IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN MONDAY, THE 25TH JULY 2011 / 3RD SRAVANA 1933 OT.Rev.No. 25 of 2010() ----------------------- AGAINST ORDER DATED 27/07/2009 IN TA.126/2008 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM .................... REVISION PETITIONER/APPELLANT/ASSESSEE ---------------------------------------------------------- TRIVANDRUM METALS & ELECTRICALS, ARYASALA, THIRUVANANTHAPURAM,REPRESENTED BY ITS PARTNER R.LALITHAKUMARI BY ADV. SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.K.S.HARIHARAN NAIR RESPONDENT(S): RESPONDENT/REVENUE --------------------------------- STATE OF KERALA, REPRESENTD BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695 033. MR.MOHAMMED RAFIQ, GOVERNMENT PLEADER THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 25/07/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: O.T.REVN. NO.25/2010 APPENDIX REVISION PETITIONER'S EXHIBITS ANNEXURE A : COPY OF ASSESSMENT ORDER DATED 05/06/2007. ANNEXURE B : COPY OF ORDER DATED 07/02/2008 OF THE DY.COMMISSIONER (APPEALS), THIRUVANANTHAPURAM. ANNEXURE C : COPY OF ORDER DATED 27/07/2009 OF THE APPELLATE TRIBUNAL. ANNEXURE D : COPY OF NOTICE DATED 08/03/2010 OF THE COMMERCIAL TAX OFFICER, 2ND CIRCLE, THIRUVANANTHAPURAM. ANNEXURE E : COPY OF MODIFIED ASSESSMENT DATED 10/12/2009 FOR THE YEAR 2005-06. ANNEXURE F : COPY OF MODIFIED ASSESSMENT DATED 10/12/2009 FOR THE YEAR 2006-07. //TRUE COPY// PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... O.T.Rev.No.25 of 2010 .................................................................... Dated this the 25th day of July, 2011. J U D G M E N T Ramachandran Nair, J. This O.T. Revision case is filed challenging the order of the Tribunal disallowing input tax credit on the entire sales turnover assessed after auditing under Section 23 of the Kerala Value Added Tax Act (hereinafter referred to as the Act for short). 2. We have heard learned counsel appearing for the revision petitioner and learned Government Pleader appearing for the State. 3. The petitioner, a dealer in electrical goods, was subjected to audit under Section 23 of the Act. It was noticed that the petitioner did not include in the purchase turnover an amount of Rs.5,24,633/- and accounts were not maintained by the petitioner properly. For want of full and complete O.T.Rev.No.25/2010 2 accounts and for the purchase suppression found, assessment was made by estimating the turnover and by disallowing complete input tax credit. In two level appeals, the petitioner could not get relief even though the Tribunal modified the pattern of addition from 20% of the declared turnover to three times of the purchase suppression. 4. Before us, the major dispute is on the disallowance of input tax credit on the entire turnover. While the case of the petitioner is that the purchases are covered by invoices, learned Government Pleader's contention is that under Section 11(12) of the Act a dealer is entitled to input tax credit only if accounts are maintained for the entire transactions, which in this case is not satisfied. Learned counsel for the petitioner submitted that production of invoices is sufficient for the petitioner to get input tax credit. 5. After hearing both sides and after going through the orders, what we notice is that this is the first year of introduction of the VAT Scheme. The petitioner is not entitled O.T.Rev.No.25/2010 3 to any input tax credit on the purchases attributable to the addition made to the turnover after noticing purchase suppression. However, we do not think the petitioner could be denied full input tax credit because documents representing purchases, namely purchase invoices, are available with the petitioner. We do not know why proper accounts were not maintained in which case, the petitioner would have been entitled to input tax credit under Section 11(12) of the Act. 6. In any case, we feel the petitioner can be granted input tax credit at least on so much of the purchase turnover which the petitioner proves with supplementary evidence such as certificate from the supplier about the accounting of the sales covered by invoices produced by the petitioner and details of payment of tax, if any made by them etc. This applies only to local purchases, and on production of certificates from the suppliers by the petitioner, the Assessing Officer will cross check the sales accounted and payment of tax made by such dealers who made sales to the petitioner O.T.Rev.No.25/2010 4 and grant input tax credit to the petitioner based on invoices covering purchases proved by supplementary evidence. The petitioner is given two months from today to obtain and produce the evidence before the Assessing Officer for him to consider the claim afresh. This O.T.Revision case is allowed as above by modifying the order of the Tribunal by directing the Assessing Officer to verify invoices and supporting evidence and allow input tax credit to the extent proved. (C.N.RAMACHANDRAN NAIR, JUDGE) (P.S.GOPINATHAN, JUDGE) jg