Judgment.-The accused is one T.N.K. Govindarajulu Chetty, managing director of T.N.K. Govindarajulu Chetty & Co.

He was convicted by the Fourth Presidency Magistrate, Madras, under section 15 (a) of the Madras General Sales Tax

Act and sentenced to pay a fine of Rs. 500 or in default to undergo simple imprisonment for three months.

The facts are not in dispute and may briefly be stated. T.N.K. Govindarajulu Chetty &38; Co. are the managing agents

of Messrs. Indian Metal and Metallurgical Corporation, having their head office at 498, Mint Street, Madras. T.N.K.

Govindarajulu Chetty is the managing director of that company. For the year 1947-48 they sent a return showing a

turnover of Rs. 7,67,641. Though the company purchased from Bombay 4 feet by 4 feet brass sheets of the value of

Rs. 6,82,017-5-0 and sold them to customers, this amount was not shown in the return but instead, Rs. 1,15,620-8-3

was shown as manufacturing charges in respect whereof they claimed exemption under the Sales Tax Act. When the

Deputy Commercial Tax Officer, Park Town, issued a notice on 26th February, 1949, under Rule 9 of the Madras

General Sales Tax (Turnover and Assessment) Rules to the company pointing out that the entire sale price of the sheets

should be included in the turnover, the company agreed to have that amount also included in the turnover. They

explained the basis of their return in the following manner. They had received from their customers ingots for converting them into sheets. The ingots supplied to them were partly from goods purchased from them and partly from goods purchased outside. Under pressure of heavy work and strike at their works, they could not convert those ingots into sheets and supply them promptly. The customers began to threaten them for damages for late delivery. Pursuant to an arrangement entered into between them, they purchased the then available 4’ by 4’ sheets from the market and supplied them to their customers. As the ingots were the property of the customers and as they had to get only the manufacturing charges according to the contract, they billed them only for the manufacturing charges in conformity with the terms of the contract. As they had already billed for the value of the ingots and as the difference between the value of the ingots and the price at which the sheets were later supplied to the customers represent manufacturing costs, in the second bill, the manufacturing costs were shown. In view of the contract for conversion of ingots into sheets against the supply of raw materials, it was not possible for them to treat the supply of sheets as sale of sheets as they could recover from the customers only the manufacturing costs. In the circumstances, they could not possibly include the entire value of sheets in their turnover when they had in their custody the ingots supplied by the parties. The ingots supplied by the customers were later converted into sheets and sold in the market as sheets for which they had paid the sales tax entirely on the value of sheets according to the bills. After making the aforesaid statement the company stated that even if the contention of the Sales Tax Officer was correct the submission of the false return was only due to a bona fide mistake and they also agreed for the inclusion of the sum omitted without prejudice to their rights. On those facts the learned Presidency Magistrate held that the omission of Rs. 1,15,620-8-3 in the turnover was not due to inadvertence or mistake but was done consciously and deliberately and the accused must be deemed to have wilfully made a submission of an untrue return within the meaning of section 15 (a) of the Madras Sales Tax Act and therefore committed the offence of contravening that provision.

Learned counsel for the accused contended that when the accused omitted the aforesaid figure from the turnover he did it with the bona fide belief that he was entitled to do so and therefore he could not be said to have wilfully made a

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