IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOPURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 24TH JULY 2008 / 2ND SRAVANA 1930 S.T.Appeal No.10 of 2006 ----------------------------------------- AGAINST THE ORDER DATED 26/07/2006 IN R4-6131/04/CT OF THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. (ASSESSMENT YEAR 2002-03) .................... APPELLANT:- ------------------- M/S. LAKSHMI JEWELLERY, GOLD SUPER MARKET, THEKKENADA, KODUNGALLUR, THRISSUR DISTRICT, REPRESENTED BY V.K.RAMAKRISHNAN, MANAGING PARTNER. BY ADV. DR.K.B.MUHAMED KUTTY (SR.) SRI.K.M.FIROZ RESPONDENT:- ----------------------- THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDING, MUSEUM JUNCTION, THIRUVANANTHAPURAM-695 033. BY SPECIAL GOVERNMENT PLEADER (TAXES) SRI.VINOD CHANDRAN. THIS SALES TAX APPEAL HAVING BEEN FINALLY HEARD ON 24/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:- H.L.Dattu, C.J. & A.K.Basheer, J. -------------------------------------------- S.T.Appeal No.10 of 2004 ---------------------------------------------- Dated, this the 24th day of July, 2008 JUDGMENT H.L.Dattu,C.J. The appellant is a dealer in gold ornaments. The Intelligence Officer of the Intelligence Wing of the Department had conducted a surprise inspection in the business premises of the assessee. During the inspection, the Intelligence Officer had come across a computer slip, in which some entries had been made, which according to the intelligence officer is the purchase of gold by the assessee from dealers outside the State. After verification of the books of accounts, the Intelligence Officer was of the view, that, the said purchases had not been accounted in the books of accounts maintained by the dealer for the assessment year 2002-03.Accordingly, before imposing a penalty under Section 45A of the Kerala General Sales Tax Act (“Act” for short), had issued a notice as required under the Act. In that, had indicated that the computer slip that was found at the time of inspection did reflect certain purchase of gold jewellery from a dealer situate outside the State and since that has not been accounted in the books of accounts maintained by the dealer,there is an attempted evasion of payment of tax due to the State under the Act. In the said notice, the officer had extracted the notings found in the computer slip. 2. The assessee had filed its objections. Apart from others, the S.T.Appeal No.10 of 2006 - 2 - dealer had stated that purchase of 14,746.210 grams of gold had been accounted in the books of accounts, ledgers, etc. during the assessment year 2000-01 itself. It was also stated that the said gold had been offered for taxation during the assessment year 2000-01 itself. 3. The Intelligence Officer has not accepted the explanation so offered by the assessee and, therefore, has proceeded to confirm the proposal made in the show cause notice issued under Section 45A of the Act. Aggrieved by the said order, the assessee had filed a revision petition before the Deputy Commissioner of Commercial Taxes. The Deputy Commissioner by his order dated 10.12.2003 has partly allowed the revision filed by the assessee and, thereby, had reduced the penalty imposed by the Intelligence Officer. Subsequently, the Deputy Commissioner, by his order dated 9.3.2004, has corrected the quantum of penalty originally fixed by him. 4. Finding that the orders passed by the Deputy Commissioner of Commercial Taxes is prejudicial to the interest of the Revenue, notice under Section 37 of the Act was issued by the Commissioner of Commercial Taxes, Thiruvananthapuram. After hearing the authorised representative of the assessee, the second revisional authority, by his order dated 26.07.2006, has revised the orders passed by the first revisional authority and has restored the orders passed by the assessing authority. That is how the assessee is before us in this appeal. S.T.Appeal No.10 of 2006 - 3 - 5. Dr.K.B.Mohammedkutty, learned Senior Counsel appearing for the assessee in this appeal, would confine his arguments only in regard to the omission pointed out by the Intelligence Officer in so far as non-accounting in the books of accounts the purchase of gold weighing 14,746.210 grams. In so far as the other omissions pointed out by the Intelligence Officer, the learned Senior Counsel would submit that he has no dispute whatsoever. 6. Sri.Vinod Chandran, learned Special Government Pleader (Taxes) appearing for the Revenue, after going through the books of accounts and the returns filed for the assessment year 2000-01, would inform us, that, whatever that was reflected in the computer slips and omissions pointed out in that regard by the Intelligence Officer is, in fact, reflected in the books of accounts/ledgers maintained by the dealer during the course of his business. 7. We have also carefully perused the assessment records for the assessment year 2000-01.We are also satisfied that the omission pointed out by the Intelligence Officer in so far as non-accounting of the purchase of gold weighing 14,746.210 grams is, in fact, was offered for the purpose of taxation for the assessment year 2000-01. In view of this factual position, in our opinion, the Intelligence Officer of the Department as well as the Commissioner of Commercial Taxes (second revisional authority) are not justified in imposing penalty on that count. 8. The above aspect of the matter was, rightly, considered by the S.T.Appeal No.10 of 2006 - 4 - first revisional authority. However, the second revisional authority has taken exception to the orders passed by the first revisional authority. Having perused the records, we are convinced that the first revisional authority was fully justified in granting the relief sought for by the assessee. In that view of the matter, we cannot sustain the orders passed by the second revisional authority dated 26.7.2006. 9. Therefore, while allowing this appeal, we set aside the orders passed by the second revisional authority and also the orders passed by the Intelligence Officer of the Department in exercise of his powers under Section 45A of the Act in so far as the omission pointed out by the Intelligence Officer in regard to gold weighing 14,746.210 grams. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/dk