IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 19TH OCTOBER 2011 / 27TH ASWINA 1933 OT.Rev.No. 41 of 2010() ----------------------- AGAINST ORDER DATED 17/08/2009 IN TA.33/2009 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM .................... REVISION PETITIONER/RESPONDENT/REVENUE ---------------------------------------------------------- STATE OF KERALA REP.BY DEPUTY COMMISSIONER(LAW),COMMERCIAL TAXES,ERNAKULAM. BY MR.BOBBY JOHN, GOVERNMENT PLEADER RESPONDENT(S): APPELLANT/ASSESSEE --------------------------------- P.K.MOHAMMED ALIAS KUNHON,CHICKEN DEALER,KALPAKANCHERY. ADV. SRI.N.MURALEEDHARAN NAIR SMT.K.HYMAVATHY THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 19/10/2011, ALONG WITH OTRV NOs. 43 OF 2010, 68 & 69 OF 2011 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.T.REV.NO.41/2010 APPENDIX PETITIONER'S EXHIBITS ANNEXURE-A : COPY OF ASSESSMENT ORDER DATED 08/03/2007. ANNEXURE-B : COPY OF ORDER OF THE DEPUTY COMMISSIONER (APPEALS) DATED 20/10/2008. ANNEXURE-C : COPY OF COMMON ORDER OF THE STAT DATED 17/08/2009. //TRUE COPY// PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR, Ag.CJ. & P.S.GOPINATHAN, J. .................................................................... O.T.Rev. Nos.41, 43 of 2010, 68 & 69 of 2011 .................................................................... Dated this the 19th day of October, 2011. J U D G M E N T Ramachandran Nair, Ag.CJ. All the connected revision cases are filed by the State challenging the orders of the Tribunal allowing 1% loss on account of mortality / weight loss of chicken sold by the respondent assessees. O.T.Rev. Nos.41 & 43 of 2010 are filed against the very same assessee for the year 2005-06. The other two revision cases, namely O.T.Rev.Nos.68 & 69 of 2011, relate to different parties pertaining to the assessment years 2009-10 & 2008-09 respectively. The respondents are dealers in live chicken and while returning turnover on which tax is payable the respondents claimed 1% deduction of the turnover towards loss of weight and mortality as an allowance in terms of circular Nos.19/02 & 6/06, both issued by the Commissioner of Commercial Taxes. The contention raised by the learned Government Pleader is that actual mortality or O.T.Rev.Nos.41, 43/2010, 68 & 69/2011 2 weight loss is not proved in the course of assessment and so much so, the Tribunal was not justified in allowing the claim at 1% in terms of circulars. However, the respondents' counsel relied on both circulars and contended that 1% is allowable as deduction and proof is required only if the claim is more than 1% of the turnover. 2. After hearing both sides, what we notice is that the problem created for the Revenue is only by the Commissioner by issuing the circulars above referred. In the first place unfamiliarity of the Commissioner with the trade is what is disclosed from the circulars. Live birds are not transported during day time to prevent death on account of heat and the transport is always during nights, that too by providing sufficient space in cages and also providing water to the birds. Most of the dealers assessed to tax are wholesalers who transport live chicken during nights and deliver the same early morning in the business places of the retailers or to large customers. Large scale mortality can happen only in the event O.T.Rev.Nos.41, 43/2010, 68 & 69/2011 3 of accident of transporting vehicle or on account of epidemic to the births. Therefore, provision for deduction of 1% of turnover towards death is against reality. Of course if the Government or the Commissioner wants to grant 1% allowance to all live chicken dealers, the Court does not want to stand in their way. However, we do not think the State on the one side can get circulars issued by the Commissioner granting allowance and Assessing Officers refusing to follow circulars and the State trying to sustain their orders in Court. We certainly do not want to entertain controversies created by circulars issued by the Commissioner of Commercial Taxes. We have in the judgment in W.A.No.1974/2005 dated 27/09/2005 explained that live chicken trade should be considered realistically and claim of massive mortality should be allowed only on production of evidence, which obviously means arrangement made for disposal of carcases. In our view, no circular is required to be issued in a matter like this and it is always for the Officer to consider the issue O.T.Rev.Nos.41, 43/2010, 68 & 69/2011 4 realistically and to grant eligible relief to the parties on production of evidence. We do not know on what basis the Commissioner says advice of the Animal Husbandry Department is required in a matter like this because Animal Husbandry Department had no occasion to examine the birds transported and sold by the dealers. There can be no dispute that chicken farmers and traders are well aware of the safety measures required for safe transport and sale of live birds without causing death. We do not know under what circumstances the Commissioner granted 1% of turnover towards weight loss and mortality. However, when the same is granted, the Department has no justification to challenge the same by filing revision petitions. 3. In our view, it is open to the Commissioner to conduct study and modify the circular, if required. It is also worthwhile to mention that if sales turnover is acceptable with or without modification, there is no scope for granting allowance because sales turnover does not cover value of O.T.Rev.Nos.41, 43/2010, 68 & 69/2011 5 carcases sold and is only sale of live birds i.e. accounted. In other words, occasion for considering deduction arises only when purchase value or the value shown in the transport documents is the sole basis for estimating sales turnover. All these O.T.Revision Cases are dismissed but with the above observations. (C.N.RAMACHANDRAN NAIR, ACTING CHIEF JUSTICE) (P.S.GOPINATHAN, JUDGE) jg