IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 116 of 2004()
1. M/S. C.D.BABY AND COMPANY,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY THE
... Respondent
For Petitioner :DR.K.B.MUHAMED KUTTY (SR.)
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :13/11/2008
O R D E R
H.L. DATTU, C.J. & A.K. BASHEER, J.
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S.T. Rev. No. 116 of 2004
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Dated this the 13th day of November, 2008
Order
H.L. Dattu, C. J:
Petitioner is an assessee under the provisions of Kerala General Sales
Tax Act (the Act, for short). He is a dealer in rice and other commodities.
According to him, he is the second seller of all the items dealt with by him
and therefore is not liable to pay tax.
2. The assessment year in question is 1995-96.
3. The assessee had filed his annual returns before the assessing
authority and in that had conceded taxable turnover at Rs.29,84,310/- and
the tax payable as nil.
4. The business premises of the asessee was inspected by the
Intelligence Squad on 19/12/1995 and on such inspection they have
recorded stock variations in various items.
5. Basing on the shop inspection report, the assessing authority,
after verifying the books of accounts, had issued a pre-assessment notice
proposing to reject the books of accounts and to proceed with the best
judgment assessment for the assessment year in question. In the proposal
made, the assessing authority had informed the petitioner the following
defects:
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(i) The shop inspection report revealed stock variation in 28 items.
(ii) Verification of recovered business slips revealed that sales of
provisions and stationery articles valued at Rs.14562.40 were not billed.
(iii) Sales tax due on the sales turnover of 103.5 Kg. Lobba had not
been accounted.
(iv) Penalty of Rs.79,558/-, being double the amount of tax sought
to be evaded on a turnover of Rs.8,19,930/- was imposed by the
Intelligence Officer under Section 45A of the act.
6. The assessee, after receipt of the re-assessment notice, had filed
his objections.
7. The assessing authority, after considering the objections so filed,
and based on the shop inspection report and the penalty imposed by the
authority under section 45A of the Act, has concluded the assessment and in
that has made an addition of 7 times of the suppressions detected to the
conceded turnover.
8. The order so passed by the assessing authority was the subject
matter of the appeal before the first appellate authority in STA.No.1637 of
1998. The first appellate authority by its order dated 30/9/1999 being of
ST.Rev.116/2004 3
the opinion that the additions so made by the assessing authority is
excessive/on the higher side has reduced the same to 4 = times of the
suppression detected. The assessee was not satisfied with the order so
passed by the first appellate authority and therefore had filed an appeal
before the Tribunal. The Tribunal while concurring with the omissions
pointed out by the assessing authority as well as the appellate authority, and
further being of the opinion that the additions made towards the probable
omissions and suppressions is again on the higher side, has reduced the
addition from 4 = times to 3 times. It is the correctness or otherwise of
the orders passed by the Kerala State Appellate Tribunal in TA.No.644 of
1999 dated 31st of May 2003 that is called in question by the assessee in
this Tax Revision Case.
9. The Assessee has framed the following questions of law for our
consideration and decision. They are as under:
“(i) Whether on the facts and in the
circumstances of the case and especially the
petitioner being a second seller not liable to
pay tax, and the stock variation alleged is
incorrect, is not the entire addition to the
conceded turnover (exempted)
unwarranted?
ST.Rev.116/2004 4
(ii) Whether on the facts and in view of
the fact that the inspection was during the
middle of December and there is no proof
that suppression continued after inspection, is
not the addition sustained by the Appellate
Tribunal excessive?”
10. So far as the first question is concerned, the assessing authority in
the pre- passessment notice has indicated that the claim of the petitioner that
he is the second seller of all the commodities cannot be accepted, in view of
the shop inspection report. The finding of the assessing authority is based
on the shop inspection report and therefore the assessee cannot claim that
he is a second seller of all the commodities in his business premises.
Therefore the first question of law framed by the assessee requires to be
answered against the assessee.
11. So far as the second question of law is concerned, it is necessary
to notice the date of shop inspection that was conducted by the Intelligence
Squad . The inspection was conducted on 19/12/1995. The assessment year
in question is 1995-96, commencing from 01/04/1995 to 31/3/1996. It is
not at the fag end of the year that the shop inspection was conducted by the
Intelligence Squad and therefore the assessing authority may be justified in
his opinion that if there was no shop inspection, the assessee would not
ST.Rev.116/2004 5
have disclosed the sales turnover in his annual returns. Therefore the
additions made by the assessing authority depending on the shop inspection
dated 19/12/1995 can be made use of by the assessing authority for making
certain additions to the conceded turnover. Therefore the second question
of law framed by the assessee also requires to be answered against the
assessee and in favour of the Revenue.
12. Accordingly, we do not see any merit in the Revision Petition
filed by the assessee. Therefore we reject this revision petition.
Ordered accordingly.
H.L. DATTU
Chief Justice
A.K. BASHEER
Judge
an.