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 S.T.Rev.No.435 of 2006 --------------------------------------- T.A.NO.16 OF 2006 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE (ORDER DATED 28--09--2006) (ASSESSMENT YEAR 2001-02) .................... PETITIONER:- -------------------- C.MUHAMMEDKUTTY, M/S.C.M.CHICKEN AGENCY, KALPETTA, WAYANAD DISTRICT. BY ADV. SRI.K.JAYAKUMAR SRI.P.B.KRISHNAN RESPONDENTS:- ------------------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, COMMERCIAL TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE SALES TAX APPELLATE TRIBUNAL (ADDITIONAL BENCH), KOZHIKODE. 3. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOZHIKODE. 4. THE SALES TAX OFFICER, VYTHIRI AT KALPETTA, KALPETTA. BY SPECIAL GOVERNMENT PLEADER (TAXES) 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.435 of 2006 -------------------------------------------- Dated, this the 11th day of August, 2008 ORDER H.L.Dattu,C.J. The assessee is a dealer and effects sales of chicken. The business premises of the assessee was inspected by the Intelligence Officer of the Department on 15.01.2002. During the said inspection, the assessee had failed to produce the books of accounts for the assessment year 2001-02, and further, the Intelligence Officer had recovered the paper slips, estimate bills, cash receipts, etc. From out of the slips, the Intelligence Officer was of the opinion that the assessee had suppressed a sales turnover of Rs.3,10,115/-. 2. The assessing authority, after issuing the pre-assessment notice, and since he was not convinced with the explanation offered by the assessee, has completed the best judgment assessment and in that, apart from the actual suppression detected, has made an addition of ten times towards the probable omission and suppression and, accordingly, has quantified the tax liability of the assessee. 3. This order of the assessing authority was carried in an appeal by the assessee before the first appellate authority. In the grounds of appeal, the assessee had stated, that, the assessee has purchased the S.T.Rev.435 of 2006 - 2 - chicken from small farmers in the Villages in Wynad District and the turnover of the assessee is exempt from payment of sales tax. Though this ground was taken in the memorandum of appeal, from the perusal of the orders passed by the first appellate authority, it is not forthcoming whether that point was urged and argued before the first appellate authority. However, the first appellate authority, taking a lenient view and further of the opinion that the additions made by the assessing authority is excessive, has modified the best judgment assessment passed by the assessing authority and has restricted the additions to three times the suppression detected at the time of inspection by the Intelligence Officer of the Department, viz., on 15.01.2002. 4. Aggrieved by the orders so passed by the first appellate authority, the assessee was before the Tribunal in T.A.No.16 of 2006. Before the Tribunal, the assessee had argued only the following issues. The Tribunal at paragraph 4 of its order has extracted the issues raised by the assessee's representative. They are: “It is significant to note that in spite of the fact that a demand was made by the assessing authority, the appellant had failed to produce his books of accounts for verification for the assessment year 2001-2002. It is also to be noticed that the appellant had submitted his monthly as well as annual returns only on 29.12.04. From a perusal of the records, it is further evident that at the time of inspection S.T.Rev.435 of 2006 - 3 - by the Intelligence Officer on 15.1.2002, paper slips, estimate bills, cash receipts, etc., were seized and it was found that turnover of Rs.3,10,115/- was suppressed. It is pertinent to note that the assessee himself had admitted before the Intelligence Officer that he was not in the habit of maintaining regular books of accounts. The offence committed by the assessee was imposed with a penalty of Rs.10,000/-. Now, the appellant contends that he was maintaining his books of accounts regularly and the findings of the assessing authority in this regard is not at all sustainable. From a perusal of the assessment records, it is clear that on 13.1.2003, the assessee himself had submitted a statement before the Intelligence Officer clearly admitting that he was not in the habit of maintaining books of accounts. So, we are of the view that the finding of the assessing authority that the books of accounts produced on 29.12.2004 were subsequently created by the assessee is just and proper. In such circumstances, we are unable to accept the contention of the appellant that the lower authorities had over-looked the fact that he was maintaining regular books of accounts. We are of the further view that the findings of the lower authorities that as the appellant had failed to maintain regular books of accounts, the Returns as well as the books of accounts produced by him on 29.12.2004 are liable to be rejected to do not warrant any interference on our hands”. 