IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 29TH SEPTEMBER 2008 / 7TH ASWINA 1930 ST.Rev..No. 323 of 2007 ------------------------------- TA.379/2004 of S.T.A.TRIBUNAL,ADDL.BENCH,KZD. .................... REVISION PETITIONER/APPELLANT IN T.A./ASSESSEE ----------------------------------- COFFEE BOARD, NO.1, AMBEDKAR VEEDHI, BANGALORE-1, REPRESENTED BY ITS SECRETARY, MR.JAYANARASIMHARAJ. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR RESPONDENT(S): RESPONDENT IN T.A./REVENUE ----------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TAXES DEPARTMENT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. VINOD CHANDRAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ALONG WITH STRV. NO.334 OF 2007 ON 22/09/2008, THE COURT ON 29/09/2008 PASSED THE FOLLOWING: H.L. DATTU, C.J. & A.K. BASHEER, J. ------------------------------------- S.T.Rev. Nos.323 and 334 of 2007 ------------------------------------ Dated this, the 29th day of September, 2008 ORDER H.L. DATTU, C.J. In these two tax revision cases, the questions of law raised by the assessee is as under:- “(i) In the facts and circumstances of the case ought not the tribunal have held that the accounting practice adopted by the Appellant is to be adopted? (ii) In the facts and circumstances of the case ought not the tribunal have held that the closing stock which is lying in the appellant's pool has already suffered tax and that the assessment again on the same turnover is bad? (iii) In the facts and circumstances of the case ought not the tribunal have held that the order of the assessing officer to treat tax paid by the appellant under KGST Act as against CST demands and raising the demand for purchase tax already paid as bad in law?” 2. The relevant assessment years are 1984-85 and 1985-86. 3. The facts in brief are:- The assessee/Coffee Board, which is a statutory body constituted under the Coffee Act, 1942. It is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956. The petitioner made payments to S.T.Rev. Nos.323 & 334/07 - 2 - growers for their coffee in accordance with the quantity and quality of coffee pooled on the basis of realisations from disposal of the coffee. The coffee is disposed of both in domestic and international market. Till 31.3.1984, coffee was taxed at the point of first sale in the State and from 1.4.1984, the point was shifted to point of first purchase. The revision petitioner has treated the compulsory delivery of coffee by growers as purchase of coffee and paid purchase tax at the point of first purchase on the entire purchase value of coffee paid to growers. Hence the subsequent sale of coffee would not attract any tax under KGST Act. The revision petitioner has also paid tax on the opening stock of coffee held as on 1.4.1984. 4. The assessing authority while finalising the assessment, has assessed the turnover arrived on the basis of quantity of coffee received in the pool by adopting an average value of coffee paid to the growers and rejecting the accounting procedure adopted by the Board and tax paid on the basis of payment made to growers. The assessing officer has adjusted the tax paid during the subsequent years against the arrears of tax both under KGST and CST Act and for the balance amount has issued the demand notices. 5. The assessee was unsuccessful both before the first S.T.Rev. Nos.323 & 334/07 - 3 - appellate authority and the Appellate Tribunal. The first appellate authority has found that the point of levy on coffee is shifted from the first sale point to the first purchase point from 1.4.1984 and hence turnover on which tax should have been paid was the purchase value of coffee pooled every year. So the purchase value was estimated on the quantity of coffee pooled every year. Since the sale was completed between the Coffee Board and the growers, and the property in the goods passed from the seller to the appellant on the entire quantity mentioned in the assessment order, even if payments are made later, it has to be treated that the appellant has effected the purchase of quantity during that year. The reasoning of the first appellate authority is accepted by the Appellate Tribunal. 6. We have heard Sri.Anil D.Nair, learned counsel for the petitioner and Sri.Vinod Chandran, learned Government Advocate. He has invited our attention to the relevant entries appended to the Schedule to the Act prior to the amendment. 7. The Tribunal in its order has noticed as under: “For the assessment year 84-85, the original assessment was completed as per order dated 11.2.1997. Then as per order in S.T.A. 219/97, the matter was remanded to the assessing authority for fresh disposal. S.T.Rev. Nos.323 & 334/07 - 4 - Thereafter, after affording reasonable opportunities to the assessee to file his objections and documents, fresh order of assessment was made by the assessing authority as per order dated 28.3.02. At the time of passing of the impugned order, the assessing authority had found that the practice adopted by the assessee in accounting his turnover on he basis of payments made to growers is unsustainable, due to the reason that, with effect from 1.4.84 the turnover of coffee is liable to be taxed at the point of last purchase. So by way of considering opening stock of Rs.4,21,49,342.10, the purchase value of coffee both during the assessment year 84-85 and direct export, sale to exporters, local sale, stock transfer etc., the total turnover was determined at Rs.83,91,57,751.28. Then,after giving exemption with respect to the inter-State sales, stock transfer etc. the taxable turnover was determined at Rs.40,38,00,510/- The Appellant has contended that, since the practice adopted by the Appellant during the previous assessment years was to calculate the total turnover on the basis of payments made to growers, there was no justification for the assessing authority to make him liable for payment of tax with respect to an additional turnover of Rs.2,41,20,995/-. It appears, the point of levy of tax on coffee was shifted from the 1st sales point to the 1st purchase point with effect from 1.4.84 and without noticing this change, the assessee happened to submit his Returns on the basis of the payments made to the S.T.Rev. Nos.323 & 334/07 - 5 - coffee growers. Since the assessee was bound to make payment of tax on the basis of first purchase point, we are of the view that the course adopted by the assessing authority to levy tax on the purchase value of coffee pooled by the assessee appears to be just and proper”. 8. It is this line of reasoning of the Appellate Tribunal which we are in agreement. The Tribunal rejected the claim of the assessee, keeping in view the amendment made in the charging provision and the consequential amendment in the Schedule to the Act, where the point of levy of tax on coffee was shifted from 1st sales point to the 1st purchase point with effect from 1.4.1984. In view of this amendment, the assessee was bound to make payment of tax on the basis of first purchase point; however, the assessee had submitted its annual returns on the basis of payments made to the coffee growers. The assessing authority keeping in view shifting of point of levy by the amendment incorporated in the provisions of the Act, after rejecting the annual returns filed, has rightly levied tax on the purchase value of coffee pooled by the assessee. This line of reasoning is accepted by the Appellate Tribunal. In our view, in view of the amendment in the charging section and consequential amendment in the point of levy of tax under KGST Act, with effect from 1.4.1984, the appellate tribunal has rightly S.T.Rev. Nos.323 & 334/07 - 6 - applied the correct interpretation and therefore, the assessee cannot have any grievance. Having heard the learned counsel at length and having perused the line of reasoning adopted by the Tribunal with which we are in general agreement, we see no reason to interfere with the conclusion reached by the Appellate Tribunal and therefore, while dismissing these revision petitions, we confirm the orders of the Tribunal, but make no order as to costs. Sd/- H.L.DATTU, CHIEF JUSTICE. Sd/- A.K. BASHEER, JUDGE DK.