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 THURSDAY, THE 17TH JULY 2008 / 26TH ASHADHA 1930 S.T.Rev..No. 202 of 2008 --------------- ------------------------- ORDER DATED 7.3.2008 IN TA.30/2008 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE .................... PETITIONER/APPELLANT/ASSESSEE ---------------------------------------------------- P.KANDANKUTTY & SONS, SEA QUEEN HOTEL, BEACH ROAD, KOZHIKODE. BY ADV. SRI.V.V.ASOKAN SMT.S.AMINA RESPONDENT/RESPONDENT/REVENUE --------------------------------------------------------- STATE OF KERALA. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 17/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------ S.T.Rev.No.202 of 2008 ------------------------------------------ Dated, this the 17th day of July, 2008 ORDER H.L.Dattu, C.J. Petitioner is a partnership firm which is running a bar attached hotel under the name and style 'Sea Queen Hotel' in Beach Road, Kozhikode. The assessing authority had quantified the tax liability of the petitioner for the assessment year 2003-04 by his order dated 31.12.2004. After completion of the assessment proceedings, the assessing authority has come to know that the assessee has received a sum of rupees one crore under miscellaneous income as per its trading and profit and loss account. In view of the above, the assessing authority has re-opened the completed assessment for the assessment year 2003-04. 2. The assessing authority after considering the miscellaneous income as sales turnover of liquor of the assessee has determined the taxable turnover at Rs.3,19,68,720/- and accordingly has also determined the tax payable by the assessee under the KGST Act.. 3. Being aggrieved by the quantification so made by the assessing authority in exercise of his powers under Section 19 of the Kerala General Sales Tax Act, 1963 ('the Act' for short), the assessee had S.T.Rev.No.202 of 2008 2 preferred an appeal before the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A.No.30 of 2008, bypassing the first appeal remedy provided under the Act. 4. The assessee's primary contention before the Tribunal was that, since the issue raised is only a pure question of law and since the burden of proving that the amount received by the assessee was sales turnover of the assessee is on the assessing authority, the appeal filed by the assessee before the Tribunal is maintainable. The Tribunal, after considering all the case laws relied upon by the assessee at paragraph 9 of the order has stated as under: “9. By way of relying on the decisions referred above, it was contended by the learned authorised representative for the assessee that mere question of law is involved in the present appeal. According to us this contention cannot be accepted. As in the present second appeal this Tribunal is expected to consider whether a sum of Rs.1 Crore shown as miscellaneous income is actually exigible to sales tax, the inability of the appellant to give any explanation regarding the nature and character of the miscellaneous income is also to be considered. So it is clear that what is expected to be considered by this Tribunal is a pure question of fact. It is true that the ratio set up in the above decisions cited by the appellant may be S.T.Rev.No.202 of 2008 3 helpful to this Tribunal to determine the questions involved in this appeal. But it does not mean that only a pure question of law is involved in this appeal. In such circumstances we are of the view that the present appeal will not come within the purview of first proviso to Section 34(1) of the KGST Act.” 5. Aggrieved by the said order passed by the Tribunal in directing the assessee to prefer first appeal against the orders of assessment passed by the assessing authority for the assessment year 2003-04, the assessee is before us in this tax revision case. 6. The assessee has raised the following questions of law for our consideration and decision. They are as under: “1. Has not the Tribunal under the facts and circumstances erred in comprehending the scope of the direct appellate power vested in the Tribunal under the first proviso to Section 34 of the KGST Act, while it proceeded to decline jurisdiction? 2. Whether the Tribunal is correct in law in declining appellate jurisdiction to this petitioner with the observation that a resolution of factual disputes are involved in the case? Is not that approach of the Tribunal against the ratio settled in 39 STC 30 and 2000 (8) KTR 303 wherein also the courts decided the issue in identical S.T.Rev.No.202 of 2008 4 set of facts? 3. Is it not the burden exclusively on the revenue to establish the fact that the income found in the hands of the assessee is by way of sale of goods exigible to tax under the Act in a proceeding under Section 19 of the KGST Act?” 7. At the time of hearing of the revision petition Sri.Mayankutty Mather, the learned counsel appearing for the assessee, would submit that the Tribunal was not justified in relegating the assessee to prefer the first appeal before the first appellate authority, and if for any reason, the assessee is aggrieved by the orders of re-assessment passed by the assessing authority for the assessment year 2003-04, and according to the learned counsel, since a pure question of law is involved, the Tribunal gets jurisdiction to decide the appeal on merits instead of relegating the assessee to approach the first appellate authority by filing a first appeal. In support of his contention, learned counsel has placed reliance on those decisions which had been relied on before the Tribunal. 