IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 68 of 2006()
1. M/S. LULU ENTERPRISES (INDIA) PVT. LTD.,
... Petitioner
Vs
1. THE STATE OF KERALA,
... Respondent
For Petitioner :DR.K.B.MUHAMED KUTTY (SR.)
For Respondent : No Appearance
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :26/09/2008
O R D E R
H.L.DATTU, C.J. & A.K.BASHEER, J.
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S.T.Rev.No.68 of 2006
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Dated, this the 26th day of September, 2008
ORDER
H.L.Dattu, C.J.
This Sales Tax Revision arises under the provisions of the
Kerala General Sales Tax Act, 1963 (‘the Act’ for short).
(2) Petitioner is a dealer registered both under the provisions
of the Kerala General Sales Tax Act and the Central Sales Tax Act. It is a
dealer in textiles and hosiery and ready made garments.
(3) The relevant assessment year is 2002-03.
(4) The assessee had filed its annual returns before the
assessing authority for the assessment year 2002-03. Before finalizing the
assessments for the assessment year in question, the assessing authority
had received information from the Sales Tax Inspector, Malappuram who
had detected unaccounted purchase of ready made garments in a sum of
Rs.50,429.00 when the vehicle in which the goods of the petitioner was
carried on 11.7.2002. The assessee had compounded the offence
departmentally.
(5) Yet another inspection was conducted by the Intelligence
Officer of the Department on 30.1.2002. In the said shop inspection it
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was revealed that there was sales suppression of Rs.2000.00 and
accordingly had seized the records and the records disclosed unaccounted
purchase and sales of Rs.30,564.00 and Rs.63,928.00 respectively. Even
this offence was compounded by the assessee departmentally. The
assessing authority also had the advantage of looking into the check post
declaration wherein it was found that there was unaccounted purchase of
the textiles in a sum of Rs.48,288.00.
(6) Keeping all these aspects of the matter in view, the
assessing authority has rejected the books of accounts and also the annual
returns filed by the assessee and thereafter had issued a pre-assessment
notice incorporating the reports that were received by him from the Sales
Tax Inspector as well as from the Intelligence Officer of the Department,
and further had directed the assessee to offer its explanation, if any, to the
proposals made in the pre-assessment notice. After receipt of the pre-
assessment notice, the assessee had filed its objections. The assessing
authority has completed the best judgment assessment under Section
17(3) of the Act and in that has made certain additions towards the
probable omissions and suppressions in the returns filed.
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(7) Questioning the correctness or otherwise of the
additions made by the assessing authority, the assessee had preferred
appeal before the first appellate authority. The first appellate authority
being of the opinion that the addition made by the assessing authority is
excessive, has modified the same and has reduced the addition made by
the assessing authority.
(8) Not being satisfied with the orders of the first appellate
authority, the assessee had filed second appeal before the Sales Tax
Appellate Tribunal. The Tribunal taking into consideration the omissions
pointed out by the assessing authority in the pre-assessment notice issued,
has come to the conclusion that the order of the first appellate authority
need not be interfered with and accordingly, has rejected the second
appeal.
(9) The order of assessment passed by the assessing
authority is on estimation basis.
(10) Time and again the apex Court has observed that in
exercise of this Court’s power under Section 41 of the Act, it can only look
into whether the Tribunal has failed to decide a question of law or has
erroneously decided a question of law.
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(11) The Supreme Court in the case of Commissioner of
Sales Tax Madhya Pradesh Vs. H.M.Esufali H.M.Abdulali {1973 (32)
STC 77) has stated as under:
“The reassessments were valid. From the circumstance
that the assessee had dealings outside the accounts of the
value of Rs.31,171.28 for 19 days, it was open to the
officer to infer that the assessee had large scale dealings
outside the accounts. In such a situation, it was not
possible for the officer to find out precisely the turnover
suppressed and he could only make an estimate of the
suppressed turnover on the basis of the material before
him. So long as the estimate made by him was not
arbitrary and had a reasonable nexus with the facts
discovered, it could not be questioned. It was wrong to
hold that the officer must have material before him to
prove the exact turnover suppressed.”
(12) This is a case of best judgment assessment. In that
best judgment assessment the assessing authority had the advantage of
seeing the reports received by the Sales Tax Inspector and also the
Intelligence Officer of the Department who had intercepted the vehicle and
also conducted a search in the business premises of the petitioner. Based
on the information available, the assessing authority has completed the
best judgment assessment. It is not a case where the best judgment
assessment has been made without any basis whatsoever.
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(13) In that view of the matter, we are of the opinion that no
question of law as such would arise in this revision petition for our
consideration and decision.
(14) Therefore, while rejecting the revision petition, we
confirm the orders passed by the Tribunal.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(A.K.BASHEER)
JUDGE
vns