IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 451 of 2006()
1. M/S.DANA GOLD, PANDALAM,
... Petitioner
Vs
1. STATE OF KERALA.
... Respondent
For Petitioner :SRI.ARIKKAT VIJAYAN MENON
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :11/08/2008
O R D E R
H.L.DATTU, C.J. & A.K.BASHEER, J.
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S.T.Rev.No.451 of 2006
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Dated, this the 11th day of August, 2008
O R D E R
H.L.Dattu, C.J.
This tax revision case would arise out of an order
passed by the Sales Tax Appellate Tribunal in T.A.No.645 of 1995
dated 25-05-2006.
2. The revision petition pertains to the assessment year
1991-1992. This is the second round of litigation by the assessee. On
an earlier occasion, the assessee was before this Court in TRC No.305 of
2002, being aggrieved by the orders passed by the Appellate Tribunal
in T.A. No.645/95 and 117/96. This Court, by its order
dated 15th November, 2002, was pleased to dispose of the revision
petition and was further pleased to remand the matter to the Tribunal for
fresh disposal, in accordance with law.
3. The facts in brief are: The assessee is a partnership
firm. It is registered as a dealer under the Kerala General Sales Tax Act
(“the Act” for short). It is engaged in jewellery business at Pandalam.
The assessee has started its business only in the year 1990-1991.
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4. The Intelligence Officer of the Department had visited
the business premises of the assessee on two occasions, namely, on
14-1-1992 and on 25-3-1992. On verification of the actual stock and
the books of accounts maintained, the Intelligence Officer on 14-1-1992
had come to the conclusion that there is variation in stock,
i.e. 5.590 grams out of 5366.610 grams.
5. On the second inspection made on 25-3-1992, the
Intelligence Officer was of the view, that, there was stock variation of
2.190 grams when the actual stock reflected in the books of account
maintained by the dealer was 5095.780 grams. In our opinion, this was
negligible stock variation especially in the context that the assessee has
commenced its business activity only in the previous year, namely,
1990-1991.
6. At the time of inspection, the stock in the business
premises should definitely tally with the quantum of stock reflected in
the stock registers maintained in the regular course of business. But, in
the present case, it is no doubt true that there was variation in the stock at
the time of two inspections. But that variation was negligible, when it is
seen in the context of the volume of business done by the dealer.
S.T.Rev.No. 451/2006 -3-
7. The assessing authority after rejecting the
annual returns filed by the assessee, based on the shop inspection report
received by him from the Intelligence Officer of the Department,
completed best judgment assessment and in that has made an addition of
5 times the average running stock.
8. In the appeal filed, the first appellate authority has
modified the orders of assessment passed by the assessing authority by
adding two times of the average running stock.
9. Being aggrieved by the orders passed by the
first appellate authority, the assessee as well as the Revenue had carried
the matter in appeal before the Tribunal in T.A.Nos.645 of 1995 and
117 of 1996. The Tribunal by its order dated 29th June, 2002 had
rejected the appeals filed both by the assessee as well as by the State and
thereby has confirmed the orders passed by the first appellate authority.
The said order passed by the Tribunal had been questioned by the
assessee before this Court in TRC No.305/2002. This Court by its order
dated 15th November, 2002 was pleased to allow the revision case and
was pleased to remand the matter to the Tribunal for fresh disposal in
accordance with law and in the light of the observations made in the
S.T.Rev.No. 451/2006 -4-
course of the order.
10. After such remand, the Tribunal has passed yet another
order dated 25th May, 2006 and in that has confirmed the orders passed
by the first appellate authority. It is the correctness or otherwise of this
order that is called in question by the assessee before us in this tax
revision case. The assessee has framed the following questions of law for
our consideration and consequent decision. They are as under:
“A. Whether on the facts and in the circumstances of the
case, has not the Appellate Tribunal gone wrong in
confirming the rejection of books of accounts and
estimation of turnover?
B. Whether on the facts and in the circumstances of the
case is not the turnover sustained by the Appellate
Tribunal at 100% of the reported turnover excessive,
arbitrary and having no nexus with the defects pointed
out?”
11. Before we advert to the legal issues raised by the
assessee, we want to make two things clear. Firstly, if the findings of the
Tribunal is perverse finding, that also would be a question of law
which can be considered by this Court in a revision petition filed under
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Section 41 of the Act. Secondly, the Tribunal in the hierarchy of the
authorities under the Act is the last fact finding authority and it can also
decide the questions of law.
12. The assessee had commenced its business in the fag
end of the year 1990-1991. The present revision petition relates to
assessment year 1991-1992. There were two inspections conducted by
the Intelligence Officer of the Department. On both occasions, there was
a stock variation, but that in our view was negligible when compared to
the volume of business of the dealer. The reasons for stock variation
was explained by the assessee. Having gone through the explanation
offered by the assessee, we are of the opinion that the explanation ought
to have been accepted by the Tribunal and should have modified the
orders passed by the assessing authority as well as by the appellate
authority.
13. The best judgment assessment can be based on certain
facts when it is found that the accounts of the dealer cannot be accepted.
In the instant case, it is related to the suppression found at the time of
shop inspection made twice by the intelligence wing of the Department
and on both occasions, the suppression noticed is nearly 8 grams out of
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10,500 grams of gold. This stock variations was properly explained by
the assessee, but the same is not accepted by the assessing authority and
the Appellate Tribunal. The approach of the Tribunal is neither
reasonable nor justifiable. To put it in a nutshell, the approach appears
to be hyper technical. In that view of the matter, it is difficult for us to
sustain any one of the orders passed by the authorities under the Act as
well as by the Tribunal. Therefore, while allowing this revision case, we
delete the additions made by the authorities under the Act as well as by
the Tribunal.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(A.K.BASHEER)
JUDGE
MS/dk