IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 244 of 2008()
1. M/S INTEGRATED RUBIAN FOODS
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY THE
... Respondent
For Petitioner :SRI.ALIAS M.CHERIAN
For Respondent : No Appearance
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :16/09/2008
O R D E R
H.L.DATTU, C.J. & A.K.BASHEER, J.
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S.T.Rev. No.244 of 2008
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Dated, this the 16th day of September, 2008
ORDER
H.L.Dattu, C.J.
This sales tax revision pertains to the assessment year
1999-2000.
(2) Petitioner is a company engaged in the business of
export of marine products and meat items. The petitioner company has
also its own poultry farm, processing plant and factory in its premises.
Petitioner exports dressed chicken. It is stated in the revision petition that
it also exports buffalo meat and marine products.
(3) Petitioner company is a dealer registered both under the
provisions of the Kerala General Sales Tax Act, 1963 (‘KGST Act’ for
short) and the Central Sales Tax Act, 1956 (‘CST Act‘ for short). For the
earlier assessment years, the petitioner had filed its monthly and annual
returns and in that had claimed exemption from payment of tax both
under the KGST Act and CST Act, on the ground that the marine products
are exempt from payment of tax under the KGST Act. It is stated in the
petition that, in fact, the claim of the assessee was accepted by the
assessing authority for all the earlier assessment years.
(4) For the assessment year in question, admittedly, the
petitioner had not filed its annual returns. But it is not disputed nor it can
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2
be disputed by the Revenue that the petitioner had filed its monthly returns
for a period of ten months. In all those monthly returns the assessee had
claimed exemption from payment of tax under the Act, as has been done in
the previous assessment years.
(5) The assessing authority has completed the best judgment
assessment, on the ground that the assessee had failed to file its annual
returns and also failed to produce the books of accounts, ledgers, etc. for
his verification. In the best judgment assessment order passed, the
assessing authority has quantified the tax liability of the petitioner in a sum
of Rs.13,26,448/- merely on the ground that the assessee had failed to file
its annual returns and also failed to produce the books of accounts in spite
of service of the pre-assessment notice.
(6) It appears that there was revenue recovery proceedings
initiated by the department for realisation of the tax due under the Act. It
is informed to us by the learned counsel appearing for the petitioner that
aggrieved by the orders of assessment passed for the assessment year in
question, the assessee had filed an appeal before the first appellate
authority. A writ petition also came to be filed before this Court, inter
alia, questioning the revenue recovery proceedings initiated by the
department for realisation of the tax due under the Act, in view of the
pendency of the first appeal before the first appellate authority. It is
informed to us by the learned counsel appearing for the petitioner that this
S.T.Rev.No.244 of 2008
3
Court had directed the petitioner to deposit the entire amount demanded in
the revenue recovery notice and further had directed the first appellate
authority to dispose of the appeal said to have been filed by the assessee
for the assessment year in question within a particular time.
(7) After such remand, the petitioner could not appear
before the first appellate authority after receipt of the hearing notice,
mainly on the ground that the hearing had been fixed on 7.3.2007,
whereas the notice came to be received by the assessee only on 9.3.2007.
It appears that the petitioner had filed an application before the first
appellate authority, inter alia, requesting him to grant sufficient time,
since its Chartered Accountant was laid up with Chikungunia fever.
(8) The first appellate authority had disposed of the appeal
without affording an opportunity of hearing to the petitioner, mainly on the
ground that this Court while disposing of the writ petition filed by the
petitioner had fixed a time limit within which time the appeal requires to
be disposed of.
(9) Aggrieved by the orders passed by the first appellate
authority, the petitioner was before the Tribunal in T.A.No.199 of 2007.
In the said appeal the assessee had taken up several contentions including
that the goods sold by the petitioner are exempted from payment of tax
under the Act and further had contended that it has now prepared the
annual returns and also the books of accounts which he would be in a
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4
position to produce before the first appellate authority if an opportunity is
given to him.
(10) The Tribunal has rejected both the contentions of the
assessee and has disposed of the appeal by confirming the orders passed by
the assessing authority and the first appellate authority. That is how the
assessee is before us in this sales tax revision.
(11) In our opinion, the one and the only question that would
arise for our consideration and decision is whether the assessing authority
was justified in passing the best judgment assessment order?
(12) It is not in dispute, nor it can be disputed, that the
petitioner company is a dealer in marine products. It is also not in dispute
that for the previous assessment years, the assessee’s claim for exemption
from payment of tax was accepted by the assessing authority.
(13) For the assessment year in question, the assessee had
filed its monthly returns for a period of ten months, but could not file its
annual returns for the reason that the assessee had closed down its
business. In the monthly returns filed, the assessee had claimed exemption
from payment of tax on the ground that it is a dealer in marine products
and the same are exempted from payment of tax.
(14) The assessing authority without noticing this aspect of
the matter and merely because the assessee had not filed its annual returns
and also not produced the books of accounts, has proceeded to complete
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5
the best judgment assessment. In our opinion, even for passing a best
judgment assessment there must be a basis and it cannot be by wild
imagination and presumption by the assessing authority. In the instant
case, as we see from the order passed by the assessing authority, there is
no basis whatsoever for quantifying the huge tax liability payable by the
assessee. If for any reason, the assessing authority had noticed the
monthly returns filed by the assessee in a proper perspective and also had
taken into consideration the orders of assessment passed for the earlier
assessment years, in our opinion, it would not have quantified the tax
liability in a sum of Rs.13,26,448/-.
(15) These aspects of the matter were brought to the notice
of the Tribunal. In our opinion, the Tribunal should have remanded the
matter directing the assessee to file its annual returns before the assessing
authority and also to produce the books of accounts to justify the claim
made in the monthly returns filed for the assessment year in question.
Since that has not been done by the Tribunal, in our opinion, we cannot
sustain the order passed by the Tribunal.
(16) In view of the above discussion and in the peculiar
facts and circumstances of the case, we are of the opinion, that, the
matter requires to be remanded to the assessing authority with a specific
direction to the assessee company to file its annual returns within a
month’s time from today before the assessing authority and also to produce
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6
the books of accounts whenever it is demanded by the assessing authority
for its verification. The assessing authority is directed to consider the
claim of the assessee and pass a fresh order in accordance with law. Till
such time, the amount deposited by the petitioner company pursuant to the
direction issued by this Court will lie with the department.
(17) This revision petition is disposed of as above.
(18) Consequently, I.A.Nos.1921 of 2008 and 2068 of 2008
stand rejected.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(A.K.BASHEER)
JUDGE
vns/dk