this Court considering the conduct of the Petitioner should refuse to interfere with the impugned order in exercise of the discretionary jurisdiction of this Court under Article 226 of the Constitution of India.
I am unable to accept the submission of Mr. Yadav. It is true that a long assessment order has been passed but not on consideration of the material of the relevant period which has also not been disputed by Mr. Yadav, learned Counsel appearing for the Market Committee. The Committee passed the said order solely on the ba5is of the inspection report dated 27th June, 1985 which contained only the facts which were found on the date of inspection and the entry made in the stock register on the date of inspection. There is nothing in the order to indicate that during the inspection, the Secretary also inspected the books of account, stock register etc. relating to the periods in question. In the case of Laxmi Stores v. State of Bihar (supra) the Division Bench which was considering the scope of the best judgment assessment made under the provisions of the Bihar Sales Tax Act, 1959, which is similar to the provisions of the Market Act, held that:
the information which has come into the possession of the assessing authority and on the basis of which reasonable grounds may induce it to believe that there has been a case of escaped assessment must be in relation to, or in respect of the period of assessment. There is neither any presumption under the general law nor can anything be culled out from the provisions of the Act that an Assessee who is found to be dishonest in one year must be deemed to have been dishonest ever since he started his business. Thereafter, the term "information" appearing in Section 18(1) of the Act has to be in respect of the period under assessment and further clarified that certain books of account seized, during a surprise inspection of the Assessee''s business premises in January, 1964.
It was further held that:
the taxing authorities might be justified in drawing an inference that during the year 1963-64, the Assessee might reasonably be said to have suppressed sales even prior to the date which appeared in the seized books of account which were suppressed. But such a presumption could not be extended further back to a previous assessment year with regard to which or in respect of which there was no information in the possession of the assessing authority from which it could be satisfied that reasonable grounds existed, that the turnover of such previous assessment year had escaped assessment. The terminus a quo in such cases must be fixed at the beginning of the year under assessment.
In the said decision this Court held that there is neither any presumption under the general law nor can anything be culled out from the provisions of the Act that an Assessee who is found to be dishonest in one year must be deemed to have been dishonest ever since he started his business. The Court also found the term information appearing in Section 18(1) of the Sales Tax Act which, according to the Division Bench, has to be for the period under inspection.
In the instant case, the Assessment Sub-Committee has passed the impugned order on the basis of the best judgment assessment solely relying upon the report of the Secretary which is based on the materials subsequent to the periods in question and not in relation to the assessment years in question. This, in my opinion, cannot be said to be a relevant consideration for the purpose of best judgment assessment. Thus, in view of the aforementioned settled law, I ant constrained to hold that the assessment sub-committee was not justified in making assessment and imposing punishment, vide impugned order, solely on the basis of the report of the Secretary relating to the periods subsequent to the assessment years in question.
Accordingly, the impugned order is quashed. However, the Respondents will be at liberty to take fresh decision with respect to the periods in question in case they find some relevant material in support thereof, in accordance with law. If the notice is given to the Petitioner in regard to the same, the Petitioner shall fully co-operate and appear before the Market Secretary on the date fixed.
It is needless to add that in view of the aforementioned order, the point of limitation shall not come in the way of the authority in taking fresh decision, in accordance with law.
The Petitioner is directed to appear before the Market Secretary and produce the certified copy of this judgment within a month from today, where after it will be open to the Market Secretary to proceed in the matter in accordance with law, in case some relevant materials are available and are considered fit and proper in the facts and circumstances of the case.
It appears that by virtue of order dated 17.12.1985, the Petitioner deposited Rs. 10,000/- (ten thousand) pursuant to the impugned assessment order during the pendency of this application. The Respondents are directed to make the necessary adjustment and/or revise the account, as the case may be, accordingly, after they take final decision afresh within two months of the receipt of a copy of this order.
In the result, the writ application is allowed, but without costs.