Shihabudheen P. v. State of Kerala

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON** **TUESDAY, THE 26TH DAY OF JUNE 2018 / 5TH ASHADHA, 1940** **OT.Rev.No. 199 of 2015 ----------------------AGAINST THE ORDER IN TAVAT 843/2013 of S.T.A.TRIBUNAL,ADDL.BENCH,KZD. DATED 22-05-2015** **REVISION PETITIONER/REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE ---------------------------------------------------------------------** **SHIHABUDHEEN P.** **M/S. GOLDEN SANDS, SULATHN BATHERY, WAYANAD DISTRICT.** **BY ADV.SRI.R.RAMADAS** **RESPONDENT/RESPONDENT/RESPONDENT/DEFENDANT/REVENUE:** **---------------------------------------------------** **STATE OF KERALA REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **R BY SR. GOVERNMENT PLEADER SRI MOHAMMED RAFIQ** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 26-06-2018,ALONG WITH OTRV NO.200/2015,THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **IN THE ORDER DATED 26.06.2018 IN OTREV NO.199/2015, THE TA(VAT) NUMBER ENTERED IN THE HEADNOTE, “TA(VAT) 843/2013” STANDS CORRECTED AS “TA(VAT)301/2014”** **SD/ASSISTANT REGISTRAR** ## **O.T. REV. NO. 199 OF 2015** ## **APPENDIX** ## **REVISION PETITIONERS ANNEXURES:** **ANNEXURE A: TRUE COPY OF THE ORDER NO. 32140764775/07-08 DT 25.02.2010 IN RESPECT OF THE PERIOD 2007-08 ISSUED BY THE ASSESSING AUTHORITY** **ANNEXURE B: TRUE COPY OF THE ORDER DT 12.11.2012 IN V.A.T.A 51/2012 ISSUED BY THE 1ST APPELLATE AUTHORITY** **ANNEXURE C: TRUE COPY OF TH ORDER DT 22.05.2015 ISSUED BY KERALA VALUE ADDED TAX APPELLATE TRIBUNAL** **ANNEXURE D: TRUE COPY OF THE REPLY DT 22.03.2012 RECEIVED BY THE PETITIONER UNDER THE RTI ACT** ## **RESPONDENTS ANNEXURES: NIL** ## **TRUE COPY** **P.A TO JUDGE** **jma** ## K. VINOD CHANDRAN & ASHOK MENON, JJ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ## O.T. Rev. Nos. 199 of 2015 & 200 of 2015 - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 26[th] day of June, 2018 ## O R D E R ## Vinod Chandran, J The revisions are by the assessee against the orders of the Tribunal confirming the penalty imposed as also the assessment made. The question of law raised against the order of the Tribunal confirming the penalty as found in O.T.Rev.No.200/2015 is re-framed as follows: 1. Has not the Tribunal erred in affirming the order of the Intelligence Officer; which estimated the turnover by adoption of the value noticed in four instances, to the entire transactions made by the petitioner, especially when bills were available showing the price at which the goods were sold at far lower price? OT Rev. Nos. 199/2015 &200/2015 **==> picture [7 x 9] intentionally omitted <==** 2. Has not the Tribunal erred in confirming the penalty imposed on estimation which is not permissible as per the judgment of this Court in U.K Monu Timbers v. State of Kerala [2012 (3) KHC 111]? 3. The questions of law arising from O.T. Rev. No.199/2015 filed against the order of the Tribunal affirming the assessment made against the petitioner are re-framed as follows: Has not the Tribunal erred in affirming the assessment adopting a uniform rate for each of the loads of sand sold by the petitioner in the year based on the price shown in four instances in a note book recovered on a shop inspection? Ought not the Tribunal have relied on the certificate issued by the Department itself OT Rev. Nos. 199/2015 &200/2015 **==> picture [7 x 9] intentionally omitted <==** showing the returns of the dealers having transactions in sand having disclosed amounts between Rs.5,350/- to Rs.5,400/- for a single load of sand? 4. We will first deal with the order of penalty which is challenged in O.T.Rev.No.200/2015. A shop inspection was conducted and there was noticed an enhanced consideration as shown against four lorry loads. The consideration shown were respectively Rs.10,500/-, Rs.10,650/-, Rs.12,000/- and Rs.12,000/-. The contention of the assessee was that when there is regular sale of sand to a particular customer, the consideration for the total sale made would be received by the dealer through the lorry driver itself, in installments. Hence if there is a delivery of two loads to a customer only on delivery of both the loads, would the consideration be paid. Hence the above discrepancy as OT Rev. Nos. 199/2015 &200/2015 4 noticed by the Department which can be easily explained. 5. The Intelligence Officer however, took the view that there is nothing indicated in the note book as to the number of loads which were transported in a particular vehicle, which alone could justify the explanation offered. The Intelligence Officer hence, estimated the entire loads transported at an average value of Rs.10,500/- and imposed penalty at twice the tax sought to be evaded. 