C.Muhammedkutty vs The State Of Kerala on 11 August, 2008

Kerala High Court
C.Muhammedkutty vs The State Of Kerala on 11 August, 2008
       

  

  

 
 
  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

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