High Court of KeralaDivision Bench2021-11-15Revision petition dismissed; penalty order set ...

State of Kerala v. P.T. Johnson Poultry Farm and Others

Case / Petition Number:OT.REV 212/2015

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S. V. Bhatti
Basant Balaji Monday
Judgment Date: 2021-11-15
Court Decision / Holding: The revision petition is dismissed. The High Court held that there was a violation of natural justice and denial of reasonable opportunity to the dealer at the Primary Authority stage, which warranted setting aside the penalty order Annexure-A and remitting the matter to the Primary Authority for fresh disposal. The court acknowledged that remand power exists within Section 55, and that the appellate process may direct remand to ensure fair inquiry, with the remand being open-ended in its exercise. The decision directs that the Primary Authority conduct a proper inquiry, provide opportunities for rebuttal and cross-examination, and pass fresh orders in accordance with law. The Tribunal’s and Appellate Authority’s findings on remand were upheld, and the revision petition was ultimately dismissed.
Final Disposition: Revision petition dismissed; penalty order set aside for violations of natural justice and remanded to Primary Authority for fresh disposal; remand remains open-ended within statutory discretion.

Parties to the Case

Appellants / Petitioners

State of Kerala

Respondents

P.T. Johnson St. Thomas Poultry Farm, Kombodinjamakkal, Thrissur
Addl. R2 Reeni Johnson, W/o Late P.T. Johnson
Addl. R3 Thomas John, S/o Late P.T. Johnson
Addl. R4 Martin P.J., S/o Late P.T. Johnson

Legal Representation & Advocates

Counsels for Petitioners

• K. K. Ravindranath
• Addl. Advocate General

Counsels for Respondents

• P. R. Ajithkumar
• K. Manoj Chandran
• K. Srikumar

Case Synopsis & Summary

This revision petition challenges an order in a Kerala VAT penalty proceeding under Section 67 of the KVAT Act, where the Revenue alleged under-valuation of chicken sales by a group of dealers led by P.T. Johnson and relatives. The Deputy Commissioner (Appeals) remanded the matter to the Primary Authority for fresh disposal, contending the assessment/penalty process violated natural justice and that the Appellate Authority lacked power to remand. The Kerala VAT Tribunal had upheld the remand, and the Revision Court addressed a central legal question: whether the Deputy Commissioner (Appeals) can order remand under Section 55 while considering penalties, and whether such remand complies with the statutory framework and principles of natural justice. The petition also canvassed whether denial of reasonable opportunity to cross-examine witnesses tainted the penalty order and whether the open-ended remand aligns with the 2014 proviso to Section 55. The court examined precedents on remand powers, the right to cross-examination (citing State of Kerala v. Shaduli Yusuf and Jose v. Addl. STO), and the need for fair inquiry (citing V.S. Narayan Nair, Dharmadas, Kochukunju Pillai, and others). The bench ultimately held that there was a violation of natural justice at the Primary Authority stage, set aside the penalty order, and remanded to the Primary Authority for fresh disposal, while noting that remand powers are permissible, subject to due process. The revision petition was dismissed with directions to proceed as held.

Provisions of Law Cited

Kerala Value Added Tax Act, 2003 - Section 55Kerala Value Added Tax Act, 2003 - Section 55(5) (a)-(c)Kerala Value Added Tax Act, 2003 - Section 63Kerala Value Added Tax Act, 2003 - Section 67Chapter VII of the KVAT Act

Legal Doctrines & Maxims

Principles of natural justice (audi alteram partem)
Right to cross-examination of witnesses
Inherent/remand power of Appellate Authority
Fair hearing and opportunity to rebut evidence
Remand open-ended within statutory discretion (Section 55(5))

Submissions & Arguments

Contentions of Appellants / Petitioners

The State contends that the Deputy Commissioner (Appeals) had power under Section 55 to remand a penalty matter to the Primary Authority for fresh disposal, and that the remand was necessitated by violations of natural justice in the original penalty order. It is argued that Section 55(5) affords wide discretion to confirm, reduce, enhance, annul, set aside or remand the case with directions for further enquiry, and that the proviso (Act 2014) limiting remand to ex parte orders should not render the remand invalid for a full hearing scenario. The State asserts that cross-examination rights were not properly afforded and that the record did not contain adequate cogent materials to justify the penalty on the stated grounds. It further submits that the Tribunal’s upholding of remand demonstrates that remand is a permissible appellate tool to correct due process flaws.

Contentions of Respondents

The respondents (dealer/assessees) challenge the remand order as illegal and beyond the scope of Section 55, arguing that the appellate authority’s remand power is limited and that the penalty order should stand or be remanded only for limited, specified purposes. They contend that denial of opportunity to cross-examine witnesses violated natural justice, and that the Intelligence Officer failed to conduct proper enquiry. They also rely on case law to argue that remand should not be open-ended and that certain amendments (Act 2014 proviso) should restrict remand powers in earlier periods.

Cited Precedents (10)

Case Name	Citation	Treatment	Explanation
State of Kerala v. Shaduli Yusuf	39 STC 478	Positive	Supreme Court held that the assessee has a right to cross-examine witnesses; supports natural justice in assessments.
Jose v. Addl. STO	—	Positive	Kerala High Court held that the assessee has a right to cross-examine witnesses.
Union of India v. Umosh Dhaimode	—	Positive	Discussions on remand powers and limit of appellate authority; supports interpretation of Section 55(5).
V.S. Narayan Nair v. Sales Tax Officer	1971 KLT (1972) 29 STC 37	Positive	Natural justice principle: cannot rely on third-party accounts without cross-examining the third party.
C.O. Devassy v. State of Kerala	81 STC 2	Positive	Affirms need for fair opportunity to rebut and proper inquiry in tax proceedings.
Dharamadas v. State Transport Appellate Tribunal	1962 KLT 505	Positive	Inherent remand power in appellate tribunals.
Kochukunju Pillai v. RDO and Others	1978 KHC 120	Positive	Remand power recognized and supported by Kerala courts.
U.K Monu Timbers v. State of Kerala	2012 (3) KHC 111	Mentioned Only	Remand principles discussed; proviso not applicable to earlier period; used as context.
Vasantha Anirudhan v. State of Kerala	128 VST 97 (Ker)	Positive	Relied on regarding 8B bills and turnover evidence in penalty proceedings.
	—	Mentioned Only	W.P.(C) 21795/2012 cited for natural justice considerations.

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Extracted Judgment Text

Exact text extracted from official judgment records.

**OT.REV 212/2015** **-1-** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI** **& THE HONOURABLE MR.JUSTICE BASANT BALAJI MONDAY, THE 15[TH] DAY OF NOVEMBER 2021 / 24TH KARTHIKA, 1943** **OT.REV NO. 212 OF 2015** **AGAINST THE ORDER/JUDGMENT IN TAVAT 677/2013 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM REVISION PETITIONER/S:** **STATE OF KERALA** **REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **BY ADVS. GOVERNMENT PLEADER SRI.K.K.RAVINDRANATH, ADDL.ADVOCATE GENERAL** ## **RESPONDENT/S:** - **1 SRI.P.T.JOHNSON ST. THOMAS POULTRY FARM, KOMBODINJAMAKKAL, THRISSUR, PIN-680697.** - **2 *ADDL.R2 SMT. REENI JOHNSON, W/O. LATE P.T. JOHNSON AGED 58 YEARS, PUNNELIPPARAMBIL HOUSE, KOMBODINJAMAKKAL, THAZHEKKAD, THRISSUR DISTRICT** - **3 *ADDL. R3 SRI. THOMAS JOHN, S/O. LATE P.T. JOHNSON, AGED 32 YEARS, PUNNELIPPARAMBIL HOUSE, KOMBODINJAMAKKAL, THAZHEKKAD, THRISSUR DISTRICT** - **4 *ADDL.R4 SRI. MARTIN P.J., S/O. LATE P.T. JOHNSON, AGED 28 YEARS,** **OT.REV 212/2015** **-2-** ## **PUNNELIPPARAMBIL HOUSE,** **KOMBODINJAMAKKAL, THAZHEKKAD, THRISSUR DISTRICT** ***ARE IMPLEADED AS ADDITIONAL RESPONDENTS R2 TO R4 AS PER VIDE ORDER DTD. 29/10/18 IN IA NO. 3/18** **BY ADVS. SRI.P.R.AJITHKUMAR SRI.K.MANOJ CHANDRAN SRI.K.SRIKUMAR SR.** ## **OTHER PRESENT:** **SPL. G.P TAXES MOHAMMED RAFIQ FOR THE PETITIONER** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 15.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **OT.REV 212/2015** **-3-** ## **O R D E R** ## S.V.Bhatti,J. State of Kerala represented by the Deputy Commissioner (Law), Commercial Taxes, Ernakulam/Revenue is the revision petitioner. P.T.Johnson/respondent herein, is a dealer registered under the Kerala Value Added Tax, 2003 (for short, ‘the Act’). 2. The dealer is engaged in the business of rearing Broiler Chicken Birds and its sale. The inspection of dealer’s books, by the Revenue disclosed that the dealer had undervalued the chicken for the purpose of account books and paid VAT thereon. In other words, suppression of actual sale value of chicken was resorted to resulting in evasion of tax. 3. The Revenue has found out similar systematic undervaluation of chicken for the purpose of books and paying **OT.REV 212/2015** **-4-** or evading payment of tax under the Act by five dealers. The five dealers are alleged to be the close relatives of P.T Johnson/dealer herein **.** The Revenue initiated proceedings under Section 67 of the Act for the assessment year 2008-09. The Revenue finally imposed penalty of Rs.3,11,39,550/through the order dated 30.10.2012, marked as Annexure-A. Broadly stated, the penalty proceedings are initiated on the basis of undervaluation, resulted in estimation of turnover and details in the income tax returns filed by the dealer are contradictory. The circumstances relied on by the Revenue for imposing penalty under Section 67 of the Act are not adverted to in our judgment, for, the views/conclusions taken by the Appellate Authority and the Tribunal on the question of violation of principles of natural justice are mainly reviewed. The dealer aggrieved by the order in Annexure-A, filed appeal before the Deputy Commissioner (Appeals) and the Deputy Commissioner, through the order dated 29.10.2013 set aside **OT.REV 212/2015** **-5-** the order in Annexure-A dated 30.10.2012 and remanded the case to Primary Authority for disposal in accordance with law. 4. The Revenue filed T.A (VAT) No.677 of 2013 before the Kerala Value Added Tax Appellate Tribunal, Ernakulam (for short, 'Tribunal') The Revenue raised the grounds that the Deputy Commissioner (Appeals)/First Appellate Authority does not have the power or jurisdiction under Section 55 of the Act to remand the case for disposal to the Primary Authority. In other words, the Deputy Commissioner (Appeals) is convinced from record that the order of assessment is made in violation of any facet of principles of natural justice or requirement of law, there is no need or necessity to remit the matter to the Primary Authority. From the unequivocal expression used in Section 55(5)(a) (b) and (c), the Deputy Commissioner can pass the fresh assessment order on the material available on record. 4.1. The Revenue contends that the appeal is nothing but continuation of original proceedings and, therefore, the **OT.REV 212/2015** **-6-** legislature, by choice, in its well-informed reasons and wisdom specifically did not confer the power of remand on the Deputy Commissioner (Appeals). Therefore, the remand _per se_ is or illegal and beyond the jurisdiction the power of the Appellate Authority. The second ground is that the order in Annexure-A, does not violate or infringe the principles of natural justice and sufficient reasons are present in AnnexureA order for imposing penalty. Therefore, the remand is unjustified in the facts and circumstances of the case. The Tribunal through a common order dated 29.05.2015 rejected both the contentions. Hence, the revision at the instance of the Revenue. 5. On 22.12.2015, this Court while condoning the delay, noted the question of law mooted in the revision as follows: “We have heard the learned Senior Government Pleader for the Department of Commercial Taxes. It is submitted that the question of law mooted for **OT.REV 212/2015** **-7-** consideration is as to whether the Deputy Commissioner (Appeals) has the power to order remand of a case relating to a penalty proceedings when considering an appeal under Section 55 of the KVAT Act. The other questions which are sought to be raised are essentially matters which will depend upon appreciation of facts and evidence which appears to be the purpose of remand by the Deputy Commissioner (Appeals) and confirmed by the VAT Appellate Authority Tribunal. It is submitted that other connected matters are filed. The learned Senior Government Pleader seeks an adjournment to address arguments further.” 6. We have heard Mr. Mohammed Rafiq, Special Government Pleader, and Mr. K.Srikumar, the learned Senior counsel for parties. 7. Mr. Mohammed Rafiq, keeping in perspective the order dated 22.12.2015 and also the scope of revision under Section 63 of the Act, argued with sufficient emphasis two grounds viz. remand by the Deputy Commissioner as illegal and violation of principles of natural justice that were unsuccessfully raised by the Revenue before the Tribunal. Stated, it is argued that the **OT.REV 212/2015** **-8-** notice issued under Section 67 of the Act, dealt with all commissions and omissions of the dealer noticed by the Revenue, warranting initiation of action under Section 55 of the Act. The dealer is not exonerated by denying each one of the accusations made against the dealer. The dealer is, therefore, under obligation to satisfactorily place before the Primary Authority that the business carried on by the dealer is compliant with the requirements of the Act and there is no commission or omission in sale price, turnover. Therefore, the findings that denial of reasonable opportunity/violation of principles of natural justice by the First Appellate Authority and the Second Appellate Authority are devoid of merit and liable to be set aside. 