IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 18TH MARCH 2009 / 27TH PHALGUNA 1930 ST.Rev..No. 266 of 2008() ------------------------- TA.167/2007 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... REVISION PETITIONER/APPELLANT:- --------------------------------------------------- N.A. SAIDU MOHAMMED, R.S.TRADERS, GOPALAPRABHU ROAD, ERNAKULAM. BY ADV. SRI.N.MURALEEDHARAN NAIR RESPONDENT(S): --------------- STATE OF KERALA BY SPL. G.P. SRI.VINOD CHANDRAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 18/03/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... S.T. Rev. No.266 of 2008 .................................................................... Dated this the 18th day of March, 2009. ORDER Ramachandran Nair, J. Revision is filed against order of the Tribunal dismissing petitioner's appeal against order issued by the Deputy Commissioner under Section 35 of the KGST Act. We have heard counsel appearing for the petitioner and Special Government Pleader appearing for the respondent. 2. The assessment for 1998-1999 was originally completed by the Assessing Officer without taking into account the penalty proceeding initiated against the petitioner. Since penalty was levied for attempted evasion of tax, assessment was also modified by the Assessing Officer under Section 19(1) of the KGST Act. However, the appeal against revised assessment was allowed by the appellate authority based on the revisional order against penalty wherein penalty was cancelled. The Assessing Officer issued revised assessment based on order in revision against penalty. However, the Deputy Commissioner found 2 that in remand proceedings penalty was again restored and the same was not taken into account by the Assessing Officer while revising the assessment. Based on the penalty levied after remand, the Deputy Commissioner set aside the revised assessment with direction to redo the same. Petitioner's challenge against this order of the Deputy Commissioner in appeal did not succeed before the Tribunal and hence this revision against the order of the Tribunal. 3. Counsel for the petitioner referred to the order in appeal and contended that first appellate authority went to the merits of the case and he cancelled the revised assessment after accepting the explanation offered by the petitioner. According to him, once the revised assessment is cancelled, the Deputy Commissioner cannot invoke suo moto powers to revise assessment later made merely because penalty was again levied on the petitioner in remand proceedings. We are unable to accept this contention because the very basis of the order in appeal against the revised assessment under Section 19(1) is the order of the Deputy Commissioner cancelling the penalty. In fact, when penalty was cancelled and matter remanded, the appellate authority was not justified in entering into independent finding with regard to allegations contained in the penalty proceedings. He should have in 3 fact remanded the case for fresh assessment based on revised order issued in penalty proceedings. In any case even if department has not filed appeal against the first appellate order, the same will not bind the Deputy Commissioner in exercise of powers under Section 35, if penalty levied subsequently will justify revised assessment enhancing the turnover. However, we make it clear that in the revised assessment pursuant to Section 35 order, the petitioner will be entitled to explain his case against addition which the Assessing Officer will be bound to consider as assessment proceeding is independent from penalty. The revision is dismissed upholding the order of the Tribunal but with the above observation. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms