IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 17TH NOVEMBER 2008 / 26TH KARTHIKA 1930 S.T.Rev.No.168 of 2007 ----------------------------------------- T.A.NO.1/2005 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE - ORDER DATED 16TH MARCH, 2006. (ASSESSMENT YEAR 1999-2000) .................... REVISION PETITIONER/APPELLANT/ASSESSEE:- --------------------------------------------------------------------- M/S.ST.MARY'S WOOD INDUSTRIES TIMBER AND FURNITURE, PADNAKKAD, KASARGOD DISTRICT, REPRESENTED BY ITS MANAGING PARTNER SRI.M.J.PHILIP. BY ADV. SRI.E.P.GOVINDAN RESPONDENT/RESPONDENT/REVENUE:- -------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY SECRETARY TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM. BY SPECIAL GOVERNMENT PLEADER (TAXES) SRI.VINOD CHANDRAN. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 17/11/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu,C.J. & A.K.Basheer,J. ---------------------------------------------- S.T. Rev.No.168 of 2007 ----------------------------------------------- Dated, this the 17th November, 2008 ORDER H.L.Dattu, C.J. Based on an order passed by the Intelligence Officer under Section 45A of the Kerala General Sales Tax Act, 1963 (“Act” for short), the assessing authority has completed the assessments for the assessment year 1999-2000. The orders so passed by the assessing authority is confirmed by the Tribunal in T.A.No.1 of 2005 dated 16th March, 2006. It is this order which is called in question in this revision petition. (2) The facts in nutshell are - the assessee is a dealer in timber and also manufactures wooden furniture. The Intelligence Officer of the Department had inspected the business premises of the assessee and had recorded, that, inter-State purchases made by the assessee is not accounted in the books of accounts. Accordingly, being of the opinion, that, the assessee has violated certain provisions of Section 45A of the Act, after notice to the petitioner and after hearing him, had passed an order under Section 45A of the Act, by imposing a penalty of Rs.67,440/-. The orders so passed by the Intelligence Officer had been questioned by the assessee before the first revisional authority. The first revisional authority has modified the orders passed by the Intelligence Officer, by reducing the S.T.Rev.168 of 2007. - 2 - quantum of penalty imposed by the Intelligence Officer. The assessee had carried the matter by way of second revision, before the Commissioner of Commercial Taxes. The said authority, by its order dated 10.12.2004, has set aside the orders passed by the Intelligence Officer as well as the first revisional authority and has remanded the matter to the Intelligence Officer to pass a fresh order in accordance with law, after affording an opportunity of hearing to the petitioner. The orders passed by the Commissioner of Commercial Taxes reads as under: “The Hon'ble High Court of Kerala had occasion to consider a similar case in which the receipt of a consignment was denied by the consignee. In the judgment in O.P.No.16707/03 the Hon'ble High Court has directed that in such cases further action has to be taken as stipulated under section 30B(4) of the KGST Act, in view of the mandatory nature of the provision. As the consignee has denied having received the consignment this a case in which action has to be taken as provided in Section 30B(4). The case is therefore remanded to the Intelligence Officer (IB), Kasargod for this purpose. He will dispose of the case within three months of receipt of this order after giving the petitioner a reasonable opportunity for hearing and representation”. (3) For the assessment year 1999-2000, the assessee had filed his annual returns and had conceded a total and taxable turnover. The assessing authority, mainly relying upon the orders passed by the Intelligence Officer under Section 45A of the Act, after rejecting the books S.T.Rev.168 of 2007. - 3 - of accounts and the returns filed by the assessee, has completed the best judgment assessment. In the order passed, the assessing authority has observed as under: “I have carefully examined the merits of the contentions raised. As regard to the transport of timber not account by the dealer, the claim cannot be allowed. In the revision petition filed by the dealer, the Deputy Commissioner, Commercial Taxes, Kasaragod examined the claims of the dealer in detail and found that the purchase of 8.193 CMt of Vaka round logs effected from Patna was not accounted by the dealer”. (4) In the instant case, it is no doubt true, that, an order had been passed by the Intelligence Officer in exercise of his powers under section 45A of the Act and had imposed a penalty of Rs.67,440/-. The orders so passed by the Intelligence Officer is taken exception to by the Commissioner of Commercial Taxes in the second revision filed by the assessee. The Commissioner of Commercial Taxes has set aside the orders passed by the Intelligence Officer under Section 45A of the Act and has remanded the matter to the Intelligence Officer to redo the matter in accordance with law. As we have already stated, based on the said order passed by the Intelligence Officer that the assessing authority has rejected the books of accounts. (5) The assessing authority, primarily relying upon the orders passed by the Intelligence Officer under Section 45A of the Act and the S.T.Rev.168 of 2007. - 4 - orders passed by the Deputy Commissioner in modifying the orders passed by the Intelligence Officer, has completed the best judgment assessment. Now that the Commissioner has set aside the orders passed by the Intelligence Officer under Section 45A of the Act, the rejection of the books of accounts and the returns filed by the assessee for the assessment year in question may not be justified. Therefore, the matter requires to be re-done by the assessing authority in accordance with law. In view of the above, while allowing this revision petition, we set aside the orders passed by the Tribunal in T.A.No.1 of 2005 dated 16.03.2006 and direct the assessing authority to recompute the tax liability of the assessee in accordance with law and in accordance with the provisions of the Act. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-