6. We have to notice that the proceedings are under Section 67 of the Kerala Value Added Tax Act, 2003 which speaks of a penalty imposable in the event of a tax evasion, possible of quantification, to the extent of twice the tax so sought to be evaded. The note book as revealed in the shop inspection only shows four instances where there was consideration at an enhanced value than that in the other transactions, against OT Rev. Nos. 199/2015 &200/2015 **==> picture [7 x 9] intentionally omitted <==** particular lorry registration numbers. The exercise carried on by the Intelligence Officer in adopting the said consideration for all the transactions till the date of shop inspection was an exercise permissible only by the Assessing Officer; who has specifically conferred under the statute, the power to carry out assessment on best judgment. As has been held in U.K Monu Timbers (Supra) there could be no penalty imposed on the basis of an estimation; the authority to carry out best judgment not being available to the officer acting under Section 67. The questions of law in OTRV No. 200/2015 are answered in favour of the assessee and against the revenue. 7. In the above circumstance, we are inclined to set aside the orders of the lower authority and direct the Intelligence Officer to compute the tax sought to be evaded in the four loads, the discrepancy of which were noticed from the shop inspection OT Rev. Nos. 199/2015 &200/2015 **==> picture [7 x 9] intentionally omitted <==** and levy penalty at twice the amount sought to be evaded. The Revision petitioner shall produce the certified copy of this order before the Intelligence Officer and the Intelligence Officer shall so compute the penalty which shall be paid by the revision petitioner within a period of one month from the date of receipt of a copy of this Order. OT Rev.200/2015 is hence allowed with the above observations. 8. Now we come to the assessment which has been carried out against the revision petitioner based on discrepancy noticed in the shop inspection. The learned Government Pleader would seek to sustain the above order on the ground that the best judgment is supported by facts which has been gone into by both the First Appellate Authority and the Tribunal. There is hence no question of law arising is the contention. Further the reliance placed is on a circular issued by the Department which indicates OT Rev. Nos. 199/2015 &200/2015 **==> picture [7 x 9] intentionally omitted <==** the price adopted therein, to be in consonance with the price adopted by the Intelligence Officer in the penalty proceedings; which has been adopted by the Assessing Officer too. It is also pointed out that the bills of the assessee did not contain the quantity transported or the capacity of the vehicle in which such transport was effected. The circular issued which is seen extracted in the Tribunal's order specifically categorizes the type of vehicles in which the transport of sand is effected and fixes the price for the sand that could be transported in full capacity of the vehicle. 9. As we held in the penalty proceedings, in assessment, the officer is definitely entitled to proceed on best judgment. We notice that the Circular was brought in by the Department on 14.02.2008, at the fag end of the year. Definitely it was after a market study that the circular was brought in and OT Rev. Nos. 199/2015 &200/2015 8 there could be no retrospective effect given to the circular. For the transactions made after 14.02.2008 necessarily the petitioner would have to concede the consideration at that shown in the circular. 10. With respect to the loads carried prior to the Circular, the contention of the assessee is that Annexure D indicates the average consideration for the load. We see that Annexure D has been issued under the Right to Information Act, by the Sales Tax Department itself. The returns of the other dealers would indicate the average price to be between Rs.5,350 to Rs.5,400/- which is in consonance with the price as seen from the bills. However, the learned Government Pleader points out that the specific capacity of a vehicle has not been shown in the bills and hence the consideration could be assessed only on the basis of the capacity. In such circumstances, we set aside the OT Rev. Nos. 199/2015 &200/2015 9 order of the first appellate authority and remand the matter for fresh consideration finding that the facts have not been considered in the proper perspective; warranting a re-consideration. We make it clear that all transactions after 14.02.2008 would be regulated by the consideration shown in Circular No. 5/2008. For the earlier transactions, the petitioner would be entitled to produce the registration certificate of the vehicle before the Assessing Officer to indicate the capacity of each of the vehicles. Based on the capacity, the Assessing Officer would be entitled to assess the turnover on the basis of the existing market conditions in the subject year. If the registration certificate is not produced, then, the Intelligence Officer will adopt the price as indicated by the Intelligence Officer being Rs.10,500/- per load. The petitioner shall appear before the Assessing Officer with a certified copy of the order on OT Rev. Nos. 199/2015 &200/2015 **==> picture [13 x 9] intentionally omitted <==** 16.07.2018. The assessee shall be given a months time to produce the registration certificates. The direction is issued only with respect to the bills which show the specific registration number of the vehicle used. The Assessing Officer shall then give an opportunity for hearing and decide the matter in accordance with the directions above. OTRevision 199 of 2015 is allowed, remanding the matter for fresh consideration. Ordered accordingly without any order as to costs. Sd/K. Vinod Chandran, Judge Sd/Ashok Menon, Judge jma