Smt. Annamma Jose (Proprietor, M/s P.J. Traders, Mananthavady) v. State of Kerala

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **&** **THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.** **TUESDAY, THE 21[ST] DAY OF FEBRUARY 2023 / 2ND PHALGUNA, 1944** **OT.REV NO. 83 OF 2016** **(ORDER OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE, IN T.A.(VAT) NO.106 OF 2014 DATED 17.11.2015)** ## **REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:** **SMT.ANSAMMA JOSE PROPRIETOR, M/S. P.J.TRADERS, MANANTHAVADY.** **BY ADVS. SRI.N.MURALEEDHARAN NAIR SRI.V.K.SHAMUSUDHEEN** ## **RESPONDENT/RESPONDENT/RESPONDENT:** **STATE OF KERALA** **BY GOVERNMENT PLEADER SMT.M.M.JASMINE** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 21.02.2023, ALONG WITH OT.Rev.84/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** :2: OT.Rev.No.83 & 84 of 2016 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **&** **THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.** **TUESDAY, THE 21[ST] DAY OF FEBRUARY 2023 / 2ND PHALGUNA, 1944** **OT.REV NO. 84 OF 2016** **(ORDER OF THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE, IN T.A.(VAT) NO.105 OF 2014 DATED 17.11.2015)** ## **REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:** **SMT.ANSAMMA JOSE AGED 50 YEARS PROPRIETOR, M/S. P.J.TRADERS, MANANTHAVADY. BY ADVS.** **SRI.N.MURALEEDHARAN NAIR SRI.V.K.SHAMUSUDHEEN** ## **RESPONDENT/RESPONDENT/RESPONDENT:** ## **STATE OF KERALA** **BY GOVERNMENT PLEADER SMT.M.M.JASMINE** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 21.02.2023, ALONG WITH OT.Rev.83/2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** :3: OT.Rev.No.83 & 84 of 2016 ## **O R D E R** ## **A.K.Jayasankaran Nambiar, J.** As the issues involved in both these Revision Petitions are the same and pertain to the same assessee, they are taken up together for consideration and disposed by this common judgment. 2. The brief facts necessary for the disposal of the O.T. Revisions are as follows: The petitioner is a dealer in hardware/cement for the purposes of the Kerala Value Added Tax Act (hereinafter referred to as ('the KVAT Act'). The assessment for the year 2005-2006 was completed by an order dated 13.02.2008 by determining a taxable turnover of Rs.1,84,78,387.76. While completing the assessment, the Assessing Officer estimated turnover consequent to detection of both purchase suppression and sales suppression in the returns filed by the petitioner assessee, and estimated the sales turnover resulting from the said acts of suppression by adding equal amounts towards probable omission and suppression and applying the gross profit at the rate of 15% to the said figure. Through a separate order dated 13.02.2008, a penalty of Rs.2,49,418/- (twice the tax due on suppressed turnover of :4: OT.Rev.No.83 & 84 of 2016 Rs.1,24,709/-) was also imposed on the petitioner under Section 67(1) of the KVAT Act. 3. Aggrieved by the orders of assessment and penalty, the petitioner approached the Appellate Authority under the KVAT Act. The Appellate Authority passed separate orders dismissing the appeals against both the assessment order as well as the penalty order. The petitioner assessee, therefore, carried the matter further before the Appellate Tribunal, which by a common order dated 17.11.2015 in TA(VAT) Nos.105 of 2014 and 106 of 2014, confirmed the orders of the authorities below in relation to the assessment and penalty. It is aggrieved by the common order of the Tribunal that the petitioner has approached this Court through the Revision Petitions aforementioned. 4. The contention of Sri.N.Muraleedharan Nair, the learned counsel for the petitioner, is essentially that the suppression of purchase turnover and sales turnover was detected by the Inspecting Authorities under the KVAT Act based on a scrutiny of the returns filed by the petitioner assessee and comparing the same with the books of accounts maintained by the assessee in the business premises. On a perusal of the records before us, we find that the differential turnover, of both purchases and sales, was determined based on a comparison :5: OT.Rev.No.83 & 84 of 2016 with the figures shown in the many revised returns filed by the petitioner assessee for various months during the assessment year 2005-2006, and the corresponding figures recorded in the books of accounts maintained by the petitioner assessee. Finding that the figures in the returns did not match with the figures in the books of accounts, the assessing authority disbelieved the figures in the returns and came to the finding that there had been a suppression of the figures showing purchase turnover and sales turnover in the returns filed by the assessee. It is thereafter that, after finding the figures in the returns submitted by the assessee to be erroneous, the assessing authority proceeded to estimate the turnover of the assessee by relying on the figures in the books of accounts. As regards the imposition of penalty, we find that the original authority has taken note of the actual suppressed turnover determined by the assessing authority and calculated the tax due on the suppressed turnover, and adopted twice that tax amount as the penalty for the purposes of Section 67 (1) of the KVAT Act. It is the said determination by the assessing authority as also the original authority for the purposes of penalty that has been confirmed by the First Appellate Authority as also the Tribunal by accepting the reasoning of the original authority. 