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 18TH NOVEMBER 2011 / 27TH KARTHIKA 1933 ST.Rev..No. 26 of 2006(M) ------------------------- TA.209/2005 of COMMR.KERALA AGR.IT & STAT,TVM. .................... PETITIONER/APPELLANT/ASSESSEE: ------------------------------------------------- ROHINI RUBBERS, KUTTAMALA, AMBOORI P.O., REPRESENTED BY ITS PROPRIETOR, DAMODARA PANICKER, BY ADV. SRI.A.M.SHAFFIQUE SRI.A.M.SHAFFIQUE, SENIOR ADVOCATE SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR RESPONDENT/RESPONDENT ------------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TAXES DEPARTMENT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER K.P PRADEEP THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 18/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: I.A NO. 386 OF 2006 IN ST.REV..NO. 26 OF 2006(M) DISMISSED SD/ C.N. RAMACHANDRAN NAIR, JUDGE SD/ K. VINOD CHANDRAN TRUE COPY P.A TO JUDGE jma ST.Rev..No. 26 of 2006(M) APPENDIX APPELLANT'S ANNEXURES: ANNEXURE A : TRUE COPY OF THE ASSESSMENT ORDER FOR 2002-03 KGST ISSUED BY THE SALES TAX OFFICER, NEYYATTINKARA TO THE PETITIONER DT. 25.2.2004 ANNEXURE B : TRUE COPY OF THE ORDER ISSUED BY THE APPELLATE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES TO THE PETITIONER ANNEXURE C : TRUE COPY OF THE ORDER ISSUED BY THE TRIBUNAL TO THE PETITIONER DT.30.9.2005 RESPONDENTS' ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE jma C.N. RAMACHANDRAN NAIR, & K. VINOD CHANDRAN, JJ ---------------------------------------------------- Sales Tax Revision No.26of 2006 ---------------------------------------------------- Dated this the 18th day of November, 2011 J U D G M E N T C.N. Ramachandran Nair , J The question raised is whether the Tribunal was justified in sustaining assessment of closing stock of 2002-03 for the same year. Assessee's case is that the item was sold in 2004-05, that is, after 1½ years, as scrap. Department's case is that assessee is engaged in purchase of natural ammoniated rubber latex and sale of it. Obviously, ammoniated latex is a commodity having very short life, supplied to the industry for converting to centrifugal latex, which itself has only a life of six months. The assessee's case of stock retained for levy is unbelievable. Since the Assessing Officer did not believe the closing stock of ammoniated latex was maintained by the assessee for so long he assessed the turnover as unaccounted sale by making addition of Gross Profit to purchase turnover. 2. After hearing both sides, we do not find any ground to interfere with the finding of facts entered by the Tribunal that STRVNo.26/2006 : 2 : the assessee's case of sale of ammoniated latex after 1½ years of purchase is unbelievable. The assessee did not produce any evidence to substantiate why a product which is fast moving in the market and also perishable was not sold in the year of purchase itself. There is nothing to indicate that the assessee has even storage facility for keeping such stock of perishable commodity. On the facts, as the assessee could not establish their case before the authority, we do not find any ground to interfere with the findings of the Tribunal based on which they sustained assessment. 3. The next question raised in the instant case is justification of addition of gross profit. The case of the petitioner is that rubber in all its forms is taxable at purchase point and since department is not contesting the purchase turnover, the estimation made by adding Gross Profit is unsustainable. The case of the learned Government Pleader is that when the contention of closing stock is rejected and no Form 25 is produced there is no scope for accepting the accounts of the assessee with regard to the disposal of the items purchased. When the assessee's case is not believed STRVNo.26/2006 : 3 : then the question is as to what is the tax lost to the Revenue which certainly is tax lost on the last purchase of the commodity. Since assessee is not the last purchaser, the assessment necessarily has to be made on the taxable turnover of the last purchaser. Assessee is not a manufacturer and the item naturally gets into the production line were when the assessee subsequently sold it. So much so, loss of tax could be made up only by making gross profit addition, which is to estimate the value for the last purchaser. We see no reason to interfere with these findings also. Therefore, revision fails and is accordingly, dismissed. C.N. RAMACHANDRAN NAIR (Judge) K. VINOD CHANDRAN (Judge) jma