8. Sri.Muhammed Rafiq, learned Senior Government Pleader appearing for the Revenue, sought to justify the impugned order passed by the Tribunal. 9. In order to resolve the controversy between the parties to S.T.Rev.No.202 of 2008 5 the lis, in our opinion, the provisions of Section 34(1) alone requires to be extracted and the same reads as under: “34. Appeals to the Appellate Assistant Commissioner:- (1) Any person objecting to an order affecting him passed by an appropriate authority under sub-section (6) or sub-section(7) of section 14, sub-section (2) or sub-section (3) or sub-section (4) or sub-section (4A) of section 17, sub-section (1) or sub-section (2) of section 19, section 19A, section 19B, section 19C, section 26, section 29, section 29A, section 30 or section 30A or an order passed by a lower authority under section 43 may, within a period of thirty days from the date on which the order was served on him, appeal against such order to the Appellate Assistant Commissioner. Provided that where the order to be appealed against involves only a question of law which has been settled by a decision of the High Court or the Supreme Court the appeal may be filed before the Appellate Tribunal. Provided further that the Appellate Assistant Commissioner may admit an appeal presented after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting the appeal within the said period: S.T.Rev.No.202 of 2008 6 Provided also that in the case of an order under sub-section (2) or sub-section (3) or sub-section (4) or sub-section (4A) of section 17, or sub-section (1) or sub- section (2) of Section 19, or Section 19B no appeal shall be entertained under this sub-section unless it is accompanied by satisfactory proof of the payment of the tax or other amounts admitted by the appellant to be due or of such instalment thereof as might have become payable, as the case may be.” 10. Sub-section (1) of Section 34 of the Act gives a statutory remedy to a person objecting to an order passed by the assessing authority or an order passed under Sections 29, 29A, etc. of the Act before the Appellate Assistant Commissioner. The first proviso appended to the said sub-section carves out an exception. The exception is, that, if the order to be appealed against involves only a question of law which has been settled by a decision of the High Court or the Supreme Court the appeal may be filed before the Appellate Tribunal. 11. The framers of the legislation has specifically used the words like, “only a question of law which has been settled either by the decision of the High Court or by the Supreme Court”. The language employed in the proviso is clear and unambiguous and therefore, the same S.T.Rev.No.202 of 2008 7 does not require purposive or any other construction or interpretation. 12. In the instant case, as we have already noticed, the assessing authority had completed the assessment for the assessment year 2003-04 by his order dated 31.12.2004, and after coming to know that the assessee has received a miscellaneous income of rupees one crore, has re- opened the assessment and has completed the same by invoking his powers under Section 19 of the Act and ultimately has determined the taxable turnover of the dealer at Rs.3,19,68,720/-. Whether the miscellaneous income so received by the assessee is an income as sales turnover of liquor or is it a black money received by the assessee or is it an amount received from any other source, by no stretch of imagination can be construed as a pure question of law. In our view, it is mixed question of law and fact. Keeping this aspect of the matter in view and also the language employed by the Legislature in the first proviso to sub-section (1) of Section 34 of the Act, the Tribunal, in our considered view, has rightly relegated the petitioner to approach the first appellate authority. In that view of the matter, we reject this revision petition. 13. After disposal of the revision petition, Sri.Mayankutty Mather, learned counsel appearing for the assessee, requests us to grant him 15 days' time to prefer an appeal before the first appellate authority S.T.Rev.No.202 of 2008 8 against the orders of re-assessment passed by the assessing authority for the assessment year 2003-04. In our opinion, the request made by the learned counsel is reasonable and if it is granted it would not cause any prejudice to the respondent. Therefore, the petitioner is permitted to file a first appeal, if it so desires, before the Appellate Assistant Commissioner against the orders of re-assessment passed by the assessing authority for the assessment year 2003-04 within 15 days from today. If such an appeal is filed within the time granted by this Court, the first appellate authority shall decide the case on merits without reference to the period of limitation. 14. Consequently, I.A.No.1499 of 2008 also stands rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk