IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON FRIDAY, THE 23RD JULY 2010 / 1ST SRAVANA 1932 WP(C).No. 20558 of 2010(T) --------------------------------------- PETITIONER(S): ----------------------- M/S. JEYAR AGENCIES, POOTHOLE, THEKKINIATH HOUSE, 1ST AVENUE, AVENUE ROAD, THRISSUR-680 005, REPRESENTED BY ITS PROPRIETOR, T.I. DEVIS. BY ADV. SRI.K.J.ABRAHAM RESPONDENT(S): -------------------------- 1. THE COMMERCIAL TAX OFFICER, III CIRCLE, THRISSUR. 2. INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, THRISSUR. R1 & R2 BY GOVT. PLEADER MR.C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23/07/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. P.R.RAMACHANDRA MENON, J -------------------------------------------- WP(C) NO. 20558 OF 2010 -------------------------------------------- Dated this the 23rd day of July, 2010 JUDGMENT The petitioner has approached this Court with a grievance that, in spite of the specific direction given by the Appellate Tribunal vide Ext.P3, the same has not been correctly implemented while issuing Exts.P4 and P4(a) modified orders. Being aggrieved of the modified orders, the petitioner had in fact preferred Exts.P5 and P5(a) petitions for rectification under Section 43, which were considered and a common order was passed as Ext.P6 dated 07.06.2010 rejecting the said applications. The petitioner is challenging the correctness and sustainability of Exts.P4/P4 (a) orders contending that, the same are not in conformity with the direction given by the Tribunal vide Ext.P3 order and that there is absolutely no rationale for proceeding with the recovery steps as borne by Ext.P2 series demand notices, which are under challenge. The petitioner is also stated as aggrieved of the rejection of Ext.P8 application claiming the benefit of Amnesty Scheme, vide Ext.P9 order dated 07.06.2010. 2. The learned counsel for the petitioner submits that the figures given as 13,24,172.20 in Ext.P4 and the figures 44,17,091.49 in Ext.P4(a) are repetition duplication of such figures, which is not correct or sustainable in view of the clear mandate given by vide Ext.P3. As per 2 WP(C) No. 20558/2010 Ext.P3, the Tribunal has held that, only an amount equal to the misclassification is liable to be reckoned. The case of the petitioner is that, the entire turnover has already been declared by the petitioners as reflected from the books of accounts. There is no case for the department to the contrary and the only case is that the petitioner, in respect of certain items claimed exemption and no tax was remitted, which in the course assessment proceedings was found against the petitioner, holding that it was also liable to be taxed. It was in the said circumstance that the liability was re-fixed as three times of the said extent vide Exts.P1 and P1(a), which were impugned in the appeals preferred before the first appellate authority, who issued Exts.P2/P2(a). This in turn was subjected to challenge by filing second appeal before the Tribunal leading to Ext.P3 order. The relevant provision of Ext.P3 order reads as follows: “It is a fact that in all these three years the assessee has accounted these purchases in the books of accounts as non-taxable purchases. Hence it is only a misclassification of goods and not suppression in purchases. In the absence of investigation, this misclassification would not have detected. Considering the entire facts and circumstances of the case, we are of the view that an addition equal to the amount of misclassification detected will be fair and reasonable addition to cover up all probable omission and suppression”. 3. Going by the contents of Ext.P3 order, it is very much obvious that, what is contemplated in the said order is the addition of the turnover to 3 WP(C) No. 20558/2010 an extent equal to the amount of misclassification. In short, the amount of misclassification plus similar extent to be added to the said amount forms the reckonable turnover, as there is a lapse on the part of the petitioner in so far as it was described as liable for exemption and no tax was paid. It was only pursuant to the steps taken by the assessing authority that the liability could be mulcted upon the shoulders of the petitioner and it is for this reason, that the addition to an equal extent has been sustained by the Tribunal. 4. In the above facts and circumstances, the course pursued by the assessing officer by passing modified orders vide Exts.P4/P4(a) appears to be correct and in conformity with the mandate given by the Tribunal vide Ext.P3. 5. The learned counsel for the petitioner, however sought to rely upon the last sentence in Ext.P3 order, wherein an observation has been made by the Tribunal as follows: “In the result, the appeals filed by the appellant for the years 1997-98, 1998-99 and 1999-2000 are allowed as indicated above.” The learned counsel submits that the prayer in the Appeal before the Tribunal was to limit the addition only to the actual extent of misclassification and since the appeals are stated as allowed, nothing more could have added as the turnover. But the learned Government Pleader 4 WP(C) No. 20558/2010 brought to the notice of this Court, the observation made by the Tribunal in paragraph 5 of Ext.P3 as extracted below: “The Assessing Authority has well established that the alleged purchases are not tax suffered as contended by the appellant and hence the Assessing Authority levied tax on its corresponding sales. For the above defect the Assessing Authority has added 3 times of the suppression detected towards probable omission and suppression. In appeal, the First Appellate Authority reduced the addition to two times.” The learned Government Pleader submits that, it is on the basis of wrong and misconceived idea that the said observation was made as given in the paragraph. This Court finds that the extent of alleged interference is liable to be interpreted and acted upon, only as specified thereunder, wherein the Tribunal has added words “as indicated above”. 6. The indication given above clearly reveals that the Tribunal was very much satisfied of the addition equal to the amount of misclassification, i.e., the amount of misclassification, plus another similar extent, which is the course pursued by the assessing authority while passing Exts.P4 and P4(a). This Court does not find any tenable ground to accept the case put forth from the part of the petitioner and hence interference is declined. 7. The learned counsel for the petitioner as well as the learned Government Pleader brought it to the notice of this Court that the benefit of the Amnesty Scheme now stands extended till 30.09.2010. If any 5 WP(C) No. 20558/2010 application is filed for the benefit of the Amnesty Scheme, the same shall be considered and appropriate orders shall be passed in accordance with law and the terms of the Scheme. The Writ Petition is dismissed. P.R.RAMACHANDRA MENON JUDGE dnc