5. The Tribunal, after considering those issues urged and argued, has answered the same in the following manner: S.T.Rev.435 of 2006 - 4 - “There cannot be any serious dispute regarding the fact that the inspection conducted on 15.1.2002 had unearthed suppression of Rs.3,10,115/-. It is true that the addition made by the assessing authority was reduced by the First appellate authority considerably in the First appeal submitted by the assessee. It is significant to note that the suppression was detected only on 15.1.2002 and no similar pattern of suppression were detected during the relevant assessment year. In such circumstances, we are of the view that reducing the addition to two times of the suppressed turnover will meet the ends of justice”. 6. Aggrieved by the orders passed by the Tribunal in T.A.No.16 of 2006 dated 28th September, 2006, the assessee is before us in this Sales Tax Revision. 7. The assessee has framed the following questions of law for our consideration and decision. They are as under: “(i) Is not the decision of the tribunal vitiated on account of the non-consideration of the contention that the entire turnover is exempt from sales tax? (ii) Has not the Tribunal erred in law in finding taxable turnover without even considering if the turnover is incurred on account of purchase of chicken from outside the State? (iii) In the absence of even a suggestion that chicken had been purchased from outside the State and in the absence of any interception at any check-post or elsewhere is it just and proper to hold that the turnover is S.T.Rev.435 of 2006 - 5 - taxable? (iv) Is not the burden of proof on the revenue and has it not failed to prove the existence of taxable turnover? (v) When the assessment proceedings is based only on the recovery made in an inspection made on 15.1.2002 and when no material even suggesting inter-State purchase of chicken is recovered is it just and proper to pass an assessment order of the present nature? (vi) Is the addition of two times the turnover justified?” 8. Sri.P.B.Krishnan, learned counsel appearing for the assessee, would submit, that, it was the specific case of the assessee, both before the first appellate authority and before the Tribunal, that, the assessee purchases chicken from small farmers of the Villages in Wynad District and effects sale and therefore, the turnover of the assessee is exempt from payment of tax under the Act and, accordingly the learned counsel is of the view, that, the first appellate authority and the Tribunal were not justified in merely reducing the additions made by the assessing authority while completing the best judgment assessment for the assessment year 2001-02. 9. In order to appreciate the contention canvassed by the learned counsel appearing for the assessee, we have carefully perused the orders passed by the first appellate authority and the Tribunal. Neither before the first appellate authority nor before the Appellate Tribunal, the S.T.Rev.435 of 2006 - 6 - assessee, though had taken up the aforesaid contention in the memorandum of appeal, had not argued the same. What was not argued and urged before the appellate authority cannot be argued and urged for the first time before this Court. If, for any reason, the assessee was of the opinion that the aforesaid issue was canvassed before the first appellate authority and also before the Tribunal and if that issue had not been noticed either by the first appellate authority or by the Tribunal and they have not answered the same in one way or the other, the assessee should have filed an appropriate review petition either before the first appellate authority or before the Tribunal. 10. The orders passed by the assessing authority is a best judgment assessment. The said assessment is based on the recovery of the paper slips, estimate bills, cash receipts, etc. from the business premises of the assessee at the time of inspection by the Intelligence Officer of the Intelligence Wing of the Department on 15.01.2002. The slips recovered would indicate that there was suppression of sales of chicken, amounting to Rs.3,10,115/-. While completing the best judgment assessment, the assessing authority has made an addition of ten times towards the probable omission and suppression, which was reduced to three times by the first appellate authority and, further, to two times by the Appellate Tribunal. The orders passed by the authorities under the Act and also by S.T.Rev.435 of 2006 - 7 - the Tribunal are purely based on facts. No question of law as such would arise in this revision petition for our consideration and decision. We hasten to add that it is not the case of the assessee's learned counsel that findings and the conclusions reached by the Tribunal is a perverse finding. In that view of the matter, the revision petition requires to be rejected and it is rejected. 11. This Court, while entertaining the revision petition, had directed the assessee to deposit one-half of the tax assessed. Sri.P.B.Krishnan, learned counsel appearing for the assessee, requests us to grant him another two months time to pay the balance amount. The request so made by the learned counsel is reasonable and, if the request is granted, it would not cause any prejudice to the Revenue. Therefore, we grant the petitioner two months' time from today to pay up the balance amount as quantified by the Appellate Tribunal. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/dk