EVEREST PLYWOODS KANJIRAKKAD v. STATE OF KERALA

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **&** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI TUESDAY, THE 02ND DAY OF JULY 2019 / 11TH ASHADHA, 1941** **ST.Rev..No.2 of 2019** **AGAINST THE ORDER/JUDGMENT IN TA 8/2015 of S.T.A.TRIBUNAL,ERNAKULAM DATED 30-04-2018** ## **REVISION PETITIONER/APPELLANT/ASSESSEE:** **M/S.EVEREST PLYWOODS KANJIRAKKAD, PERUMBAVOOR, REPRESENTED BY IT'S MANAGING PARTNER SRI.M.S.KUNJUMOHAMMED.** **BY ADVS. SRI.AJI V.DEV SMT.O.A.NURIYA SRI.ALAN PRIYADARSHI DEV** ## **RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT (TAXES), SECRETARIAT, THIRUVANANTHAPURAM- 695001.** **BY ADV.SRI. V.K. SHAMSUDHEEN, SR. GOVERNMENT PLEADER** **THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 02.07.2019, ALONG WITH ST.Rev..3/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** S.T.Rev.2/19&3/19 2 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **&** **THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI** **TUESDAY, THE 02ND DAY OF JULY 2019 / 11TH ASHADHA, 1941** **ST.Rev..No.3 of 2019** **AGAINST THE ORDER/JUDGMENT IN TA 9/2015 of S.T.A.T.ADDITIONAL BENCH,ERNAKULAM DATED 30-04-2018** ## **REVISION PETITIONER/APPELLANT/ASSESSEE:** **M/S. EVEREST PLYWOODS KANJIRAKKAD,PERUMBAVOOR, REPRESENTED BY ITS MANAGING PARTNER SRI,M.S.KUNJUMOHAMMED** **BY ADVS. SRI.AJI V.DEV SMT.O.A.NURIYA SRI.ALAN PRIYADARSHI DEV** ## **RESPONDENT/RESPONDENT/REVENUE:** **STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT (TAXES), SECRETARIAT, THIRUVANANTHAPURAM-695001** **BY ADV. GOVERNMENT PLEADER** **SRI.V.K.SHAMSUDHEEN, SR. GOVERNMENT PLEADER** **THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 02.07.2019, ALONG WITH ST.Rev..2/2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** S.T.Rev.2/19&3/19 3 ## C.K. ABDUL REHIM, J. & R. NARAYANA PISHARADI , J. ------------------------------------------------S.T.Rev.Nos.2 & 3 of 2019 ------------------------------------------------Dated this the 2[nd] day of July, 2019 ## O R D E R ## Abdul Rehim, J 1. These Revision Petitions are filed challenging a common order passed by the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Ernakulam in T.A.Nos.8/2015 and 9/2015, dated 30.4.2018. 2. Assessments finalized against the revision petitioner under the Central Sales Tax Act (CST Act, for short) with respect to the years 2003-04 and 2004-05 were set aside by the Deputy Commissioner, in exercise of the powers vested under Section 35 of the Kerala General Sales Tax Act (KGST Act, for short). The Assessing Authority was directed to make enquiry into genuineness of the 'C' Forms produced by the revision petitioner, claiming payment of concessional rate of tax. The Assessing Authority, through Annexure A order passed on 30.12.2013, finalized the assessment doubting the genuineness of certain 'C' Forms S.T.Rev.2/19&3/19 4 produced with, respect to both the years, and rejected the claim for concessional rate of tax allowed based on those 'C' Forms. The turnover covered under those 'C' Forms were taxed at the higher rate of 13.8%. 3. Challenging the above said assessment orders, the revision petitioner filed appeals before the Deputy Commissioner (Appeals), Ernakulam. Through a common order passed on 10.10.2014, the assessments were set aside based on the findings that, the Department has not collected any convincing materials to arrive at the conclusion that the 'C' Forms produced were bogus. The state went up in appeals before the Tribunal challenging the order of the first appellate authority. The Tribunal had set aside the order of the first appellate authority and remanded back the cases for fresh disposal on the question of genuineness of the disputed 'C' Forms. It is aggrieved by the said order of the Tribunal, the above revision petitions are filed. 4. Learned counsel for the revision petitioner contended that, the impugned assessments were passed beyond the time limit stipulated under the relevant statute. It is conceded that there is no time limit stipulated under Rule 6(5) of the Central Sales Tax (Kerala) Rules. The Tribunal, relying upon the decision in **Parisons Foods (P) Limited, Kozhikode** v. **State of Kerala and another [2017 (3) KHC 371]** found that, when the CST(Ker) Rules does not stipulate any time limit, it is quite open for that purpose to bank upon similar provisions in the S.T.Rev.2/19&3/19 5 KGST Act. Section 17(6) of the KGST Act provides that the assessments should be completed within a period of 4 years from the last date of the year to which the return relates. However, relying on another decision of a Division Bench of this Court in **Sales Tax Officer Special Circle 2, Kozhikode** v. **C.C. Transport Company [(1997) 40 SCC 594]** , the Tribunal found that, in a case where the revisional authority had passed an order under section 35 of the KGST Act and remitted the matter to the Assessing Authority, the time limit stipulated under Section 17 cannot operate against the said authority to finalize the assessment in the place of the assessments already set aside. Therefore, the question of time limit agitated against the impugned assessments was negatived by the Tribunal. We do not find merit in the argument raised by the revision petitioner in view of the above said ruling. 