IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN FRIDAY, THE 2ND DAY OF DECEMBER 2011/11TH AGRAHAYANA 1933 STRV.No. 19 of 2011 ( ) -------------------------------- TA.248/2008 of S.T.A.TRIBUNAL,ADDL.BENCH,PALAKKAD ----------- REV.PETITIONER/RESPONDENT/REVENUE: --------------------------------------------------------- STATE OF KERALA REP.BY DEPUTY COMMISSIONER(LAW) COMMERCIAL TAXES ERNAKULAM. BY ADV.GOVERNMENT PLEADER APPELLANT/ASSESSEE: -------------------------------- 1 M/S.JAYAKRISHNA PESTICIDES(P) LTD PIRIVUSALA PALAKKAD-1. BY ADV. SRI.N.MURALEEDHARAN NAIR SMT.K.HYMAVATHY THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 02-12-2011 , ALONG WITH STRV. 20/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: STRV.No. 19 of 2011 APPENDIX REV.PETITIONER'S ANNEXURES: ANNEXURE A : TRUE COPY OF THE ASSESSMENT ORDER DATED 10.02.2006 FOR THE YEAR 2003-04 ANNEXURE B : TRUE COPY OF THE ASSESSMENT ORDER OF THE DEPUTY COMMISSONER(APPEALS) DATED 15.9.2008 ANNEXURE C : TRUE COPY OF THE ORDER OF THE STAT DT.28.3.2009 RESPONDENTS' ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE jma C.N. RAMACHANDRAN NAIR, & K. VINOD CHANDRAN, JJ ---------------------------------------------------- STRev. Nos. 19 & 20 of 2011 ---------------------------------------------------- Dated this the 2nd day of December, 2011 J U D G M E N T C.N. Ramachandran Nair , J We have heard the learned Government Pleader and the Counsel appearing for the respondents. 2. The issue raised by the Revenue in these two revisions is one and the same, that is whether sale at below stock transfer value justifies rejection of sales turnover and addition of estimated turnover by adding Gross Profit to Stock Transfer Value. 3. After hearing both sides and going through the Tribunal's order, what we notice is that the respondent's specific case is that stock transfer value recorded is MRP (Maximum Rate of Price)recorded in the packing case. However, the Tribunal without verifying records accepted the arguments which in our view is not correct. The tribunal also had to look into the regulations or the Excise rules based on which respondents raised contention that stock transfer value STRev. Nos. 19 & 20 of 2011 : 2 : shown in the transport documents is MRP and not distributor price. In our view if the factual position is as claimed by the respondent then the tribunal's order does not warrant interference because respondent as distributor cannot be expected to sell the products at MRP to other distributors for sale to retailers. Necessarily, dealer margins have to be provided in making sales which means that the sales should be at below MRP. So much so, if stock transfer value shown is MRP then the reduction in sale price accounted does not warrant estimation. However, since, facts are not verified and practice as mandated by Excise rules with regard to declaration of MRP as Stock transfer value is also not verified, we set aside the order of the tribunal and that of the lower authority and remand the matter back to the Assessing Officer for verifying the facts and if claim is found genuine, assess at the declared turnover. The Assessing Officer is free to verify the present practice also to see whether stock transfer value shown is MRP printed in the packets. Appellant is given freedom to produce evidence and to prove the claim, failing which estimation can be made but only after giving STRev. Nos. 19 & 20 of 2011 : 3 : opportunity to the assessee to raise objection against the rationality of the addition proposed. If Excise Rules or regulations provided for mandatory declaration of MRP on transfer documents then the Assessing Officer will without any further evidence accept the claim and revise the assessment based on return filed on the declared turnover. Sd/- C.N. RAMACHANDRAN NAIR (Judge) Sd/- K. VINOD CHANDRAN (Judge) jma //true copy// P.A to Judge