Purchase-tax liability on paddy shortage sustained where principal's verification showed unaccounted purchases.

Revenue's tape-measure or sampling verification was not treated as a sound basis for imposing tax, but the measurement made on behalf of the Food Corporation of India was given greater weight because it showed a shortage of 61 quintals of paddy. On that footing, and in light of the assessee's practice of back-calculating purchase tax and accepting that the shortage reflected paddy purchased but not matched by corresponding rice sales, the shortage was treated as unaccounted purchase. Purchase-tax liability was therefore sustained on the 61 quintals of paddy, and the demand was upheld.

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Issues: Whether there was sufficient material to hold the assessee liable for the tax demand, and whether purchase tax could be levied on the shortage of 61 quintals of paddy.

Analysis: The verification made by the revenue officials was only by a tape-measurement or sampling method and was not treated as a sound basis for imposition of tax. Greater weight was given to the measurement made on behalf of the principal, the Food Corporation of India, which showed a shortfall of 61 quintals. Since the assessee followed the practice of paying purchase tax by a back-calculation method and accepted that the shortage indicated paddy purchased but not accounted for by corresponding sale of rice, the shortage was taken as representing paddy on which purchase tax had not been paid.

Conclusion: The assessee was held liable to pay purchase tax on 61 quintals of paddy, and the tax demand was upheld.

Ratio Decidendi: Tax liability cannot be founded on a mere sampling verification, but a shortage established on the more reliable principal's verification may justify an inference of unaccounted purchase and purchase-tax liability.

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