IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 11TH AUGUST 2008 / 20TH SRAVANA 1930 ST.Rev. No. 451 of 2006 ----------------------------------------- (ORDER DATED 25-5-2006 IN TA.No.645/1995 OF KERALA SALES TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM) .................... REVISION PETITIONER: APPELLANT:ASSESSEE: --------------------------------------------------------------------- M/S.DANA GOLD, PANDALAM, PATHANAMTHITTA DISTRICT, REPRESENTED BY SUNNY MATHEW, MANAGING PARTNER. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT: RESPONDENT:REVENUE: ---------------------------------------------------------- STATE OF KERALA. BY GOVERNMENT PLEADER SRI.VINOD CHANDRAN. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 11/08/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------------------ S.T.Rev.No.451 of 2006 --------------------------------------------- Dated, this the 11th day of August, 2008 O R D E R H.L.Dattu, C.J. This tax revision case would arise out of an order passed by the Sales Tax Appellate Tribunal in T.A.No.645 of 1995 dated 25-05-2006. 2. The revision petition pertains to the assessment year 1991-1992. This is the second round of litigation by the assessee. On an earlier occasion, the assessee was before this Court in TRC No.305 of 2002, being aggrieved by the orders passed by the Appellate Tribunal in T.A. No.645/95 and 117/96. This Court, by its order dated 15th November, 2002, was pleased to dispose of the revision petition and was further pleased to remand the matter to the Tribunal for fresh disposal, in accordance with law. 3. The facts in brief are: The assessee is a partnership firm. It is registered as a dealer under the Kerala General Sales Tax Act (“the Act” for short). It is engaged in jewellery business at Pandalam. The assessee has started its business only in the year 1990-1991. S.T.Rev.No. 451/2006 -2- 4. The Intelligence Officer of the Department had visited the business premises of the assessee on two occasions, namely, on 14-1-1992 and on 25-3-1992. On verification of the actual stock and the books of accounts maintained, the Intelligence Officer on 14-1-1992 had come to the conclusion that there is variation in stock, i.e. 5.590 grams out of 5366.610 grams. 5. On the second inspection made on 25-3-1992, the Intelligence Officer was of the view, that, there was stock variation of 2.190 grams when the actual stock reflected in the books of account maintained by the dealer was 5095.780 grams. In our opinion, this was negligible stock variation especially in the context that the assessee has commenced its business activity only in the previous year, namely, 1990-1991. 6. At the time of inspection, the stock in the business premises should definitely tally with the quantum of stock reflected in the stock registers maintained in the regular course of business. But, in the present case, it is no doubt true that there was variation in the stock at the time of two inspections. But that variation was negligible, when it is seen in the context of the volume of business done by the dealer. S.T.Rev.No. 451/2006 -3- 7. The assessing authority after rejecting the annual returns filed by the assessee, based on the shop inspection report received by him from the Intelligence Officer of the Department, completed best judgment assessment and in that has made an addition of 5 times the average running stock. 8. In the appeal filed, the first appellate authority has modified the orders of assessment passed by the assessing authority by adding two times of the average running stock. 9. Being aggrieved by the orders passed by the first appellate authority, the assessee as well as the Revenue had carried the matter in appeal before the Tribunal in T.A.Nos.645 of 1995 and 117 of 1996. The Tribunal by its order dated 29th June, 2002 had rejected the appeals filed both by the assessee as well as by the State and thereby has confirmed the orders passed by the first appellate authority. The said order passed by the Tribunal had been questioned by the assessee before this Court in TRC No.305/2002. This Court by its order dated 15th November, 2002 was pleased to allow the revision case and was pleased to remand the matter to the Tribunal for fresh disposal in accordance with law and in the light of the observations made in the S.T.Rev.No. 451/2006 -4- course of the order. 10. After such remand, the Tribunal has passed yet another order dated 25th May, 2006 and in that has confirmed the orders passed by the first appellate authority. It is the correctness or otherwise of this order that is called in question by the assessee before us in this tax revision case. The assessee has framed the following questions of law for our consideration and consequent decision. They are as under: “A. Whether on the facts and in the circumstances of the case, has not the Appellate Tribunal gone wrong in confirming the rejection of books of accounts and estimation of turnover? B. Whether on the facts and in the circumstances of the case is not the turnover sustained by the Appellate Tribunal at 100% of the reported turnover excessive, arbitrary and having no nexus with the defects pointed out?” 11. Before we advert to the legal issues raised by the assessee, we want to make two things clear. Firstly, if the findings of the Tribunal is perverse finding, that also would be a question of law which can be considered by this Court in a revision petition filed under S.T.Rev.No. 451/2006 -5- Section 41 of the Act. Secondly, the Tribunal in the hierarchy of the authorities under the Act is the last fact finding authority and it can also decide the questions of law. 12. The assessee had commenced its business in the fag end of the year 1990-1991. The present revision petition relates to assessment year 1991-1992. There were two inspections conducted by the Intelligence Officer of the Department. On both occasions, there was a stock variation, but that in our view was negligible when compared to the volume of business of the dealer. The reasons for stock variation was explained by the assessee. Having gone through the explanation offered by the assessee, we are of the opinion that the explanation ought to have been accepted by the Tribunal and should have modified the orders passed by the assessing authority as well as by the appellate authority. 13. The best judgment assessment can be based on certain facts when it is found that the accounts of the dealer cannot be accepted. In the instant case, it is related to the suppression found at the time of shop inspection made twice by the intelligence wing of the Department and on both occasions, the suppression noticed is nearly 8 grams out of S.T.Rev.No. 451/2006 -6- 10,500 grams of gold. This stock variations was properly explained by the assessee, but the same is not accepted by the assessing authority and the Appellate Tribunal. The approach of the Tribunal is neither reasonable nor justifiable. To put it in a nutshell, the approach appears to be hyper technical. In that view of the matter, it is difficult for us to sustain any one of the orders passed by the authorities under the Act as well as by the Tribunal. Therefore, while allowing this revision case, we delete the additions made by the authorities under the Act as well as by the Tribunal. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS/dk