IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 106 of 2005()
1. P.K.BALAKRISHNAN,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY
... Respondent
For Petitioner :SRI.T.M.SREEDHARAN
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MRS. Justice M.C.HARI RANI
Dated :22/05/2008
O R D E R
H.L.DATTU, C.J. & M.C. HARI RANI, J.
------------------------------------------------------------------
S.T.Rev.No.106 of 2005
-------------------------------------------------------
Dated, this the 22nd day of May, 2008
O R D E R
H.L.Dattu, C.J.
The issues involved in this tax revision case, in our opinion, lies
in a narrow compass. Therefore, detailed discussion of the case pleaded by
the parties need not be noticed by us in extenso.
(2). The assessee is a dealer registered under the provisions
of the Kerala General Sales Tax Act (” Act ” for short).
(3). The assessee is doing business in timber. For the
assessment year 1998-1999, the assessing authority has completed regular
assessment under Section 17 (4) of the Act.
(4). The assessing authority, based on the information
received from the check post authorities with regard to certain declarations
filed, had re-opened the assessments by issuing notice dated 3-3-2002 under
Section 19 of the Act. In response to the said notice, the assessee firstly
had denied that he is not the consignee or purchaser that was shown in the
check post declarations. Apart from that, he had also requested the
assessing authority to furnish him the copies of the check post declarations,
invoices, details of the vehicles used for transport of the goods from
Karnataka to Kerala and the details of payments made to the Karnataka
dealers. Further, he has stated in his reply that, he would be in a position to
file a detailed reply to the notice dated 3-3-2002 after the receipt of the
STRV No.106/2005 -2-
documents requested in the reply letter.
(5). The assessing authority, after receiving the letter dated
20-5-2002 from the assessee, had directed the assessee to appear before
him on 6-7-2002 to collect the details of the copies requested in the reply
letter dated 20-5-2002. For various reasons, the assessee could not appear
before the assessing authority on the day on which he was asked to appear.
The assessing authority has completed re-assessment by his order dated
26-7-2002 and has made an addition of Rs.3,98,750/- to the conceded
turnover for the assessment year 1998-1999.
(6). Aggrieved by the said order, the assessee was before the
first appellate authority, who in turn, has modified the order of re-assessment
passed by the assessing authority.
(7). The assessee, not being satisfied by the orders passed by
the first appellate authority, had preferred T.A.No.135/2003 before the
Tribunal. The Revenue also had preferred T.A.No.280/2003 against the
orders of the first appellate authority.
(8). The Tribunal, by its common order dated 25th November,
2004 has modified the orders passed by the first appellate authority.
(9). Aggrieved by the orders so passed by the Tribunal, the
assessee is before us in this tax revision case.
(10). The assessee has framed the following questions of law
for our consideration and decision. They are as under:
STRV No.106/2005 -3-
“1. Whether on the facts and circumstances of the case and
in the light of the provisions contained in Sec.30B(4) and the
principles laid down by this Hon’ble Court in the decisions
reported in James Vs. AIT & Sales Tax Officer (2002 (10)
KTR 302) and M.K.Pushparanjini Vs. Sales Tax Officer and
others (2003 (11) KTR 527):-
a). The Appellate Tribunal is justified in sustaining
reassessment based on check post Declarations referred to in
the Assessment Order with reference to which the alleged
unaccounted purchases are denied by the petitioner?
b). The Appellate Tribunal is justified in sustaining the
addition and the reassessment which is made in violation of
the provisions contained in Sec.30B (4), the principles of
which are interpreted and laid down in James Vs. AIT &
Sales Tax Officer (2002 (10) KTR 302) and
M.K.Pushparanjini Vs. Sales Tax Officer and others (2003
(11) KTR 527) by this Hon’ble Court?
c). Without prejudice to the above questions, the appellate
Tribunal is justified in enhancing the gross profit from 5 to
20% on the alleged unaccounted purchases in determining
the sales turnover?
