IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 4 of 2006()
1. M/S. K.K. GOPALAN & COMPANY,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY
... Respondent
For Petitioner :SRI.E.P.GOVINDAN
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice THOMAS P.JOSEPH
Dated :30/09/2008
O R D E R
H.L.DATTU, C.J. & THOMAS P.JOSEPH, J.
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S.T.Rev.No.4 of 2006
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Dated, this the 30th day of September, 2008
ORDER
H.L.Dattu, C.J.
The orders passed by the Sales Tax Appellate Tribunal,
Additional Bench, Palakkad in T.A.No.685 of 2004 dated 21st May, 2005 is
the subject matter of this revision petition at the instance of the assessee
who 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).
(2) The relevant assessment year is 1999-2000.
(3) The assessee is a dealer in arecanut, pepper, etc. at
Pazhanji, Thrissur District. The goods dealt with by the assessee are
taxable at the last purchase point within the State.
(4) The assessee had filed its annual returns for the
assessment year 1999-2000 as nil returns.
(5) The assessing authority after rejecting the returns so filed
by the assessee had issued a pre-assessment notice. According to him, the
entire closing stock held by the assessee for the assessment year 1999-2000
in the books of accounts must have been sold by the assessee and having
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2
come to this conclusion has assessed the tax liability of the assessee under
the provisions of the KGST Act by making certain additions to the closing
stock and fixing the taxable turnover in a sum of Rs.7,33,610/-. This was
objected to by the assessee both before the first appellate authority and
before the Tribunal. Before the Tribunal the attempt of the assessee was
failed. Therefore, the assessee is before us in this revision petition.
(6) The assessee has framed the following questions of law
for our consideration and consequential decision. They are as under:
“i. Whether on the facts and in the circumstances of
the case the Tribunal was justified in dismissing the appeal
filed by the petitioners.
ii. Whether on the facts and in the circumstances of
the case the Tribunal was justified in confirming the
assessment of closing stock held by the petitioners. Has not
the Tribunal committed an error in confirming the
assessment order when the sale was proved?
iii. Whether on the facts and in the circumstances of
the case the Tribunal was justified in not considering the
form 25 declarations and books of accounts for the
subsequent years 2000-2001 and 2001-02 submitted by the
petitioners supporting their case.
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iv. Whether on the facts and in the circumstances of
the case the Tribunal was justified in not appreciating the
peculiar business transaction at Kokkalai market, Thrissur.
Has not the Tribunal committed an error in analysing the
facts of the case.
v. Whether on the facts and in the circumstances of
the case the Tribunal was justified in shifting the burden of
proof of sale on the petitioners. Is it not the duty of the
revenue to prove a completed sales, before subjecting the
turnover to tax.”
(7) The assessee, as we have already stated, is a dealer in
betel nuts and pepper. He is also an agent at Kokkalai in Thrissur District.
He not only effects sales of his own but also through his agent. He also
purchases betel nuts and pepper both intra and inter state purchases. The
opening stock for the assessment year in question was 46,515 Kgs. valued
at Rs.13,36,209/-.
(8) It was the specific case of the assessee before the
assessing authority that though he had an opening stock of 46,515 Kgs. of
betel nuts and 2000 Kgs. of pepper, he had not effected any sales during the
relevant assessment year.
(9) The assessing authority, without there being any basis
whatsoever and on mere presumptions and surmises, comes to the
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conclusion that the assessee must have sold the betel nuts and pepper during
the relevant assessment year. For the aforesaid conclusion the assessing
authority has not indicated any basis whatsoever. The assessing authority’s
presumption is that betel nuts and pepper are normally not kept without
being sold by an assessee. However, it was the stand of the assessee before
the assessing authority that during the assessment year in question since the
price of betel nuts and pepper had fallen down, he had not effected any
sales.
(10) In our opinion, even for passing the best judgment
assessment, there must be a basis and that cannot on mere whims and
fancies. No doubt there can be a little bit of guess work, but that cannot be
on mere whims and fancies.
(11) In the instant case, as we have already stated, the
assessing authority did not have any material before him to come to the
conclusion that the assessee, for the assessment year 1999-2000, had
effected sales of 46,515 Kgs. of betel nuts and 2000 Kgs. of pepper. This
order of the assessing authority was confirmed by the first appellate
authority and by the Tribunal.
(12) Having gone through the orders passed by all the
authorities under the Act, we are of the firm opinion that none of the
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authorities have considered the case of the assessee in a proper perspective.
(13) Therefore, while allowing this revision petition, we set
aside the orders passed by the assessing authority as confirmed by the first
appellate authority and by the Tribunal.
(14) Consequently,I.A.No.188 of 2006 stands rejected.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(THOMAS P.JOSEPH)
JUDGE
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