IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH TUESDAY, THE 30TH SEPTEMBER 2008 / 8TH ASWINA 1930 S.T.Rev..No. 4 of 2006 ------------- ----------------------- ORDER DATED 21.5.2005 IN TA.685/2004 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, PALAKKAD .................... REVISION PETITIONER/ASSESSEE/APPELLANT: --------------------------------------------------------------------- M/S. K.K. GOPALAN & COMPANY, ARECANUT DEALER, PAZHANJI, THRISSUR DISTRICT, A PARTNERSHIP FIRM REPRESENTED BY ITS MANAGING PARTNER SRI. K.K. GOPALAN. BY ADV. SRI.E.P.GOVINDAN SRI.A.J.ANTONY RESPONDENT/REVENUE/RESPONDENT: ---------------------------------------------------------- STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES DEPARTMENT, GOVT.SECRETARIAT, TRIVANDRUM. BY SPECIAL GOVERNMENT PLEADER SRI.VINOD CHANDRAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 30/09/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & THOMAS P.JOSEPH, J. ------------------------------------------- S.T.Rev.No.4 of 2006 ------------------------------------------ Dated, this the 30th day of September, 2008 ORDER H.L.Dattu, C.J. The orders passed by the Sales Tax Appellate Tribunal, Additional Bench, Palakkad in T.A.No.685 of 2004 dated 21st May, 2005 is the subject matter of this revision petition at the instance of the assessee who is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) and the Central Sales Tax Act, 1956 ('CST Act' for short). (2) The relevant assessment year is 1999-2000. (3) The assessee is a dealer in arecanut, pepper, etc. at Pazhanji, Thrissur District. The goods dealt with by the assessee are taxable at the last purchase point within the State. (4) The assessee had filed its annual returns for the assessment year 1999-2000 as nil returns. (5) The assessing authority after rejecting the returns so filed by the assessee had issued a pre-assessment notice. According to him, the entire closing stock held by the assessee for the assessment year 1999-2000 in the books of accounts must have been sold by the assessee and having S.T.Rev.No.4 of 2006 2 come to this conclusion has assessed the tax liability of the assessee under the provisions of the KGST Act by making certain additions to the closing stock and fixing the taxable turnover in a sum of Rs.7,33,610/-. This was objected to by the assessee both before the first appellate authority and before the Tribunal. Before the Tribunal the attempt of the assessee was failed. Therefore, the assessee is before us in this revision petition. (6) The assessee has framed the following questions of law for our consideration and consequential decision. They are as under: “i. Whether on the facts and in the circumstances of the case the Tribunal was justified in dismissing the appeal filed by the petitioners. ii. Whether on the facts and in the circumstances of the case the Tribunal was justified in confirming the assessment of closing stock held by the petitioners. Has not the Tribunal committed an error in confirming the assessment order when the sale was proved? iii. Whether on the facts and in the circumstances of the case the Tribunal was justified in not considering the form 25 declarations and books of accounts for the subsequent years 2000-2001 and 2001-02 submitted by the petitioners supporting their case. S.T.Rev.No.4 of 2006 3 iv. Whether on the facts and in the circumstances of the case the Tribunal was justified in not appreciating the peculiar business transaction at Kokkalai market, Thrissur. Has not the Tribunal committed an error in analysing the facts of the case. v. Whether on the facts and in the circumstances of the case the Tribunal was justified in shifting the burden of proof of sale on the petitioners. Is it not the duty of the revenue to prove a completed sales, before subjecting the turnover to tax.” (7) The assessee, as we have already stated, is a dealer in betel nuts and pepper. He is also an agent at Kokkalai in Thrissur District. He not only effects sales of his own but also through his agent. He also purchases betel nuts and pepper both intra and inter state purchases. The opening stock for the assessment year in question was 46,515 Kgs. valued at Rs.13,36,209/-. (8) It was the specific case of the assessee before the assessing authority that though he had an opening stock of 46,515 Kgs. of betel nuts and 2000 Kgs. of pepper, he had not effected any sales during the relevant assessment year. (9) The assessing authority, without there being any basis whatsoever and on mere presumptions and surmises, comes to the S.T.Rev.No.4 of 2006 4 conclusion that the assessee must have sold the betel nuts and pepper during the relevant assessment year. For the aforesaid conclusion the assessing authority has not indicated any basis whatsoever. The assessing authority's presumption is that betel nuts and pepper are normally not kept without being sold by an assessee. However, it was the stand of the assessee before the assessing authority that during the assessment year in question since the price of betel nuts and pepper had fallen down, he had not effected any sales. (10) In our opinion, even for passing the best judgment assessment, there must be a basis and that cannot on mere whims and fancies. No doubt there can be a little bit of guess work, but that cannot be on mere whims and fancies. (11) In the instant case, as we have already stated, the assessing authority did not have any material before him to come to the conclusion that the assessee, for the assessment year 1999-2000, had effected sales of 46,515 Kgs. of betel nuts and 2000 Kgs. of pepper. This order of the assessing authority was confirmed by the first appellate authority and by the Tribunal. (12) Having gone through the orders passed by all the authorities under the Act, we are of the firm opinion that none of the S.T.Rev.No.4 of 2006 5 authorities have considered the case of the assessee in a proper perspective. (13) Therefore, while allowing this revision petition, we set aside the orders passed by the assessing authority as confirmed by the first appellate authority and by the Tribunal. (14) Consequently,I.A.No.188 of 2006 stands rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (THOMAS P.JOSEPH) JUDGE vns