5. Learned counsel argued that, even assuming that the time limit stipulated in Section 17(6) would not apply, it remain settled through various precedents of the Hon'ble Supreme Court that, the assessments should be finalized within a reasonable time. But in the case at hand it is evident that there occurred no delay, after the Deputy Commissioner had set aside the earlier assessments, on the part of Assessing Authority to finalise the fresh assessments. Therefore, we are of the opinion that such a question does not arise in the case at hand. S.T.Rev.2/19&3/19 6 6. Yet another contention raised is that, the Deputy Commissioner ought not have set aside the earlier assessments because the power under Section 35 of the KGST Act would not have been exercised for the reasons mentioned therein. But, as found by the Tribunal, it is evident that the revision petitioner herein had not chosen to challenge the order of the Deputy Commissioner, issued under Section 35 of the KGST Act. Instead, the revision petitioner participated in the proceedings before the Assessing Authority. He had also chosen to challenge the said proceedings before the first appellate authority. Therefore, the Tribunal was fully justified in holding that the revision petitioner was estopped from raising such a contention against the order passed under Section 35 of the KGST Act, in the appeals filed against the consequential assessments. 7. Coming back to merits, as found by the first appellate authority, the Assessing Authority has not collected any relevant or convincing materials to arrive at a conclusion that the disputed 'C' Forms were bogus. It is pertinent to note that the Assessing Authority has not conducted any verification with the tax officials of the state from which those 'C' Forms were issued, regarding its genuineness. Section 35 of the KGST Act enables the Deputy Commissioner to pass an order directing to make such enquiry as he deem fit. The re-assessment on the basis of such an order has to be made only based on an enquiry and only based on convincing materials. As pointed out in the order of the S.T.Rev.2/19&3/19 7 first appellate authority, the Department, under special instructions from the Commissioner, had undertaken some cross verifications with respect to 'C' Forms filed by the Plywood dealers in the state. It is mentioned that special Inter-state Investigation Team was deputed to the issuing states to find out the genuineness of the 'C' Forms. But in the case at hand, as observed by the first appellate authority, there is no proof regarding such verification made or materials collected with respect to the disputed 'C-Forms' in order to arrive at any conclusion that those 'C' Forms were bogus. Unless and until the Assessing Authority became convinced that the 'C' Forms produced were not genuine, based on any materials collected, the assessments made rejecting the claim for concessional rate of tax, cannot be sustained. 8. Under the above mentioned circumstances, we are of the opinion that the matter requires an in-depth verification by the original authority itself. Therefore, we are inclined to interfere with the impugned order of the Tribunal directing the first appellate authority to reconsider the appeals. Instead, it will be appropriate to remit the matter to the original authority for a fresh decision after making due verification and adjudication with respect to genuineness of the 'C' Forms. 9. Hence the above revision petitions are hereby allowed. The impugned common order passed by the Tribunal in T.A.Nos.8/2015 and 9/2015 will stand modified to the extent of setting aside the impugned assessments and remitting the matters to the Assessing Authority, the S.T.Rev.2/19&3/19 8 Commercial Tax Officer (State Tax Officer), 1[st] Circle, Perumbavoor. The said authority shall decide the matter afresh, taking note of the observations contained hereinabove, after affording reasonable opportunity to the revision petitioner. A decision in this regard shall be taken at the earliest possible. **==> picture [125 x 42] intentionally omitted <==** Sd/- R. NARAYANA PISHARADI Judge kkb. S.T.Rev.2/19&3/19 9 ## **APPENDIX OF ST.Rev. 2/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER (CST ACT/RULES) PASSED FOR THE YEAR 2003-04 DATED 30.12.2013.** **ANNEXURE B A TRUE COPY OF THE FIRST APPELLATE ORDER PASSED FOR 2003-04 DATED 10.10.2014 (COMMON FOR TWO YEARS).** **ANNEXURE C** **THE ORIGINAL OF THE TRIBUNAL ORDER DATED 30.04.2018, UNDER CHALLENGE HEREIN.** S.T.Rev.2/19&3/19 10 ## **APPENDIX OF ST.Rev. 3/2019** **PETITIONER'S/S EXHIBITS:** **ANNEXURE-A A TRUE COPY OF THE ASSESSMENT ORDER (CST ACT/RULES0 PASSED FOR THE YEAR 2004-05 DATED 30.12.2013** **ANNEXURE-B A TRUE COPY OF THE FIRST APPELLATE ORDER PASSED FOR 2004-05 DATED 10.102014 ( C0MMON FOR TWO YEARS)** **ANNEXURE-C** **TRUE COPY OF THE TRIBUNAL ORDER DATED 30.04.2018 UNDER CHALLENGE HEREIN**