IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 6TH SEPTEMBER 2010 / 15TH BHADRA 1932 ST.Rev..No. 282 of 2009() ------------------------- TA.1/2008 of STAT, ADDL.BENCH, KOTTAYAM .................... REVISION PETITIONER/RESPONDENT/REVENUE : -------------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER MOHAMMED RAFEEQ RESPONDENT/APPELLANT/ASSESSEE: ------------------------------------------------------ SRI.T.C. THOMAS, THATTAMPARAMBIL TIMBERS, THALAPPULAM, PLASSANAL. ADV. SRI.E.P.GOVINDAN FOR R SRI.V.V.GEORGEKUTTY THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 06/09/2010, ALONG WITH STRV NO. 283 OF 2009 & STRV NO. 285 OF 2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------- ST.REV.Nos.282, 283 and 285 of 2009 ------------------------------------------- Dated this the 6th September, 2010 JUDGMENT Ramachandran Nair, J. These are revisions filed by the State challenging the order of the Sales Tax Appellate Tribunal cancelling penalty levied on the respondent assessee for the assessment years 2001-2002, 2002-2003 and 2003-2004. We have heard the Government Pleader appearing for the petitioner and counsel appearing for the respondent. The respondent is engaged in purchase and sale of timber mostly from Forest Department. Timber purchased from the forest department is moved out of the forest depots with the help of forest passes issued by the forest department which are required to be produced at the forest check post for release of vehicle with the timber. The Intelligence Officer of the Sales Tax Department collected the details of forest passes issued by the forest department to the respondent for transport of timber sold STRV Nos.282/2009 & conn.cases 2 to him during the three years and when the details contained in the forest passes were checked by the accounts, it was noticed by the department that several purchases covered by forest passes are not accounted by the respondent. Notices issued proposing penalty for unaccounted sale of goods purchased from forest department were not responded to by the respondent. Consequently, turnover of unaccounted sales was estimated based on the data gathered from the forest passes and penalty was levied. Even though in appeal, first appellate authority only granted partial modification of the penalty, on second appeal, the Tribunal cancelled the penalty holding that the department has not furnished copies of the forest passes relied on by them in the penalty order to the respondent. Another ground based on which Tribunal cancelled the penalty is that the vehicles used for transport were autorickshaws, motor cycles, etc. It is against these orders of the Tribunal, State has filed the revision cases. 3. During hearing, we noticed that the department STRV Nos.282/2009 & conn.cases 3 has made out a specific case that transactions of purchases not accounted for 2001-2002 were covered by 49 forest passes and similar suppressions were found to be with respect of 30 forest passes for the year 2002-2003 and for the last year, 2003-2004, suppression was found in respect of purchases covered by 15 forest passes. We notice that forest passes were issued in triplicate and therefore the respondents should have copies of the forest passes with them. We therefore directed the respondent to furnish an affidavit in Court, so that if he wants to deny the forest passes referred to in the penalty orders as not relating to him, he was free to do so. However, surprisingly, he has filed affidavit in terms of the interim order admitting that all the forest passes referred to in the penalty order were issued to him and the same pertain to transport of timber purchased by him from forest department. Therefore, what is required to be verified is only whether the details contained in the forest passes held by the respondent tally with the details collected by the sales tax department from the forest records. In our STRV Nos.282/2009 & conn.cases 4 view, the cancellation of penalty by the Tribunal for the reason that copies of the forest passes were not furnished by the department to the respondent is absolutely untenable. When the department collected information from the forest department about the sales made to the respondent and when the respondent is confronted with details of transactions collected by them with reference to forest passes, details of which were also furnished to the respondent in the notices issued, it was his duty to substantiate with records that he has accounted the purchases. Therefore, we do not find any violation of natural justice because respondent did not care to file even a reply or produce any documents to prove the correctness of his accounts either before the officer or before the first appellate authority. The Tribunal did not care to verify the details collected by the Intelligence Officer from the Forest department based on which penalty was levied. Further, the mere fact that vehicle numbers given in the forest passes pertain to autorickshaws or other vehicles do not lead to the STRV Nos.282/2009 & conn.cases 5 conclusion that the transport was not genuine particularly when respondent has admitted transport of goods covered by all forest passes mentioned in the penalty order. Therefore, this ground relied on by the Tribunal for cancelling the penalty is also sustainable. Having seen the change in attitude of the respondent by filing an affidavit before this Court and owning up all transactions covered by forest passes, what is required is to verify whether the purchases covered by the forest passes were fully accounted by the respondent. We feel one more opportunity can be granted to the respondent to establish his case of maintenance of full and complete accounts of purchase and sales before the Intelligence officer. Accordingly, we set aside the orders of the Tribunal and remand the matter to the assessing officer for reconsideration of the matter, after giving an opportunity to the respondent to produce accounts and all records pertaining to the purchase and transport from the forest department including those covered by the forest passes mentioned in the penalty order. The Intelligence Officer is STRV Nos.282/2009 & conn.cases 6 directed to pass fresh orders within a period of two months from the date of receipt of a copy of this judgment. The respondent will, without fail, produce the entire records before the Intelligence Officer to substantiate his case. There shall also be a direction to the Intelligence Officer to allow the respondent to peruse the records collected by the forest department and if required, to take photocopies thereof. sd/- C.N.RAMACHANDRAN NAIR JUDGE sd/- K.SURENDRA MOHAN JUDGE lgk