5. It is the contention of Sri.N.Muraleedharan Nair, the learned :6: OT.Rev.No.83 & 84 of 2016 counsel for the petitioner, that in view of the fact that the figures for estimation of the sales turnover were taken from the books of accounts maintained by the petitioner assessee itself, there ought not to have been a further estimation of suppressed turnover by the Department. For the same reason, he also contends that there was no scope for the imposition of any penalty under Section 67 of the KVAT Act. Per contra, it is the submission of the learned Government Pleader Smt.M.M.Jasmine, that the impugned orders of the Tribunal do not call for any interference since the estimation of total turnover, taking note of the actual suppressed turnover, was justified under the facts and circumstances of the instant case. She would also maintain that the maximum penalty was warranted on the facts of the instant case. 6. On a consideration of the rival submissions, we find that it is not in dispute that the petitioner assessee had not returned the actual sales turnover in the returns filed by her during the relevant assessment year. It was after the factum of suppression of purchase turnover as well as sales turnover was made known to her that she proceeded to file revised returns trying to match the figures in the returns and the books of accounts. This is not a case where even prior to the detection of the suppression by the Department, the assessee voluntarily came forward to correct the figures in the returns. The :7: OT.Rev.No.83 & 84 of 2016 decision in **Alwaye Sugar Agency v. Asst. Commissioner, (ASSMNT) [2017 (4) KLT 794]** relied upon by the learned counsel for the petitioner is, therefore, clearly distinguishable on facts. Since the Department was justified in disbelieving the figures returned by the petitioner for the assessment year in question, and the estimation of taxable turnover was done by relying on the figures in the books of accounts of the petitioner assessee, as adjusted to take care of probable omission and suppression, we see no reason to interfere with the orders of the Assessing Officer estimating the suppressed turnover and demanding differential tax thereon. That said, we find force in the contention of the learned counsel for the petitioner as regards the quantum of penalty imposed on the petitioner assessee for the said assessment year. As already noticed above, the figures for estimation were taken from the books of accounts maintained by the assessee. No doubt, the assessee is labile for penalty for filing of incorrect returns, and since there has been a separate estimation of the total turnover for the purposes of assessment at the hands of the Assessing Officer, we feel that the ends of justice would be met by confining the penalty to the actual amount of tax suppressed. We, therefore, dismiss O.T. Revision No.83 of 2016 and partly allow O.T Revision No.84 of 2016 by reducing the penalty imposed on the :8: OT.Rev.No.83 & 84 of 2016 petitioner assessee to an amount equal to the tax that was sought to be evaded, namely, Rs.1,24,709/-. Since we are informed by the learned Government Pleader that the entire tax and penalty amounts confirmed against the petitioner assesee have already been paid in full on 16.06.2016, we direct that the refund amount to which the petitioner assessee would be entitled consequent to the finding in this judgment on the quantum of penalty to be imposed on the petitioner, shall either be refunded to the petitioner or adjusted against any future tax liability of the petitioner. Sd/- ## **A.K.JAYASANKARAN NAMBIAR JUDGE** Sd/- **MOHAMMED NIAS C.P. JUDGE** mns :9: OT.Rev.No.83 & 84 of 2016 ## **APPENDIX OF OT.REV 83/2016** ## **PETITIONER ANNEXURES** ## **ANNEXURE-A** **TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, (AUDIT ASSESSMENT) WAYANAD AT SULTHAN BATHERY, FOR THE ASSESSMENT YEAR 2005-06 DATED 13.02.2008.** ## **ANNEXURE-B** **TRUE COPY OF THE 1ST APPELLATE ORDER PASSED BY THE ASSISTANT COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOZHIKODE, FOR THE ASSESSMENT YEAR 2005-16 DATED 09.10.2010** ## **ANNEXURE-C** **TRUE COPY OF THE COMMON TRIBUNAL ORDER PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE IN T.A.(VAT)No. 105/2014 AND 106/2014 DATED 17.11.2015.** ## **ANNEXURE-D** **TRUE COPY OF THE REVISED RETURN FILED BY THE PETITIONER FOR THE YEAR 2005-06 DATED 28.12.2006.** ## **ANNEXURE-E** **TRUE COPY OF THE DEMAND NOTICE ISSUED BY COMMERCIAL TAX OFFICER FOR THE YEAR 2005-06 DATED 18.05.2016.** :10: OT.Rev.No.83 & 84 of 2016 ## **APPENDIX OF OT.REV 84/2016** ## **PETITIONER ANNEXURES** **ANNEXURE-A TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE COMMERCIAL TAX OFFICER, (AUDIT ASSESSMENT) WAYANAD AT SULTHAN BATHERY, FOR THE ASSESSMENT YEAR 2005-06 DATED 13.02.2008. ANNEXURE-B TRUE COPY OF THE PENALTY ORDER PASSED BY THE COMMERCIAL TAX OFFICER, (AUDIT ASSESSMENT) WAYANAD AT SULTHAN BATHERY, FOR THE ASSESSMENT YEAR 2005-06 DATED 13.02.2008. ANNEXURE-C TRUE COPY OF THE 1ST APPELLATE ORDER PASSED BY THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOZHIKODE, FOR THE ASSESSMENT YEAR 2005-16 DATED 03.11.2010. ANNEXURE-D TRUE COPY OF THE COMMON TRIBUNAL ORDER PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE IN T.A.(VAT)No. 105/2014 AND 106/2014 DATED 17.11.2015. ANNEXURE-E TRUE COPY OF THE DEMAND NOTICE ISSUED BY COMMERCIAL TAX OFFICER FOR THE YEAR 2005-06 DATED 18.05.2016.**