IN THE HIGH COURT OF KERALA AT ERNAKULAM ST.Rev..No. 435 of 2006() 1. C.MUHAMMEDKUTTY, M/S.C.M.CHICKEN ... Petitioner Vs 1. THE STATE OF KERALA, REPRESENTED ... Respondent 2. THE SALES TAX APPELLATE TRIBUNAL, 3. THE DEPUTY COMMISSIONER (APPEALS), 4. THE SALES TAX OFFICER, For Petitioner :SRI.K.JAYAKUMAR For Respondent : No Appearance 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. -------------------------------------------- S.T.Rev.No.435 of 2006 -------------------------------------------- Dated, this the 11th day of August, 2008 ORDER
H.L.Dattu,C.J.
The assessee is a dealer and effects sales of chicken. The
business premises of the assessee was inspected by the Intelligence
Officer of the Department on 15.01.2002. During the said inspection, the
assessee had failed to produce the books of accounts for the assessment
year 2001-02, and further, the Intelligence Officer had recovered the
paper slips, estimate bills, cash receipts, etc. From out of the slips, the
Intelligence Officer was of the opinion that the assessee had suppressed a
sales turnover of Rs.3,10,115/-.
2. The assessing authority, after issuing the pre-assessment
notice, and since he was not convinced with the explanation offered by
the assessee, has completed the best judgment assessment and in that,
apart from the actual suppression detected, has made an addition of ten
times towards the probable omission and suppression and, accordingly,
has quantified the tax liability of the assessee.
3. This order of the assessing authority was carried in an
appeal by the assessee before the first appellate authority. In the grounds
of appeal, the assessee had stated, that, the assessee has purchased the
S.T.Rev.435 of 2006 – 2 –
chicken from small farmers in the Villages in Wynad District and the
turnover of the assessee is exempt from payment of sales tax. Though this
ground was taken in the memorandum of appeal, from the perusal of the
orders passed by the first appellate authority, it is not forthcoming
whether that point was urged and argued before the first appellate
authority. However, the first appellate authority, taking a lenient view and
further of the opinion that the additions made by the assessing authority is
excessive, has modified the best judgment assessment passed by the
assessing authority and has restricted the additions to three times the
suppression detected at the time of inspection by the Intelligence Officer
of the Department, viz., on 15.01.2002.
4. Aggrieved by the orders so passed by the first appellate
authority, the assessee was before the Tribunal in T.A.No.16 of 2006.
Before the Tribunal, the assessee had argued only the following issues.
The Tribunal at paragraph 4 of its order has extracted the issues raised by
the assessee’s representative. They are:
“It is significant to note that in spite of the fact
that a demand was made by the assessing authority, the
appellant had failed to produce his books of accounts for
verification for the assessment year 2001-2002. It is also to
be noticed that the appellant had submitted his monthly as
well as annual returns only on 29.12.04. From a perusal of
the records, it is further evident that at the time of inspection
S.T.Rev.435 of 2006 – 3 –
by the Intelligence Officer on 15.1.2002, paper slips,
estimate bills, cash receipts, etc., were seized and it was
found that turnover of Rs.3,10,115/- was suppressed. It is
pertinent to note that the assessee himself had admitted
before the Intelligence Officer that he was not in the habit of
maintaining regular books of accounts. The offence
committed by the assessee was imposed with a penalty of
Rs.10,000/-. Now, the appellant contends that he was
maintaining his books of accounts regularly and the findings
of the assessing authority in this regard is not at all
sustainable. From a perusal of the assessment records, it is
clear that on 13.1.2003, the assessee himself had submitted
a statement before the Intelligence Officer clearly admitting
that he was not in the habit of maintaining books of
accounts. So, we are of the view that the finding of the
assessing authority that the books of accounts produced on
29.12.2004 were subsequently created by the assessee is just
and proper. In such circumstances, we are unable to accept
the contention of the appellant that the lower authorities had
over-looked the fact that he was maintaining regular books
of accounts. We are of the further view that the findings of
the lower authorities that as the appellant had failed to
maintain regular books of accounts, the Returns as well as
the books of accounts produced by him on 29.12.2004 are
liable to be rejected to do not warrant any interference on
our hands”.
