Revisional assessment and pro rata tax estimation upheld where form 19 records were found unreliable.

Revisional assessment was upheld where the authority acted on the same record already before the assessing officer and did not rely on new material, so the exercise remained within section 67. A pro rata method for estimating breach of form 19 declarations was also accepted because the dealer's production records were found to be notional and unreliable, leaving no sound basis for direct segregation of taxable and non-qualifying purchases. The dealer further failed to discharge the statutory burden under section 16(4), as mere register entries did not prove actual use contrary to the declaration. The assessment on a pro rata basis, together with the revised penalty, was sustained.

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Issues: (i) Whether the revisional powers under section 67 were validly invoked and exercised by the Assistant Commissioner. (ii) Whether the pro rata method adopted for estimating breach of declarations in form 19 for levy of purchase tax was legal and proper. (iii) Whether the dealer discharged the burden of proving that the goods purchased against form 19 were not liable to be included in the turnover of purchases.

Issue (i): Whether the revisional powers under section 67 were validly invoked and exercised by the Assistant Commissioner.

Analysis: The revisional authority acted on the same material that was before the assessing officer and no new or extraneous material was shown to have been relied upon. The information called for under section 59 did not convert the exercise into an impermissible reassessment, and the scope of revision was not exceeded merely because a different inference was drawn on the same record. The limitation on revisional power does not bar interference where the statutory authority is correcting an erroneous assessment on the material already available in the proceedings.

Conclusion: The revisional powers were rightly invoked and exercised, in favour of Revenue.

Issue (ii): Whether the pro rata method adopted for estimating breach of declarations in form 19 for levy of purchase tax was legal and proper.

Analysis: The dealer's production register was found to contain notional entries and did not reflect actual use of the purchased raw materials. In the absence of reliable segregation of the raw materials used for taxable and non-qualifying sales, the only rational method was to apportion the purchases on a pro rata basis according to the extent of sales inside and outside the State. The method was consistent with the obligation undertaken under form 19 and with the principle that tax liability must be estimated on a fair and reasonable basis where actual linkage is not proved.

Conclusion: The pro rata method was legal and proper, in favour of Revenue.

Issue (iii): Whether the dealer discharged the burden of proving that the goods purchased against form 19 were not liable to be included in the turnover of purchases.

Analysis: Once the dealer had executed the declaration in form 19, the burden lay on it to establish by positive and unimpeachable evidence that the purchased goods were not used in the manner declared. Mere entries in the production register were insufficient, especially when the register was found to be notional and unsupported by separate batch-wise accounting or other reliable evidence. The statutory burden under section 16(4) was therefore not discharged.

Conclusion: The dealer failed to discharge the burden under section 16(4), in favour of Revenue.

Final Conclusion: The reference was answered against the assessee and the assessment made on a pro rata basis, together with the revised penalty, stood sustained.

Ratio Decidendi: Where a dealer fails to prove actual use of goods purchased against a restrictive declaration, and the accounting record is found to be notional or unreliable, the taxing authority may estimate liability on a reasonable pro rata basis and revise an erroneous assessment on the same material already forming part of the record.

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