COMMISSIONER, SALES TAX, U.P., LUCKNOW versus M/S. GIRJA SHANKER AWANISH KUMAR

Citation: [1996] SUPP. 5 S.C.R. 640 · Decided: 09-09-1996 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
COMMISSIONER, SALES TAX, U.P., LUCKNOW 
v. 
MIS. GIRJA SHANKER AWANISH KUMAR 
SEPTEMBER 9, 1996 
[S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.] 
U.P. Sales Tax Act, 1948-Section 12(2}-Assessment of turnover 
where stock register not maintaine~Held, non- maintenance of stock not 
only technical qef ect-Wliere stock books not maintained, account books not 
C reliable-Tumover, therefore, to be detennined on best judgment of assessing 
authority. 
For the Assessment Year 1974-75, the respondent-assessee returned a 
total turnover of Rs. 1,74,948 which was enhanced to Rs. 10 lakhs by the 
Sales Tax Officer, and reduced to Rs. 5 lakhs in appeal. In further revision, 
D the account books of the assessee along with the disclosed turnover were 
accepted. In revision, a Single Judge of the High Court noticed that the 
assessee was a manufacturer but did not maintain any stock books as 
contemplated by Section 12(2) of the U.P. Sales Tax Act 1948 and so the 
account books were liable to ht~ rejected. But it held that this defect being 
E 
'technical', the turnover disclosed in the !lCcount books should be accepted 
and the turnover need not be determined afresh. 
The Revenue appealed against the High Court's Order. 
Allowing the appeal, this Court 
F 
HELD : 1. Non-maintenance of stock register is not only a technical 
defect. Section 12(2) of the U.P. Sales Tax Act mandates the dealer to maintain 
stock books in resped of raw materials and of products obtained at every stage 
of production. If such a stock book is not maintained, the account books are not 
reliable. If the account books are rejected, the turnover has to be determined 
G according to the best judgment of the assessing authority. (642-B-D] 
2. The estimated turnover of the dealer, as upheld in appeal, stands 
restored. (642-E] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4084 of 
H 1982. 
640 
.} 
COMMRSALESTAX v. GIRTASHANKARAWANISHKR [PARIPOORNAN,J.] 641 
From the Judgment and Order dated 7.5.81 of the Allahabad High A 
Court in S.I.R. No. 615 of 1980. 
R.C. Verma and R.B. Misra for the Appellant. 
S.S. Khandula for the Respondent. 
The Judgment of the Court was delivered by 
PARIPOORNAN, J. The Commissioner of Sales Tax, Uttar Pradesh, 
Lucknow, has filed this appeal after obtaining special leave by order of this 
Court (order dated 10)2.1982). The appeal is filed against the judgment 
of the learned single Judge of Allahabad High Court rendered in S.T.R. 
B 
c 
No. 61530 dated 7.5.1981. The respondent-assessee carried on business in 
silver ornaments, utensils and scraps. For the Assessment Year 1974-75 he 
returned a total turnover of Rs. 1,74,948 which was enhanced to Rs. 10 
lakhs by the Sales Tax Officer, but reduced to Rs. 5 lakhs in appeal by 
A.G. (J.). In further Revision, the account books of the assessee along with D 
the disclosed turnover were accepted. The said order was assailed by the 
Revenue before the Allahabad High Court in Sales Tax Revision No. 
615/80. The learned single Judge held that the account books of the 
assessee were liable to be rejected. But, he took the view that the defect 
aforesaid being "technical" in nature, the turnover disclosed in the account E 
books should be accepted, and there was no need tri' determine the 
turnover afresh. Aggrieved by the aforesaid decision the Revenue has come 
up in appeal. 
2. We heard counsel. Admittedly, the shop of the assessee w.as 
inspected on 22.2.1975. Ca~h amounting to Rs. 3,000 and certain slips were F 
found. There was also variance in the stock at the time of survey. The 
Additional Judge (Revision) directed the acceptance of the account books 
of the assessee, since according to him the rejection of accounts Was based 
on suspicion . 
. 3. The learned Judge of the High Court noticed that the assessee is G 
a manufacturer and did not maintain any book as contemplated by Section 
12(2) of the Uttar Pradesh Sales Tax Act, 1948 (hereinafter referred to as 
('the Act') and so the account books were liable to be rejected. Even so, 
he took the view that the defect being technical in nature, the turnover 
disclosed in the account books should be accepted and that the turnover H 
642 
SUPREME COURT REPORTS (1996] SUPP. 5 S.C.R. 
A need not be determined afresh. We are of the view that the approach made 
by the learned Judge of the High Court is patently erroneous. 
4. The keeping of a stock register, especially in the case of a manufac-
turer, is of great importance. It is a means 

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