5. The Tribunal, after considering those issues urged and
argued, has answered the same in the following manner:
S.T.Rev.435 of 2006 – 4 –
“There cannot be any serious dispute regarding the
fact that the inspection conducted on 15.1.2002 had
unearthed suppression of Rs.3,10,115/-. It is true that the
addition made by the assessing authority was reduced by the
First appellate authority considerably in the First appeal
submitted by the assessee. It is significant to note that the
suppression was detected only on 15.1.2002 and no similar
pattern of suppression were detected during the relevant
assessment year. In such circumstances, we are of the view
that reducing the addition to two times of the suppressed
turnover will meet the ends of justice”.
6. Aggrieved by the orders passed by the Tribunal in
T.A.No.16 of 2006 dated 28th September, 2006, the assessee is before us
in this Sales Tax Revision.
7. The assessee has framed the following questions of law
for our consideration and decision. They are as under:
“(i) Is not the decision of the tribunal vitiated on
account of the non-consideration of the contention that the
entire turnover is exempt from sales tax?
(ii) Has not the Tribunal erred in law in finding
taxable turnover without even considering if the turnover is
incurred on account of purchase of chicken from outside
the State?
(iii) In the absence of even a suggestion that
chicken had been purchased from outside the State and in
the absence of any interception at any check-post or
elsewhere is it just and proper to hold that the turnover is
S.T.Rev.435 of 2006 – 5 –
taxable?
(iv) Is not the burden of proof on the revenue and
has it not failed to prove the existence of taxable turnover?
(v) When the assessment proceedings is based
only on the recovery made in an inspection made on
15.1.2002 and when no material even suggesting inter-State
purchase of chicken is recovered is it just and proper to
pass an assessment order of the present nature?
(vi) Is the addition of two times the turnover
justified?”
8. Sri.P.B.Krishnan, learned counsel appearing for the
assessee, would submit, that, it was the specific case of the assessee, both
before the first appellate authority and before the Tribunal, that, the
assessee purchases chicken from small farmers of the Villages in
Wynad District and effects sale and therefore, the turnover of the
assessee is exempt from payment of tax under the Act and, accordingly
the learned counsel is of the view, that, the first appellate authority and
the Tribunal were not justified in merely reducing the additions made by
the assessing authority while completing the best judgment assessment for
the assessment year 2001-02.
9. In order to appreciate the contention canvassed by the
learned counsel appearing for the assessee, we have carefully perused the
orders passed by the first appellate authority and the Tribunal. Neither
before the first appellate authority nor before the Appellate Tribunal, the
S.T.Rev.435 of 2006 – 6 –
assessee, though had taken up the aforesaid contention in the
memorandum of appeal, had not argued the same. What was not argued
and urged before the appellate authority cannot be argued and urged for
the first time before this Court. If, for any reason, the assessee was of the
opinion that the aforesaid issue was canvassed before the first appellate
authority and also before the Tribunal and if that issue had not been
noticed either by the first appellate authority or by the Tribunal and they
have not answered the same in one way or the other, the assessee should
have filed an appropriate review petition either before the first appellate
authority or before the Tribunal.
10. The orders passed by the assessing authority is a best
judgment assessment. The said assessment is based on the recovery of the
paper slips, estimate bills, cash receipts, etc. from the business premises
of the assessee at the time of inspection by the Intelligence Officer of the
Intelligence Wing of the Department on 15.01.2002. The slips recovered
would indicate that there was suppression of sales of chicken, amounting
to Rs.3,10,115/-. While completing the best judgment assessment, the
assessing authority has made an addition of ten times towards the
probable omission and suppression, which was reduced to three times by
the first appellate authority and, further, to two times by the Appellate
Tribunal. The orders passed by the authorities under the Act and also by
S.T.Rev.435 of 2006 – 7 –
the Tribunal are purely based on facts. No question of law as such would
arise in this revision petition for our consideration and decision. We
hasten to add that it is not the case of the assessee’s learned counsel that
findings and the conclusions reached by the Tribunal is a perverse
finding. In that view of the matter, the revision petition requires to be
rejected and it is rejected.
11. This Court, while entertaining the revision petition, had
directed the assessee to deposit one-half of the tax assessed.
Sri.P.B.Krishnan, learned counsel appearing for the assessee, requests us
to grant him another two months time to pay the balance amount. The
request so made by the learned counsel is reasonable and, if the request is
granted, it would not cause any prejudice to the Revenue. Therefore,
we grant the petitioner two months’ time from today to pay up the balance
amount as quantified by the Appellate Tribunal.
Ordered accordingly.
H.L.Dattu
Chief Justice
A.K.Basheer
Judge
vku/dk