THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 27TH MAY 2008 / 6TH JYAISHTA 1930 S.T.Rev..No. 559 of 2004 ---------------------------------- ORDER DATED 16.3.2004 IN TA.257/2001 OF THE KERALA AGRICULTURALINCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM .................... PETITIONER/APPELLANT ----------------------------------- M.T.JAMES, PROPRIETOR, M/S. S.S.TRADING CO., VALARA, ADIMALI, IDUKKI DISTRICT. BY ADV. SRI.C.K.THANU PILLAI RESPONDENT/RESPONDENT: -------------------------------------------- THE STATE OF KERALA BY SPECIAL GOVERNMENT PLEADER MR.VINOD CHANDRAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 27/05/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & T.R.RAMACHANDRAN NAIR , J. ------------------------------------------------------------------ S.T.Rev.No.559 of 2004 ------------------------------------------------------- Dated, this the 27th day of May, 2008 O R D E R H.L.Dattu, C.J. This revision petition is filed by a dealer registered under the Kerala General Sales Tax Act and Central Sales Tax Act, being aggrieved by the orders passed by the Tribunal in T.A.No.257 of 2001 dated 16th March, 2004. 2. The assessee has framed the following questions of law for our consideration and decision. They are as under: I). Whether on the facts and in the circumstances of the case is the Tribunal justified in upholding the rejection of accounts and resorting to a best judgment assessment resulting in arbitrary estimate of turnover. ii). Whether on the facts and in the circumstances of the case is the Tribunal justified in upholding rejection of accounts and estimate of turnover based on Check Post declarations when the petitioner denied any such purchase of goods without making any enquiry as to the genuineness of the transactions and without resorting to the procedure provided in section 30B (4) of the Kerala General Sales Tax Act, 1963, which is mandatory and in view of the Circular instructions of the Board of Revenue (Taxes) in Circular NO.19/88/TD dated 14-12-1988. STREV.No.559/2004 -2- iii). Whether on the facts and in the circumstances of the case is the Tribunal justified in holding that check post declarations are public documents when such declarations are filed by the transporters of goods or the driver of the vehicle and whether the Tribunal is justified in shifting the burden of proof illegally on the petitioner when the burden of proof is on the declarant especially in view of the provisions of Rule 57 of the Kerala General Sales Tax Rules. iv). Whether on the facts and in the circumstances of the case is the Tribunal justified in ignoring the provisions of section 30B (4) read with Circular No.19/88 and the decision of this Honourable Court reported in (2002) 10 KTR 302) in O.P. filed by the petitioner. 3. While entertaining this revision petition, this Court had issued a direction to the department to make proper enquiry from the consignor, the owner of the lorry or the driver who is said to have transported the goods from the consignor to the consignee and file a report before this court within one month from the date of the order. The interim direction issued by this Court at para 2 reads as under: “When such a question came up for consideration in WPC No.16707 of 2003, one of us, (Ramachandran Nair, J), has alerted the Government about the necessity to take necessary measures to curb such type of illegal transport of goods STREV.No.559/2004 -3- through the checkpost. In fact the learned Judge suggested a procedure by which delivery and Form No.26 be made compulsory for transport of goods from outside Kerala to disable the dealers from denying the purchases. Learned Government Pleader in that case on instruction submitted that the Government did not propose to make any rule or provision and Government has the mechanism to trace the actual consignees and levy tax or penalty on them under Section 30B (4) of the Act. Since it is stated that the Government has got mechanism, we are inclined to give a direction to the Department to make proper enquiry and demand tax from the consignor, owner of the lorry or the driver and file a report in this Court within one month from today. There will be an interim stay for one month.” 4. Pursuant to the aforesaid direction so issued, certain enquires are made by the officials of the Commercial Taxes Department and thereafter they have filed a report before the Joint Commissioner (Law) Commercial Taxes, Ernakulam, a copy of the said report is also made available to us by Sri.Vinod Chandran, learned Government Pleader appearing for the respondent. In the report it is stated as under: “M/s. Pooja Plastics Mumbai as per the letter dated 7-6-2005 informed that M/s.S.S.Trading Co., Valara, Adimali is never been their client, and have not made any sale to them. And also stated that they are trading only in Acrylic Plastic offcults only. Ms.S.S.Trading Co., Valara, Adimali is trading in plastic STREV.No.559/2004 -4- moulded furniture only. The Regional Transport officer, Koramangala, Banglore (C ) has reported the name and address of the owner of the vehicle letter dated 26-4-05. Accordingly notice under section 30b 3 and 4 dated 27-5-05 has also been issued to the owner. But no reply has been received from the party till date. As per the letter dated 13-4-05 of Sri.S.R.Kulanthavel (Advocate), Sankari, it is reported that M/s. Pooja Plastic, Mumbai has effected the sale of plastic chairs through Surya Cargo Movers, Vapi, Mumbai. And it is also stated that since the incident was occurred about 6 years ago the consigner has no bills or any papers relating to the transaction. It is also requested to drop the penalty proposal.” 5. In view of the report of the Inspecting Assistant Commissioner (Intelligence) Ernakulam dated 30-8-2005, it may not be possible for us to sustain the additions made by the assessing authority in the orders of assessment passed for the assessment year 1998-1999 dated 13-4-2000 on mere check post declaration. In that view of the matter, the revision petition requires to be allowed and appropriate directions requires to be issued. Accordingly, in the peculiar facts and circumstances of this case, in our opinion, we need not have to answer the specific questions of law framed by the assessee for our consideration and decision. Therefore, without answering those questions, we set aside the orders passed by the assessing authority in so far as making the additions in the assessment order STREV.No.559/2004 -5- depending on check post declarations and then direct the assessing authority to re-do the assessment, in accordance with law, and issue appropriate demand notice to the petitioner. 6. Consequently, I.A.No.3909/2004 is closed. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (T.R.RAMACHANDRAN NAIR) JUDGE MS/dk.