IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 1ST APRIL 2009 / 11TH CHAITHRA 1931 ST.Rev..No. 316 of 2008() ------------------------- AGAINST THE ORDER DATED 30/06/2008 IN RP 2/2008. IN TA.162/2007 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... REVISION PETITIONER --------------------------------------- M/S.SHARON CHEMICALS & SOLVENTS, MATTOOR, KALADY, ERNAKULAM DISTRICT. REPRESENTED BY ITS MANAGING PARTNER V.G.JOSHI. BY ADV. SRI.BOBBY JOHN SRI.TOMSON T.EMMANUEL SRI.SAIBY JOSE KIDANGOOR RESPONDENT(S): --------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, COMMERCIAL TAX DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY G.P. SRI.V.K. SHAMSUDEEN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 01/04/2009, ALONG WITH STRV NO. 323 OF 2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. -------------------------------------------- S.T. Rev. Nos. 316 & 323 OF 2008 -------------------------------------------- Dated this the 1st day of April, 2009 JUDGMENT Ramachandran Nair,J. Connected Revision Cases arise from the KGST and CST assessments for the year 2001-02. We have heard counsel appearing for the petitioner and Government Pleader appearing for the respondent. 2. After hearing both sides and after going through the orders, we find that petitioner accounted local sales as inter-State sales to the tune of Rs. 86,76,000/-. However, when the irregularity was detected by the Intelligence Officer, petitioner conceded the offence and remitted compounding fee of Rs. 2 lakhs. Annexure IV is the compounding order issued by the Intelligence Officer whereunder there is a clear cut finding based on admission by the assessee that inter-State sales are accounted only as local sales. However, it is seen that even after rejecting the claim of inter-State sales, the assessing officer assessed the very same turnover under the CST Act based on returns filed. We find force in the contention of the petitioner that when turnover conceded for CST is added to the KGST, there is no 2 justification for making CST assessment on the very same turnover. However, Government Pleader pointed out that corresponding deduction is granted in the KGST assessment which we also find to be correct. Petitioner has a further case that when irregularity is only in regard to wrong accounting of local sales as inter-State sales, there is no scope for addition. Further contention is that since purchases are from outside the State, there is no scope for assessment under Section 5A on the raw materials purchased namely, varsol. Since the assessee has admitted irregularities in maintenance of accounts and paid maximum compounding fee of Rs. 2 lakhs, obviously accounts cannot be accepted as such and therefore best judgment assessment is the only solution. However, having regard to the duplicity of assessment and claim of inter-State purchase of raw materials from Gujarath, we dispose of the Tax Revisions by making modification of the assessment confirmed by the Tribunal as follows: 1. The assessing officer will in addition to the turnover of Rs. 106,25,778/- assessed under the KGST Act limit the addition to Rs. 43,38,000/- which is 50% of the suppressed turnover. 2. No assessment under section 5A should be made if 3 petitioner produces proof of inter-State purchases and transport of entire raw materials from Gajarat to Kerala. However, if petitioner does not produce proof for purchase from outside the State, assessment under Section 5A would be made on 65% of the turnover actually added including accounted purchasea. 3. The CST assessment of Rs. 86,76,000/- will stand cancelled and the entire tax paid under the CST will stand credited towards KGST on the dates on which payments are made and interest under Section 23(3A) will be worked out in accordance with the said provision. 4. The assessing officer is directed to revise the assessment immediately on production of a copy of this judgment by the petitioner. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk 4