2. Is the order of the Appellate Tribunal legally valid and
sustainable in law?
(11). At the time of hearing of this revision petition, the learned
counsel for the assessee would submit that the respondent assessing
authority, without furnishing the details as requested by the assessee in his
letter dated 20-5-2002 and also without holding proper enquiry has passed
the impugned order, and therefore, the learned counsel would characterise
the orders passed by the assessing authority not only as arbitrary but also in
violation of the principles of natural justice. Though, this was brought to the
STRV No.106/2005 -4-
notice of the first appellate authority, the first appellate authority has not
given his finding in this regard, it is the submission of the learned counsel for
the assessee.
(12). Sri.Muhammed Rafiq, learned senior Government
Pleader appearing for the Revenue would submit that, the assessing authority
had directed the assessee to appear before him to collect the information that
the assessee wanted, on a particular day and since the assessee did not
appear on that day, the assessing authority had no other alternative but to
confirm the notice dated 3-3-2002.
(13). We have carefully perused the orders of assessment
passed by the assessing authority and the orders passed by the first
appellate authority as well as the Tribunal. In the assessment order passed,
the assessing authority has adverted to the notice issued by him dated
3-3-2002 and also the reply of the assessee dated 20-5-2002. Merely
because the assessee did not appear on a particular day on which date he
was asked to appear, the assessing authority has proceeded to pass an order
under Section 19 (1) of the Act.
(14). The admitted facts are : The assessment is completed
for the assessment year 1998-1999 in the petitioner’s/assessee’s case
under Section 17 (4) of the Act. After completion of the assessments, the
assessing authority has received the so-called check post declarations made
showing the name of the assessee as the consignee/purchaser. In view of
the aforesaid information received, the assessing authority has
re-opened the assessments by issuing notice under Section 19 of the Act.
STRV No.106/2005 -5-
The notice is dated 3-3-2002. After receipt of the notice, the assessee had
not only denied the transaction, but also had requested the assessing
authority to furnish certain documents and details so as to facilitate him to
effectively reply the allegations made in the notice dated 3-3-2002. The
assessing authority had directed the assessee to appear before him on a
particular day. For various reasons which are mentioned in the revision
petition, the assessee could not appear before the assessing authority on
6-7-2002. The assessing authority, in our opinion, could have granted one
more opportunity to the petitioner/assessee to appear before him and collect
the documents which the assessee wanted in his reply letter dated
20-5-2002 and could have afforded an opportunity to the assessee to file a
detailed and effective reply to the notice. That has not been done in the
present case. The assessee was denied the opportunity to counter the
allegations made in the notice. This, in our opinion, is not only contrary to
the principles of natural justice but also contrary to the basic principles of
passing orders under Section 19 of the Act. Therefore, it is difficult for us to
sustain the re-assessment orders passed by the assessing authority under
Section 19 (1) of the Act dated 26-7-2002. This aspect of the matter ought
to have been taken note of by the first appellate authority as well as by the
Tribunal. Since that has not been done in the instant case, we cannot sustain
those orders also .
(15). In view of the above, we have no other alternative, but to
remand the matter to the assessing authority, to re-do the matter, in
accordance with law, after furnishing the copies which the petitioner/assessee
STRV No.106/2005 -6-
requested in his letter dated 20-5-2002. Accordingly, we pass the following:
Order
i). The petitioner/assessee shall appear before the assessing
authority on 23rd June, 2008 to collect whatever documents that are available
with the assessing authority and file an effective reply to the notice issued by
the assessing authority dated 3-3-2002, within 15 days thereafter.
ii). After considering the reply that may be filed by the
petitioner/assessee within the time granted by this Court, and after holding an
enquiry, the assessing authority is directed to pass fresh re-assessment order
in accordance with law.
(16). Consequently, I.A.No.578/2005 is closed.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(M.C.HARI RANI)
JUDGE
MS/dk