8. Mr. K.Srikumar appearing for the dealer, to sustain the finding recorded by the Appellate Authority and the Tribunal, has placed before us the tabular statement showing the allegations in the notice issued under Section 67 of the Act, **OT.REV 212/2015** **-9-** the findings of the Primary Authority, and the findings of the Tribunal which confirmed the findings of the Appellate Authority. To appreciate the fundamental omission in the procedure followed by the Primary Authority, we find it useful to state the details as follows: |**_Sl_** **_no._**|**_Allegations in the_** **_proposal notice dated_** **_27.02.2012_**|**_Reply/objection to the_** **_allegations dated_** **_26.09.2012 &_** **_15.10.2012_**|**_Findings of_** **_Intelligence_** **_Officer in_** **_Penalty Order_** **_dated_** **_30.10.2012._**|**_Findings of Tribunal_** **_in common order_** **_dated 29.05.2015._**| |---|---|---|---|---| |_1._|_1. Thomson Group is a_ _single entity Entire sales_ _turnover of the Group_ _(except meager sales_ _turnover conceded by the_ _Rose Poultry Farm) is_ _shown as made to ultimate_ _customers. ie., unregistered_ _dealers and verification_ _has confirmed that such_ _addresses or purchasers of_ _live chicken shown as per_ _Form 8 B Bills are bogus or_ _non-existent._ _All 6 dealers/assessees are_ _members of a common_ _business group 'Thomson_ _Group' and attempted_ _evasion of tax in close_ _cooperation._|_There is no business_ _concern with the name_ _'Thomson Group'._ _Thomson Group is not a_ _juridical person or legal_ _entity. The group has_ _no registration under_ _KVAT Act either as_ _proprietor or as partner_ _in any business. The_ _liability under the Act_ _is on dealer. The_ _dealer is a person who_ _carries on the business_ _of buying, selling or_ _supplying of goods for_ _remuneration, or other_ _valuable consideration._ _Sales to end customers_ _or ultimate customers_ _are not an act_ _prohibited by law or an_ _offence under the Act._ _Statute expressly_ _allow sale to end_ _customers by_ _prescribing Form 8 B_ _sale billfor that_|_Thomas Group is_ _a single entity._ _All 6 dealers/_ _assessee are_ _members of a_ _common business_ _group 'Thomson_ _Group' and_ _attempted_ _evasion of tax in_ _close cooperation._ _(Page 274 of the_ _penalty order)_|_On a close reading of_ _the findings of the_ _Intelligence Officer it_ _can be said that the_ _Intelligence Officer_ _has not collected any_ _evidence to establish_ _that the business of_ _all the 6 assessee_ _dealers are carried_ _out by a single person_ _or all of them are_ _doing the business as_ _common (Para 36)_ _At any rate none of_ _them can be made_ _jointly liable for any_ _offences committed_ _by any of them_ _especially when the_ _registration obtained_ _by them for running_ _their business under_ _the Act stands in the_ _name of each of them_ _(Para 37)_ _The Intelligence_| **OT.REV 212/2015** **-10-** ||_Form 8 B bills (bills to be_ _issued to end consumers_ _under rule 58 of KVAT_ _rules. 100 notices were sent_ _to purchasers, referred to_ _in Form 8B bills which were_ _returned with an_ _endorsement of postal_ _authorities that such_ _persons are “not known”._ _Sales claimed to have been_ _conducted is only a paper_ _transaction to camouflage_ _the actual transactions_ _which have been revealed_ _in the investigations_ _conducted. There is no_ _dealer to dealer sale of_ _chicken and the entire_ _turnover has been made_ _only to unregistered_ _dealers._|_purpose. Statute does_ _not insist for postal_ _address of the buyer in_ _the sale bill when sale is_ _made to end customers._ _Address of the_ _purchaser is given in_ _Form 8 B bill only as_ _reported by the buyer_ _himself._ _The requirement is only_ _to furnish Name and_ _address of purchaser._ _There is no requirement_ _to furnish residential_ _address, building_ _number, post office, pin_ _code or the full address_ _etc. in Form 8B bill._ _Nowhere in the statute_ _it is provided that bills_ _should contain postal_ _address of the buyer or_ _that if buyer could not_ _be served notice in the_ _address given by them,_ _it shall be ground to_ _impose penalty._ _The observation that_ _the buyers are bogus or_ _non-existent persons is_ _contrary to facts and is_ _made without any_ _supporting or_ _corroborating_ _materials._ _All parties (alleged as_ _group) are separately_ _registered as dealers_ _under the KVAT Act._|_Form 8 B bills_ _(bills to be issued_ _to end consumers_ _under rule 58 of_ _KVAT rules (page_ _100-103 of penalty_ _order)._ _100 notices were_ _sent to_ _purchasers,_ _referred to in_ _Form 8B bills_ _which were_ _returned with an_ _endorsement of_ _postal authorities_ _that such persons_ _are “not known”_ _Sales claimed to_ _have been_ _conducted is only_ _a paper_ _transaction to_ _camouflage the_ _actual_ _transactions_ _which have been_ _revealed in the_ _investigations_ _conducted. There_ _is no dealer to_ _dealer sale of_|_Officer has not_ _brought on record_ _any materials to_ _establish the_ _managerial,_ _administrative or_ _monetary_ _transactions between_ _respondent assessees_ _except for their blood_ _relationship. De jural_ _relationship alone is_ _not sufficient. (Para_ _40)_**_Relied on_** **_Vasantha_** **_Anirudhan v. State_** **_of Kerala (2008) 128_** **_VST 97 (Ker)_** _When considering the_ _findings arrived at by_ _the Deputy_ _Commissioner_ _(Appeals) with regard_ _to 8B bills in the wake_ _of the contention_ _raised by both sides,_ _we are constrained to_ _concede with the_ _finding of the Deputy_ _Commissioner_ _(Appeals) that_ _"merely for the_ _reason for the return_ _of the notices send to_ _certain buyers in the_ _address given in Form_ _8B bills by the postal_ _authorities with an_ _endorsement as not_ _known is not at all the_ _circumstance to draw_ _an inference that the_ _buyers are bogus or_ _non-existent persons,_ _on the other hand the_ _inference drawn in_ _the intelligence_ _officer from the_ _endorsement made by_| |---|---|---|---|---| **OT.REV 212/2015** **-11-** |_chicken and the_|_the postal authority_| |---|---| |_entire turnover_|_on the postal article_| |_has been made_|_as not known does not_| |_only to_|_mean that the_| |_unregistered_|_address is bogus or_| |_dealers._|_such persons did not_| ||_exist in such a_| ||_circumstance the_| ||_inference drawn by_| |_Therefore it can_ _be inferred that_ _the Form 8 B bills_ _are forged ones._ _All Form 8B bills_ _show uniform_ _sale value of_ _below Rs. 5000_ _even though sales_ _were effected to_ _very faraway_ _places. On_ _scrutiny it is_ _found that not_ _even a single bill_ _was issued by the_ _dealers during_ _2008-09, 2009-10_ _and 2010-11_ _having sale value_ _above Rs. 5000._ _Therefore the_ _bills were issued_ _to