RAMASWAMI, J.
The respondent (hereinafter referred to as the "assessee") is a dealer in various commodities including coffee powder at Theni, Madurai District. For the assessment year 1959-60 the Commercial Tax Officer assessed him on a taxable turnover of Rs. 17, 40, 960.52 P. under the Madras General Sales Tax Act, 1959 (hereinafter referred to as the "Act") at various rates. His turnover in respect of French coffee sales was Rs. 50, 848.28 P. Out of this amount it was the case of the assessee that the local sales were Rs. 41, 154.32 P. and outside sales were Rs. 9, 693.93 P. The assessee further contended that the local sales of French coffee were made from his local purchases of coffee seeds amounting to Rs. 57, 952.22 P. and that outside sales of French coffee seeds came out of his outside purchases of coffee seeds amounting to Rs. 26, 581.22 P. The Commercial Tax Officer (Assessments), Madurai, assessed him on the turnover of Rs. 28, 817.46 P. at 5 per cent. single point holding that it represented first sales of coffee powder in the State. The assessee preferred an appeal to the Appellate Assistant Commissioner of Commercial Taxes and contended that he was not the last purchaser in the State and that he was not liable to pay tax on French coffee turnover of Rs. 28, 817.46 P. coming under item 33 of the First Schedule to the Act, as the coffee portion of the French coffee had already suffered tax in the State under item 32. The Appellate Assistant Commissioner found that the assessing officer had assessed on some proportion adopted by him with reference to his purchases made from outside the State. The Appellate Assistant Commissioner remanded the matter to the Commercial Tax Officer (Assessments) for a fresh assessment. The assessee took the matter in further appeal to the Sales Tax Appellate Tribunal which held that this item of turnover should be deleted from the taxable turnover in view of the decision of the Madras High Court in S. Rathinaswamy Chettiar v. The State of Madras ([1962] 13 S.T.C. 419). The State of Madras moved the High Court in revision but the revision petition was dismissed by the High Court in limine on 16th April, 1964, in Tax Case No. 84 of 1964.Section 3(2) of the Act states as follows :
"Notwithstanding anything contained in sub-section (1) in the case of goods mentioned in the First Schedule, tax under this Act shall be payable by a dealer, at the rate and only at the point specified therein on the turnover in each year relating to such goods whatever be the quantum of turnover in that year."
Items 31, 32 and 33 of the First Schedule state :
"Item 31. Chicory At the point of first sale in the State. 5%
Item 32. Coffee, that is to say, any one of the forms of coffee such as coffee beans, coffee seeds (raw or roastde), coffee powder, but not including coffee drink. ditto 5%
Item 33. French coffee (if the coffee portion of the French coffee has not already suffered tax in this State under item 32) ditto 5%"
Section 10 provides :
"The "burden of proving that any dealer or any of his transactions is not liable to tax under this Act shall lie on such dealer"."
Section 40 reads as follows :
"Every person registered under this Act, every dealer liable to get himself registered under this Act, and every other dealer who is required so to do by the prescribed authority by notice served in the prescribed manner, shall keep and maintain a true and correct account and such other record as may be prescribed in any of the languages specified in the Eighth Schedule to the Constitution, or in English, showing such particulars as may be prescribed; and different particulars may be prescribed for different classes of dealers."
Rule 26 of the Madras General Sales Tax Rules, 1959, made by the Government of Madras in exercise of the powers conferred by section 53 of the Act provides as follows :
"26. (1) Every person registered under the Act, every dealer liable to get himself registered under the Act and every other dealer who is so required by an assessing authority by notice served in the prescribed manner shall keep and maintain a true and correct account in any of the languages specified in the Eighth Schedule to the Constitution or in English showing the goods produced, manufactured, bought or sold or supplied or distributed by him, and the value thereof separately together with the voucher.(2) Every such dealer shall keep separate sales accounts for different goods liable to tax at different rates and stages.
(9) Every wholesale dealer, importer and manufacturer shall maintain stock accounts of goods dealer in by him."
In S. Rathinaswamy Chettiar v. The State of Madras ([1962] 13 S.T.C. 419), the assessee, a dealer in bullion and jewellery, sold bullion purchased both from dealers and persons other than dealers. The total sales turnover of bullion came to Rs. 5, 63, 000 out of which the assessee claimed that a turnover of Rs. 3, 80, 918 representing sales of bullion purchased from dealers, was exempt from tax as second sales inasmuch as a presumption should be raised in his favour that the entire quantity covered by second sales was included in the sales turnover of Rs. 5, 63, 000. The assessee did not maintain a separate account of the gold sold from out of the stocks obtained from dealers or licensees. The claim of the assessee was rejected by the Tribunal but it was held by the High Court that although the assessee had not maintained a separate account, such an account would be only a make-believe one. What the law required was that there should be no escape of tax. As the quantity bullion sold by the assessee exceeded the quantity purchased from other dealers, the natural presumption arose that a person engaged in a transaction would presumably follow that course which took him out of the taxable category rather than otherwise.
Therefore the turnover of Rs. 3, 80, 918 should, under the law, be deemed to relate to the quantity of gold which the assessee had purchased from other dealers and it was exempt from tax as turnover representing second sales of bullion.
On behalf of the appellant it was contended by the Advocate-General that the judgment of the Madras High Court in S. Rathinaswamy Chettiar v. That State of Madras ([1962] 13 S.T.C. 419) requires reconsideration in view of the express statutory provisions in section 10 of the Act that the
"burden of proving that any dealer or any of his transactions is not liable to tax under this Act shall lie on such dealer"
. It was also submitted that the provisions of section 40 of the Act and rule 26(1), (2) and (9) are mandatory in character and the decision of the Madras High Court which was given under the
Madras General Sales Tax Act, 1939 (Madras Act 9 of 1939) requires to be reconsidered, and there was no scope for taking into account any question of hardship. In our opinion, the argument on behalf of the appellant is well-founded and must be accepted as correct. The earlier decision of the Madras High Court in
S. Rathinaswamy Chettiar v. The State of Madras ([1962] 13 S.T.C. 419) requires to be reconsidered in view of the statutory provisions of the new Act, i.e., The
Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959). We consider therefore that the judgment of the Madras High Court should be set aside and the case should be remanded. But it is also necessary, in this case, to set aside the order of the Appellate Tribunal dated May 15, 1963, so far as it concerns the turnover of the assessee relating to French coffee. There is no clear finding by the Appellate Tribunal how much coffee portion of the French coffee has already suffered tax in the State under item 32 and the language of the order of the Appellate Tribunal with regard to the non-taxability of French coffee under item 33 is obscure.For these reasons we hold that this appeal should be allowed. The order of the Madras High Court dated April 16, 1964, in Tax Case No. 84 of 1964 is set aside as also the order of the Sales Tax Appellate Tribunal dated May 15, 1963, in Appeal No. 425 of 1962, and the case is remanded to the Sales Tax Appellate Tribunal for hearing the appeal afresh and determining it in accordance with law. We direct that, in the circumstances of the case, the appellant will pay the costs of this appeal.
Appeal allowed.