IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN FRIDAY, THE 21ST MAY 2010 / 31ST VAISAKHA 1932 ST.Rev..No. 69 of 2010() ------------------------ REVISION PETITIONER/ASSESSEE/APPELLANT:- ------------------------------------------------------------------- SRI.A.AJIL KUMAR, KATTUVILAYIL WOOD INDUSTRIES, MELVETTOOR, VARKALA. BY ADV. SRI.E.P.GOVINDAN RESPONDENT: REVENUE/RESPONDENT:- --------------------------------------------------------- THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. BY GOVT.PLEADER SHRI.MOHAMMED RAFEEQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 21/05/2010 ALONG WITH ST.REV.NO. 70 OF 2010, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.Ramachandran Nair & P.S.Gopinathan, JJ. ============================================ S.T(RV)Nos.69 & 70 of 2010 ============================================ Dated this the 21st day of May, 2010. ORDER Ramachandran Nair, J. 1.Heard counsel for the revision petitioner and Government Pleader for the respondent. 2.Petitioner is a saw mill owner stated to be engaged in cooly sawing. However, during one inspection held in 2004-05, a total stock of timber valued at around Rs.1,38,000/- was noticed and for want of proof of records pertaining to taking of goods for cooly sawing, the Intelligence Officer levied penalty and based on penalty order, assessment is also made on estimation basis. Petitioner challenges both the penalty orders and assessment orders under revision and appeal and since Tribunal confirmed STRV69&70/10 -:2:- all the impugned orders, these revisions are filed both against penalty as well as assessment. 3.The first contention raised by the counsel for the petitioner is that the records pertaining to cooly sawing were produced before the adjudication officer, even though it was not produced at the time of inspection. Further, he pointed out that timber is entrusted by local people, who are known to the petitioner and therefore, non-maintenance of register for cooly sawing does not give rise to a presumption that the petitioner was engaged in purchase or sales of timber. Government Pleader submitted that, being a registered dealer, petitioner is bound to maintain records, which should include register of stock taken for cooly sawing. Even though we agree in principle about the requirement of record for cooly sawing, which should be STRV69&70/10 -:3:- available in the mill at all times, we notice that the petitioner has a specific case that he was never assessed previously or subsequently for purchase or sale of timber. In the previous year, assessment is stated to be under Section 17 (4) and in subsequent years also, petitioner has not returned any turnover on purchase and sales considering the small value of the total stock, which is only around Rs.1.38 lakhs, it is very unlikely that the petitioner was acting as a dealer in timber because with such small stock of timber, business itself may not be viable. Strangely, even after detecting alleged unaccounted purchase and sale, none of the department officers had chosen to conduct further inspection in subsequent years to verify whether really there is purchase and sales by the petitioner. If petitioner is not found to be involved in trading in any previous year or STRV69&70/10 -:4:- subsequent year, we do not think that the penalty order could be sustained, merely because, the petitioner failed to produce the register for cooly sawing at the time of inspection. We, therefore, allow the revisions by setting aside the orders of the Tribunal and that of the lower authorities and remand the matter to the assessing officer to go through the assessment records of previous years and subsequent years and if trading is not reported by the petitioner and the petitioner is not assessed to tax for purchase and sales in any of these years, then no penalty or tax should be imposed against the petitioner for this year pursuant to the inspection report. However, if the petitioner is found to have purchased and sold timber during any of these years, the assessing officer will examine the genuineness of the details of register produced by the petitioner subsequently STRV69&70/10 -:5:- and if transaction is found to be genuine, he will grant exemption and if it then he will be free to issue notice to the petitioner, levy penalty as well as tax. However, we make it clear that enquiry need be conducted only if the petitioner is assessed for any other year for purchase and sale of timber in his mill. C.N.Ramachandran Nair, Judge. P.S.Gopinathan, Judge. sl.