avoid scrutiny_ _at the time of_ _transport. (pg._ _104 penalty_ _order)_|_the intelligence_ _officer appear to be_ _unrealistic and bad in_ _law". Over and above,_ _we also concur with_ _the finding of the_ _Deputy Commissioner_ _(Appeals) that no_ _honest or a pain_ _staking enquiry was_ _done by the_ _Intelligence Officer to_ _ascertain whether the_ _addressees shown in_ _the 8B bills does exist_ _or not and without_ _considering these_ _aspect, the_ _Intelligence Officer_ _has proceeded with_ _the penalty_ _proceeding. It is_ _evident that no_ _attempt was made by_ _the Intelligence_ _Officer to conduct a_ _proper enquiry in this_ _regard. The fact being_ _so, we are fully_| ||_constrained to uphold_| ||_the findings arrived_| ||_at by the Deputy_| ||_Commissioner_| ||_(Appeals) on this_| ||_aspect. We find no_| ||_impropriety or any_| ||_illegality in the said_| ||_findings. As such, we_| ||_find no merit in the_| ||_contention of the_| ||_Revenue. (Para 57)._| **OT.REV 212/2015** **-12-** |||||||| |---|---|---|---|---|---|---| |_2_|_Undervaluation_ _The Group has deliberately_ _adopted a novel pattern of_ _tax evasion tactics by_ _conceding_ _only_ _an_ _undervalued_ _minimum_ _price thereby suppressing_ _approximately half of the_ _sales turnover._ _The dealers under quoted_ _sale value of live chicken_ _than the floor rate fixed by_ _the Commissioner for the_ _collection of advance tax._ _The dealers under quoted_ _sale value of live chicken_ _than the floor rate fixed by_ _the Commissioner for the_ _collection of advance tax._ _The_ _estimated_ _bills_ _recovered_ _from few_ _institutions_ _constitutes_ _solid and indisputable_ _piece_ _of_ _evidence_ _suggesting illegal pattern_ _of suppression tactics_ _adopted by the Group for_ _decisive evasion of tax_ _under the KVAT Act by_ _undervaluing the chicken_ _rate._|_The allegation of_ _undervaluation is not_ _supported by any_ _evidence. The rate_ _fixed_ _by_ _the_ _Commissioner_ _of_ _Commercial Taxes is_ _purely for the purpose_ _of collecting advance_ _tax and not for the_ _purpose of assessment_ _or for imposing penalty._ _Tax liability of the_ _dealer under the_ _statute is on the_ _amount received or_ _receivable as sale_ _consideration. It cannot_ _be on the estimated sale_ _value or on the basis of_ _the floor rate fixed for_ _the_ _purpose_ _of_ _collection of advance_ _tax._ _The allegations based_ _on certain recoveries_ _and_ _depositions_ _collected_ _from_ _witnesses are wrong._ _The witnesses have_ _deposed that they had_ _purchased poultry meat_ _from market. They do_ _not have any direct_ _transactions with the_ _assessee. It is also_ _pertinent to note that_ _the assesses sells only_ _live birds in their_ _poultry farms._ _No enquiry conducted_ _even to ascertain truth_ _of_ _statement_ _of_||_Undervaluation_ _(page 120-267)_ _"The estimate_ _bills_ _to_ _Ambilikkala_ _hostel constitute_ _solid_ _and_ _indisputable_ _piece of evidence_ _suggesting well_ _thought_ _and_ _orchestrated_ _pattern_ _of_ _suppression_ _tactics adopted_ _by group viz. Sri_ _PT Jose, Sri PT_ _Benny, Sri PT_ _Davis, Smt. Gracy_ _Thomas, Sri. _ _PT_ _Varghese and Sri_ _PT Johnson- for_ _purposeful_ _evasion of tax_ _under the KVAT_ _Act._ _(page 194)._ _Several materials_ _discovered_ _including_ _estimation slips_ _reveal_ _that_ _dealers_ _had_ _supplied chickn_ _to Hotal Joys_ _Palace,_ _Ambilikkala,_ _Hostel_ _Hotal_ _Ashoka Inn, M/s._ _Harvest caterers_ _etc. at market_ _rate_ _while_|_There is nothing on_ _record to make it_ _appear that the_ _Intelligence Officer_ _had unearthed any_ _materials to show_ _that the assessees_ _have_ _factually_ _collected more than_ _the_ _ostensible_ _consideration shown_ _in_ _their_ _accounts or bills_ _(para 80) But a duty_ _is cast on the Revenue_ _to prove that the_ _assessee has factually_ _collected more than_ _the_ _ostensible_ _consideration shown_ _in the account. Such a_ _finding is essential_ _even_ _for_ _an_ _assessment in case of_ _undervaluation. But_ _in the instant case, on_ _a close reading of the_ _impugned orders of_ _the_ _Intelligence_ _officer we hod that_ _though the Revenue_ _had a case that the_ _sales of chicken_ _effected by the_ _assessee_ _dealers_ _shown in their_ _accounts are at a low_ _prices. with a view to_ _evade the payment of_ _tax compared to the_ _market price of such_ _goods that too with a_ _view to. evade_ _payment of tax, but_ _there is no such a_ _finding to the effect_ _that any of the_ _assessee dealers have_ _factually collected or_ _obtained more than_|| **-13-** ## **OT.REV 212/2015** ||_The prevailing market_|_witnesses and to_ _discredit the case. of_ _dealers through cross_ _examination_ _of_ _witnesses sought for by_ _the dealers._ _The rate of live chicken_ _supplied_ _by_ _the_ _Economics_ _and_ _Statistical Department_ _is retail market price._ _The dealer herein is_ _selling the live chicken_ _from own farm. It is_ _everybody's knowledge_ _that farm rate would be_ _less than the retail_ _price because farm rate_ _is excluding the after_ _sale expenses incurred_ _by the buyers. Retail_ _price would include_ _expenses_ _for_ _transportation from_ _farm to the place of the_ _end customer, loading_ _and unloading charges,_ _loss_ _of_ _weight,_ _processing live bird to_ _meat, mortality and_ _expenses for feeding the_ _birds in between these_ _days, etc. The allegation_ _of undervaluation is_ _hence without realistic_ _appraisal of the facts_ _and circumstances of_ _the_ _case._ _3. The examination of_ _Statistical department_ _officers would prove_ _that the details of_ _poultry meat are_ _procured by them from_ _market, the price_ _governing the retail_ _market would always_ _be_ _higher_ _when_ _compared to farm rate,_ _the details collected_|_accounting_ _at_ _lesser_ _rate_ _evading tax._|_the amount shown in_ _their accounts or in_ _the 8B bills, or in the_ _purchase order as_ _claimed by the_ _intelligence officer_ _when considering the_ _facts_ _and_ _circumstance of the_ _case such a finding is_ _essential to warrant_ _an action u/s 67 of_ _the Act in the cases_ _on hand. In the_ _absence of such a_ _finding, the penalty_ _imposed_ _on_ _estimation appears to_ _be_ _highly_ _an_ _erroneous and illegal_ _one Especially when it_ _is born out from the_ _records that the data_ _collected by the_ _investigation team_ _from the statistical_ _department and the_ _data collected by the_ _respondent_ _dealer_ _from the very same_ _department through_ _Right To Information_ _Act (RTI) show_ _different rates. On the_ _other hand, on a close_ _reading of the datas_ _supplied by the_ _statistical department_ _it can be said that the_ _Intelligence Officer_ _has considered only_ _the 'retail market_ _price of the chicken_ _whereas the assessees_ _specific case is that_ _they have sold_ _chicken only from_ _their farm and the_ _Intelligence Officer_ _did not consider the_ _fact of 'rate difference_ _in the farm as well as_ _in the open market_|| |---|---|---|---|---|---| **OT.REV 212/2015** **-14-** ||_price gathered by the_ _statics department from_ _various markets on weekly_ _basis for the period from_ _2008-09, 2009-10 and 2010-_ _11._|_from the Statistical_ _department under RTI_ _Act by the assesses_ _substantially differs_ _from the rate adopted_ _for proposing the_ _penalty.._|_Statement_ _of_ _Economic and_ _Statistics_ _Department_ _showing the price_ _in retail market_ _of poultry meat_ _on weekly basis is_ _adopted_ _to_ _calculate_ _the_ _suppresses_ _turnover._|_and the materials_ _available from the_ _affidavits filed by the_ _agents_ _of_ _the_ _purchasers. (para 79)_ _The dealers had a_ _specific case that all_ _the sales effected by_ _them are "sales to_ _dealer"_ _or_ _to_ _"retailers" from their_ _farm. But this aspect_ _was_ _not_ _even_ _considered by the_ _Intelligence Officer._ _Bills at a lower rate_ _that_ _prevailing_ _market price is_ _justifiable in cases of_ _sales between dealers._ _(Para 82)_|| |---|---|---|---|---|---| In the above background, we would refer to the clear and categorical findings recorded by the Deputy Commissioner (Appeals) on how the order of imposing penalty is vitiated in all fours. The relevant portion is excerpted hereunder: “(154) Regarding denial of opportunity for examination and cross Examination of witnesses. The appellant has raised a specific contention of denial of opportunity for examination of witnesses and thereby violation of principles of natural justice. The Intelligence Officer has discovered materials during the enquiry which will throw light into the transactions of appellants and other dealers. The **OT.REV 212/2015** **-15-** Intelligence Officer has no case that any materials has been detected connecting clandestine sale done by the appellant in this case. Though certain estimate slips were recovered in respect of M/s. Rose Poultry Farm and M/s. Best Poultry Farm no such materials could be found in respect of the other dealers. The department witnesses in their deposition have stated that they have no business transaction with the appellant in this case. It is pertinent to note that all the Department witnesses have deposed that they had purchased chicken from shops in the market and the specific case of the appellant is that he does not have any shop either in the market or any other place. During the Cross Examination Sri.Muraleedharan and Sri. Radhakrishnan of Ambilikkala Hostel have deposed that they regularly purchased chicken from open market at Sakthan Thampuram Market at Thrissur. In such circumstances it was fair and proper to conduct a proper enquiry regarding the transactions. No suppression or irregularity is found in the case of the appellant as in the case of M/s. Rose poultry Farm and M/s. Best Poultry Farm. But the Intelligence Officer has imposed penalty by estimating turnover. More over the Intelligence Officer has relied on the materials unearthed in respect of the suppression of turnover by the other two dealers and came to an inference that all the dealers including the appellant uniformly follows the same pattern of suppression. The findings of the Intelligence officer that “The estimate bills **OT.REV 212/2015** **-16-** constitute solid and indisputable piece of evidence suggesting illegal pattern of suppression tactics adopted by the groups. Viz. Sri. P.T. Jose, Sri. P.T. Davis, Sri. P.T. Benny, Smt. Gracy Thomas, Sri. P.T. Johnson and Sri. P.T. Varghese for decisive evasion of tax under the KVAT Act 2003, by undervaluing chicken rates", shows that the nominal and trifle lapses detected by the Intelligence Officer in the case of a single dealer and a lone lapse detected in the case of another dealer, have been utilized as materials to add up huge turnover additions to other four dealers also, even though no similar defect have been found in their cases. This inference and uniform adoption of all the dealers is definitely against the principles of penalty and hence should have been avoided. Apart from the above the appellant has contended that his request for examination of certain witnesses on the basis of depositions primarily made by certain witnesses was rejected by the Intelligence Officer and thereby violated the principles of natural justice. I have meticulously looked into those contentions especially in view of the settled legal positions that denial of opportunity for examination and cross examination of witnesses would result in violation of natural justice which would make the order a nullity. In the present case the appellant had furnished a list of witnesses to be examined. On his behalf. The crucial question here arose is whether the appellant has a right to examine and cross examine and whether examination of the persons cited as **OT.REV 212/2015** **-17-** witnesses are relevant for a adjudication in the matter. The Hon'ble Supreme Court has held in State of Kerala Vs. Shaduli Yusuf [39 STC 478] and Hon'ble High Court of Kerala in Jose Vs. Addl. STO have held that the assessee has a right to cross examine witnesses. The intelligence Officer has evaluated the facts and circumstances and also materials on record and found that there is no need for cross Examination of any of the witnesses. The appellants have contented that the examination of the witnesses cited are highly necessary to bring out the truth behind the presence of estimated slips as those persons had conducted the transactions in dispute. It is to be noted in this context, as pointed out by the learned counsel for the appellant, names of certain persons have come out in evidence during the cross examination of the departmental witnesses . It was also came out in evidence that those persons are very much related to the transactions involved and the Departmental witnesses have deposed that they have purchased live chicken from different persons in the market. More over some of the slips show the name of Mr. K.A. John (page 146 of the penalty order ) from whom the departmental witnesses had purchased live chicken. In such circumstances, it was just and proper to evidence by examining the said person by the appellants. The denial of such an opportunity was incorrect. On page 81 of the notice the Intelligence has stated that Sri. Aniljith, Manager, M/s. Harvest Caters (Pvt.) Ltd had deposed that from 2008, they effect purchase of chicken from **OT.REV 212/2015** **-18-** Rose Poultry Farm. Consequent to purchase order given over phone to Rose Poultry Farm, chicken is supplied at Thrissur unit and for which purchase estimate slips superscribed as "John Chicken" is given and at the end of each week, Rose Poultry Farm will issue 8 B bills for said total amounts and payments are made accordingly. In the cross examination made by the appellant on 23.08.2012, Sri. Aniljith, Manager of M/s Harvest Caters (P) Ltd has deposed that whenever they required chicken, they place orders over phone for the quantity and size of the needed chicken to office of the "John chicken " at Ollur, at Pillai Nada by the production Manager of the Company. Sri. John, Proprietor of the "John Chicken" is the corporation councilor of Thrissur corporation. Sri. John who accepts orders clean the chicken, cut them to the required sizes and supplies them at the specified time along with invoices of Rose Poultry farm and estimate slips for the extra works done by him. Sri. John himself receives the cheques due to Rose Poultry Farm and balance of cash due to him for his incidental work. This shows that the appellant has nothing to do with the estimate slips. In the light of the deposition of the Manager at the time of Cross examination the Intelligence Officer ought to have withdrawn his previous observations made in the notice, which have been proved totally incorrect. Apart from the above, the Intelligence Officer has decided to reject the affidavit of certain persons filed by the appellant by analyzing the contents of the same. It is settled **OT.REV 212/2015** **-19-** law that if the affidavits are considered on merits, the same can be rejected/controverted only after examining the deponent on the statements averred in the affidavit. There is some force in the arguments of the appellant regarding denial of opportunity for examination of witnesses. The appellant had approached the Hon'ble High Court on two occasions seeking opportunity for adducing evidence by examining witnesses. The Hon'ble High Court in W.P. (C) No. 21795/2012 observed that "First of all, adjudication is only pending and final orders are yet to be passed. If as contented by the petitioners,evidence of seven witnesses is essential and the matter is finalized without affording them opportunity to cross examine those witnesses that will give rise to a case of violation of principles of natural justice. However such a plea can be raised by the petitioners only after final order is passed by the 2nd respondent, on conclusion of the adjudication which he is now seized of In this connection it is also relevant to note the observation of the Hon'ble High Court in C.O. Devassy Vs. State of Kerala [1991] 81 STC 2." we are aware of the legal positions that the sales tax officer when he hold an enquiry and effects the best judgment assessment is not functioning as a court. The proceedings before him are not judicial but only quasi judicial. But he should proceed to decide the matter before him in a fair and reasonable manner ascertained facts and upon properly circumstances. In exercising the quasi judicial function, the assessing authority should conform to **OT.REV 212/2015** **-20-** the principles of natural justice. He should act fairly and reasonably and afford proper and effective opportunity to the assessee to rebut the case of the Department ". The above observation of the Hon'ble High Court with regard to the assessing authority is equally applicable to the Intelligence officer. On going through the Order and reasons stated herein, for rejecting the opportunity of examination and cross Examination of witnesses, I am of the opinion that the denial was improper and an opportunity for examination and cross examination of witnesses should have been granted, particularly when the amount of penalty imposed was a substantial one. xxx xxx xxx (162) In V. S. Narayan Nair V. Sales Tax officer 1971 KLT (1972) 29 STC 37 the Hon'ble High Court held that " an assessment cannot be based on the entires found in the books of accounts of a third party without giving to the assesse an opportunity to cross examining that party with reference to those books if so required and that this is a requirement of natural justice ". The Intelligence officer and the team have conducted intensive enquiry in the matter and collected voluminous documents and records relating to the transactions of the appellant. Hence it will be improper to cancel the order for the reason of improper appreciation of evidence and also for not fixing the appellant with cognet evidence to impose penalty. Proper enquiry should have been conducted to establish whether the appellant had actually **OT.REV 212/2015** **-21-** suppressed any turnover with materials. The appellant should have been provided with opportunity to rebut the case of the department with ample opportunity .It is to be noted that giving of opportunity for adducing evidence will not affect penalty proceedings, on the other had it would give the findings more transparency and authoritativeness. considering the entire facts of the case the order of the penalty is set-aside and remitted back to the Intelligence officer for fresh disposal taking into consideration the above observations. The Intelligence Officer shall conduct proper enquiry with regard to all the points with proper appreciation evidence gathered raised by the appellant in the replies filed by him before passing fresh orders. The appellant shall be given proper opportunity for adducing evidence, to cross examine witnesses and of being heard and pass orders. In accordance with law. Common order shall be incorporated in each file.” 9. The Revenue except raising general grounds on the circumstances considered and concluded against the Revenue by the Appellate Authority and the Tribunal, failed to demonstrate, either perversity or that presumptuous conclusions are drawn by the Authorities and/or extraneous material or views led to **OT.REV 212/2015** **-22-** recording conclusions in favour of the dealer. Since we are in agreement with the view expressed by the Deputy Commissioner (Appeals) on the procedure followed by the Primary Authority and denial of reasonable opportunity to the dealer, vitiates the order in Annexure-A, we sustain the findings recorded both by the Appellate Authority and the Tribunal on the violation of principles of natural justice and/or denial of reasonable opportunity to the dealer, including the right to cross-examine the persons whose statements the Revenue is relying on in support of its case against the dealer, for initiating and concluding penalty proceedings. The above conclusions take us to the next argument of Mr.Mohammed Rafiq. 10. The Special Government Pleader contends that Section 55 is part of Chapter VII of the Act. Chapter VII deals with the Appeals, Revisions, and Settlement of cases under the Act. Right of appeal is a statutory remedy and is inherent in a **OT.REV 212/2015** **-23-** litigant to file appeal. The Act provides the right of appeal, the forum of appeal, and the procedure to be followed by the Appellate Authority. According to him, the Deputy Commissioner (Appeals), while making the order in AnnexureB, did not conform to the jurisdiction conferred on Deputy Commissioner (Appeals) by subsection (5) of Section 55 of the Act, which reads thus: [55. Appeals to the Deputy Commissioner (Appeals) and Assistant Commissioner (Appeals).