Judgment

VARADARAJAN, J.:- This Civil Appeal by special leave is directed against the order of the Assistant Director, Entry Tax, Government of West Bengal, the second respondent, dated 25-9-1979 dismissing the case of the appellant Hindustan Milkfood Manufacturers Limited in Appeal Case No. 3970H of 1976-77. The appeal was filed under S. 27 of Taxes on Entry of Goods into Calcutta Metropolitan Area Act 1972 (hereinafter referred to as the Act of 1972) against the assessment of entry tax made in form V No. D-983001 at the Hussenabad Road Check Post in respect of 8736 kgs. of Horlicks powder contained in 18 steel drums on the "best judgment assessment" basis with reference to the sale price of the product within the Calcutta Metropolitan Area. The appellant is a public limited company incorporated under the Companies Act, 1956 having its registered office at Patiala Road, Nabha. The Company is engaged in the manufacture and sale of dairy products including the milk food popularly known as Horlicks. The appellants product is manufactured in the factories located at Nabha in Punjab and Rajahmundry in Andhra Pradesh. The product is transported in bulk in several steel drums containing 182 kgs. each. The appellant showed the value of the aforesaid 8736 kgs. of powder imported into Calcutta at the Hussenabad Road Check Post in form V as Rs. 1,22,304.00 working out to Rs. 14.00 per kg. The appellants contention was that the value as per stock transfer invoice is Rs. 5.9891 per kg. and the delivered cost including freight and insurance is Rs. 7.694 per kg. at Calcutta, that the declaration and documents regarding the value, freight end insurance made by the appellant should have been accepted by the Assessing Officers at the Hussenabad Road Check Post and that G. P.- 1 was irrelevant for the purpose of assessment of entry tax and it should not have been made the basis for determination of the value of the product at the point of entry. Memo No. 779/ETO/H-76 dated 11-8-1976 of the Entry Tax Officer of the concerned Check Post contains the orders of the Assessing Officers with their reasons for arriving at the assessable value shown in Form V mentioned above. The original documents were not produced before the Assessing Officers in spite of repeated reminders. Consequently the assessment was made on the "best judgment" basis.

2. In the appeal before the second respondent it was argued, for the appellant that the Taxes on Entry of Goods into Calcutta Metropolian Area Rules 1970 (hereinafter referred to as the Rules of 1970) framed under S. 34 of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1970 (herinafter referred to as the Act of 1970) were ultra vires on the ground that they were framed under S. 34 of the Act of 1970 and cannot be applied for the purposes of the Act of 1972. It was also argued for the appellant that where a declaration is submitted and the documents were shown by the dealer to the Assessing Officer he should have proceeded in accordance with Section 14 (1) of the Act of 1972 and that there was no omission or failure on the part of the dealer, and therefore, there. was no scope for determining the value of the product on the "best judgment" basis as provided for in Rule 12 (2) of Rules of 1970. The Ordinance of 1972 replaced the Act of 1970. According to the second respondent Section 1 (3) of that Ordinance and Sec. 37 (2) of the Act of 1972 provide for continuance of the operation of the Rules of 1970 and that those provisions can be validly applied under the present Act of 1972. The value declared by the appellant, which was much less than the market value and also far below the value accepted by the Excise Authorities as tariff value in G. P.-1 as ascertained while the product came out of the factory at Nabha, was not accepted by the Assessing Officer for the reason given by him in the aforesaid memo dated 11-8-1976 and, therefore, he proceeded to ascertain the value on the approximate saleable val