- (1) Any person aggrieved by any order issued or proceedings recorded other than those under Section 16, section 19, sub-sections (8) and (9) of section 44, section 49, section 67, section 68, section 69 and section 70 passed by an authority empowered to do so under this Act not being an authority above the rank of an Assistant Commissioner may, within a period of thirty days from the date on which the order was served on him, appeal against such order, xxx xxx xxx (5) In disposing of an appeal, the Deputy Commissioner (Appeals) and Assistant Commissioner (Appeals) may, after giving the appellant a reasonable opportunity of being heard,- (a) in the case of an order of assessment or **OT.REV 212/2015** **-24-** penalty, either confirm, reduce, enhance or annul the assessment or the penalty or both; (b) set aside the assessment and direct the Assessing Authority to make a fresh assessment after such further enquiry as may be directed; (c) or pass such other orders as he may think fit; or (d) in the case of any other order, confirm, cancel or vary such order: Provided that at the hearing of any appeal against an order of the assessing authority, the Assessing Authority or the officer empowered by the Commissioner in this behalf shall be heard.” Second proviso to subsection (5) of Section 55 of the Act has been inserted by the Kerala Finance Act, 2014 (Act 29 of 2014), which reads thus: “Provided that the of the power Deputy Commissioner (Appeals) to remand a case is limited to ex-parte orders only.” 10.1. In a nutshell, the argument of the Special Government Pleader is that the order of remand by Deputy **OT.REV 212/2015** **-25-** Commissioner (Appeals) in Annexure-B to Primary Authority is unavailable; beyond the jurisdiction of the Appellate Authority and illegal. 11. Senior Advocate Mr. K.Srikumar, argues that the objection raised on the power of the Deputy Commissioner (Appeals) to remand the case to the Primary Authority is an objection without substance. According to him, subsection (5) (c) provides, viz. pass such other orders as he (the Appellate Authority) may think fit is. Read along with clause (a) which reads; in the case of an order of assessment or penalty, the Appellate Authority either confirm, reduce, enhance or annul the assessment or the penalty or both. The power of remand follows from one or the other exigencies contemplated by subsection (5)(a). The proviso introduced through Act 29 of 2014 is not applicable to the case on hand. He relies on a few precedents to bring home his argument that the power of remand is inherent in the power of adjudication by the **OT.REV 212/2015** **-26-** Appellate Authority. The phraseology of subsection (5) is wide enough to expressly confer the power of remand in the Appellate Authority. We are not preferring to advert to all the decisions relied on by him, however, except the following: ## **Union of India Vs. Umosh Dhaimode[1]** “8. In view of the above, we are of the considered opinion that, without properly understanding the judgment of the Tribunal, the appellant has framed second question of law in both these appeals, viz., 'Whether a single Member Bench can overrule a decision of the larger Bench on the same issue.' There is no question of overruling the judgment of the larger Bench. As stated earlier, the learned single Member has held that the judgment of the larger Bench of the appeal per incuriam in view of the judgment of the Hon'ble Supreme Court and he is bound by the Hon'ble Supreme Court judgment and not by the judgment of the larger Bench of the Tribunal. Once, we accept the judgment of the single Member of the Tribunal taking view against the Department, then the Commr. (A) continues to have the power of remand even after the amendment of Section 35A(3) of the Central Excise Act, 1944 by Finance Act, 2001, then the first 1 LAWS (SC) 19972 35 **OT.REV 212/2015** **-27-** question does not remain to be decided as substantial question of law. 9. We must also state that even after amendment, which has come into force w.e.f. 11th May, 2001, powers of remand by allowing the appeal of the Commr.(A) have not been taken away specifically. In that view of the matter, we are of the considered opinion that the Appellate Authority, viz., Commr. (A) was vested with the power while deciding the appeal as he deemed fit by confirming, modifying or annulling the decision or order appealed against him. In our considered opinion, order of remand necessarily annuls the decision, which is under appeal before the Appellate Authority. Therefore, we entirely agree with the view taken by the learned single Member of the Tribunal that even after amendment of Section 35A of the Central Excise Act, the Appellate Authority has the power to set aside the decision, which is under appeal before it and it has power to remand the matter to the authority below for its fresh consideration. In view of the above discussion, both these appeals fail and are hereby dismissed.” ## **Kochukunju Pillai v. RDO and Others[2]** “2. We find it difficult to sustain the judgment of the learned Judge on the ground that the proceedings for settlement of record of rights had been rendered infructuous by certain separate 2 1978 KHC 120 **OT.REV 212/2015** **-28-** proceedings before the Land Tribunal in regard to the purchase of landlord's rights under S.72B of the Act. To so bold in the appellant's writ petition to quash the order of remand made by the Appellate Authority, seems to us to require examination. But we do not pursue this line of enquiry, as we are satisfied that even dealing with the appellant's writ petition on the merits, there are no grounds to allow it and it has only to be dismissed. 3. The only grievance that the appellant had in his writ petition was that the Revenue Divisional Officer had no power of remand in dealing with the appeal from the order of the Tahsildar an allowing application for preparation of record of rights. Counsel drew our attention to R.28, sub-r.(3) of the Kerala Land Reforms Tenancy Rules, which deals with the procedure for disposing of an appeal, against an application to settle the record of rights. We think it unnecessary to extract the rule. It was argued that the rule contemplates only a dismissal of the appeal or a direction to the Tahsildar to make such additions, alterations, deletions or modifications as are deemed necessary by the Revenue Divisional Officer. We find it a little difficult to understand how this latter power of direction to the Tahsildar can be exercised except by or through an order of remand. But that apart, there is enough authority to hold, and we have no hesitation to hold, that a power of remand is inherent in the power of the Appellate Authority. Were authority needed for the proposition, we have it in the Full Bench decision **OT.REV 212/2015** **-29-** of this Court in Dharmadas v. State Transport Appellate Tribunal (1962 KLT 505). In view of the said principle, the appellant can have no grievance against the order of the Revenue Divisional Officer and his writ petition had only to be dismissed. The learned Judge was wrong in quashing the whole proceedings to settle record of rights.” 12. The Revenue argues that the First Appellate Authority/Deputy Commissioner (Appeals) upon recording the finding that the order of the primary authority in Annexure-A is vitiated on account of denial of reasonable opportunity, such as cross-examination of witness whose statements are relied on; violation of principles of natural justice in any form; ought to have completed the assessment in accordance with subsection (5)(a) which provides for confirming, reducing, enhancing or annulling the assessment or the penalty or both as the case may be. Therefore, there is no explicit power or inherent power of remand conferred on the Appellate Authority by Section 55 of the Act while dealing with penalty **OT.REV 212/2015** **-30-** orders. The argument is unsustainable for the following reasons: Subsection (5) begins with words, in disposing of an appeal, the Appellate Authority after giving the appellant a reasonable opportunity of being heard, in the case of an order of the assessment/penalty, either confirms, reduces, enhances or annuls the assessment/penalty or both. Another option is, set aside the assessment and direct the Assessing Authority to make a fresh assessment after such further enquiry as may be directed. The third option is, pass such other orders as he may think fit. 12.1. Mr. Mohammed Rafiq further argues that the discretion available to the Appellate Authority in clause (a) viz., it provides for both assessment and penalty orders. Clause (b) limits only to assessment order. The order under challenge, in the case on hand, before the Appellate Authority is an order of penalty made under Section 67 of the Act. Therefore, _per se_ the order of remand is unavailable. **OT.REV 212/2015** **-31-** 13. We have difficulty in reading subsection (5) in the manner canvassed before us. The procedure prescribed by the Act for disposing of the appeal in the manner now commended to us by Mr.Rafiq stifles the expression used in the clause (a) as well. In the case on hand, we would like not to confer or deny the power of the Appellate Authority on general principles of law viz., the Appellate Authority has inherent power of remand etc. The appeal being a statutory remedy under the Act, we may endeavour to trace whether such power is available to the Appellate Authority or not under the scheme of subsection (5) of Section 55. We would like to read subsection (5) of Section 55, as follows _**:**_ “In disposal of the appeals (filed questioning the order of penalty) the Deputy Commissioner (Appeals) may, after giving the dealer a reasonable opportunity of being heard; in the case of order of penalty, annual the penalty and pass such other orders as he may think fit”. In case on hand, the Appellate Authority once **OT.REV 212/2015** **-32-** is convinced that the penalty order imposed needs to be annulled on the ground of violation of principles of natural justice, then instead of deciding the case on merits the Deputy Commissioner can certainly invoke the power under Clause (c), viz. pass such other orders he may think fit, and complete the adjudication of appeal filed before him. The argument of Revenue denies this functional proprietary conferred by clause (a) of subsection (5) of Section 55. The Deputy Commissioner, on a case-to-case basis, either does the assessment/decides the penalty himself or calls upon the Primary Authority to redo the procedure in accordance with law. In the case on hand, the table, read with the findings of the Deputy Commissioner shown in paragraph 8 supra, justify the remand to the Primary **.** Authority A conjoint reading of clauses (a) and (c) of subsection (5) of Section 55 would necessarily give wide discretion and power to the First Appellate Authority to consider ordering remand in terms of the language of Section. **OT.REV 212/2015** **-33-** Annulment of an assessment/penalty proceedings could be on merits, likewise annulment of assessment/penalty proceedings could be for deviation of principles of natural justice, denial of reasonable opportunity etc, to the dealer or any other ground justifiable in the circumstances of the case. The latter exigency needs something more to make the adjudication complete at the hands of the Appellate Authority, and remand certainly is the option. The Appellate Authority notices, in deciding the appeal, the procedural safeguards in the manner noted above, are not followed, even thereafter, examining the merits of the issue decided by the Primary Authority is incorrect. Therefore, parties are relegated to the stage where the Appellate Authority has interdicted the decision of Primary Authority. In our considered view, the interpretation placed by the Revenue on the power of remand by the Deputy Commissioner (Appeals) is without merits and rejected. 14. In view of the above consideration, as matter of fact, **OT.REV 212/2015** **-34-** there is violation of principles of natural justice and denial of reasonable opportunity to the dealer, thus warranting setting aside the penalty order in Annexure-A, and, as a corollary to the above finding, the Appellate Authority has rightly, within its powers and jurisdiction, remitted the matter to the Primary Authority for consideration and decision afresh. The power of remand is available and no exception to the findings recorded by the Tribunal and the Appellate Authority on the remand is warranted. However, the Tribunal by referring to the principle enunciated in **U.K Monu Timbers v. State of Kerala[3]** made a few observations. In our view the remand to Primary Authority ought to be open-ended and the Primary Authority is given discretion to proceed in accordance with law. Hence, it is made clear that the remand is open and all contentions/objections of both the parties are left open for decision. The application of **U.K Monu Timbers** case is 3 2012 (3) KHC 111 **OT.REV 212/2015** **-35-** premature to the remand ordered by the First and Second Appellate Authorities. The proviso, in our considered view, introduced through Act 29 of 2014, need not be considered for deciding the power of the Appellate Authority in the year prior to the amendment or in the year 2013. Revision fails, accordingly dismissed. No order as to costs. **Sd/-** **S.V.BHATTI** **JUDGE** **Sd/-** **BASANT BALAJI JUDGE** JS **OT.REV 212/2015** **-36-** ## **APPENDIX OF OT.REV 212/2015** ## **PETITIONER'S ANNEXURES:** **ANNEXURE A A TRUE COPY OF THE PENALTY ORDER DATED 30.10.2012 FOR THE YEAR 2008-09** **ANNEXURE B A TRUE COPY OF THE COMMON ORDER IN KVATA 3763/12, 3764/12 & 3765/12 DATED 29.10.13 PASSED BY THE DEPUTY COMMISSIONER (APPEALS) ANNEXURE C A CERTIFIED COPY OF THE COMMON ORDER PASSED BY THE TRIBUNAL IN TA(VAT)NOS. 677 TO 679/13 DATED 29.05.2015 ANNEXURE C(a) A TRUE COPY OF ANNEXURE C**