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 FRIDAY, THE 24TH OCTOBER 2008 / 2ND KARTHIKA 1930 S.T.Rev.No.300 of 2008 ----------------------------------------- T.A.NO.11/2008 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM (ORDER DATED 16.04.2008) (ASSESSMENT YEAR 2003-2004) .................... REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:- ------------------------------------------------------------------------------------------- ABY SIMON, M/S.ST.MARY'S GRANITES, PAZHUKKAMATTAM, THIRUVANIYOOR. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT/RESPONDENT/RESPONDENT/REVENUE:- ----------------------------------------------------------------------------------- STATE OF KERALA. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 24/10/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu,C.J. & A.K.Basheer,J. ------------------------------------------- S.T.Rev.No.300 of 2008 -------------------------------------------- Dated, this the 24th October, 2008 ORDER H.L.Dattu,C.J. Petitioner is a dealer, registered both under the provisions of the Kerala General Sales Tax Act, 1963 (“KGST Act” for short) and Central Sales Tax Act, 1956 (“CST Act” for short). (2) The petitioner is engaged in the crushing of granite into crushed metal and dust. (3) The petitioner calls in question the correctness or otherwise of the orders passed by the Sales Tax Appellate Tribunal, Additional Bench-II, Ernakulam in T.A.No.11 of 2008, dated 16.04.2008. By the impugned order, the Tribunal has confirmed the orders passed by the first appellate authority. (4) This revision petition relates to the assessment year 2003-04. (5) The business premises of the petitioner was inspected by the Intelligence Officer of the Department on 18.9.2004, i.e., after the completion of the assessment year. The assessee had compounded the offence Departmentally in lieu of the prosecution proceedings. (6) The assessee has filed its annual returns for the assessment year 2003-04 and, in that, had conceded a particular turnover. In view of the information that was received by the assessing authority with regard to the S.T.Rev.300 of 2008 - 2 - inspection that was conducted in the business premises of the petitioner, the assessing authority, after rejecting the books of accounts and the returns filed, has proceeded to complete the assessments by way of best judgment assessment and, in that, has made an addition of two times the suppressed turnover to the conceded turnover. (7) Aggrieved by the quantification so made by the assessing authority, the assessee was before the first appellate authority. The first appellate authority, being of the opinion, that, the addition made by the assessing authority was on a higher side, has directed the assessing authority to make an addition of one time of the suppressed turnover to the conceded turnover. (8) Not being satisfied with the orders so passed by the first appellate authority, the assessee was before the Tribunal in T.A.No.11 of 2008. (9) The Tribunal has rejected the assessee's appeal. That is how the assessee is before us in this revision petition. (10) The assessee has framed the following questions of law for our consideration and decision. They are as under: “A. Whether on the facts and in the circumstances of the case, has not the Appellate Tribunal failed to take note that no addition can be made over and above the suppression quantified as the inspection is after the end of the assessment year and therefore there is no pattern of suppression? S.T.Rev.300 of 2008 - 3 - B. Whether on the facts and in the circumstances of the case is not the addition to the turnover sustained by the Appellate Tribunal without any basis and arbitrary?” (11) Since the issues raised in this revision petition lies in a narrow compass, we had directed Sri.Muhammed Rafiq, learned Government Advocate, to take notice for the respondent. (12) We have heard both the learned counsels. (13) Smt.Meera V.Menon, learned counsel appearing for the petitioner/assessee, would submit, that, none of the authorities under the Act were justified in making addition to the conceded turnover and, according to the learned counsel, the addition that can be made is, only to the suppression that was noticed by the Intelligence Officer at the time of inspection of the business premises of the petitioner. In support of that contention, the learned counsel relies on the observations made by a Bench of this Court in the case of Chilton Refrigeration v. State of Kerala [(2004) 138 STC 472]. In the said decision, at paragraph 5, this Court has observed as under: “As we have already noted the only basis on which the addition of Rs.13,99,314 made was the actual suppression of Rs.4,66,438 found at the time of inspection and the compounding of the offence by paying Rs.68,492. Admittedly the inspection was made after the close of the assessment year and during the assessment year 1995-96. It is also an admitted position that there was no inspection of the business premises of the assessee during the assessment year 1994-95. No other S.T.Rev.300 of 2008 - 4 - discrepancy in the accounts was also found. Since the only material relied on for making the addition is the materials gathered after the close of the assessment year there was no justification on the part of the assessing authority to surmise that similar unaccounted transaction might have been effected by the assessee during the year 1994-95. This assumption, according to us, is on pure conjectures and surmises. Since the assessee had admitted the offence and paid compounding fee the assessing authority will be justified in adding the sum of Rs.4,66,438 to the returned turnover. This is what the first appellate authority has done. The Tribunal, according to us, has wrongly relied on the decision of this Court in V.A.Augustaine and Co. v. State of Kerala [1975] 36 STC 257. If as a matter of fact an inspection was conducted during the assessment year in question and unaccounted transaction was found there was justification on the part of the assessing authority to presume that similar unaccounted transactions might have been effected for the remaining period also. But such inference cannot be drawn in a case where there was no inspection during the assessment year in question and that the materials relied on for making the addition was obtained after the close of the assessment year”. (14) The facts of this case are identical with the facts and the legal issues decided by this Court in Chilton Refrigeration's case (supra). (15) In this case also, the inspection was done by the Intelligence Officer of the Department after the expiry of the assessment year, viz., 18.09.2004. In such circumstances, this Court has observed, that, what can be S.T.Rev.300 of 2008 - 5 - added to the conceded turnover, even while passing the best judgment assessment, is only the suppressed turnover that was detected at the time of inspection. (16) In view of the law declared by a Bench of this Court, in our opinion, the revision petitioner should succeed in this revision petition. (17) Accordingly, while answering the questions of law framed by the assessee in favour of the assessee and against the Revenue, we direct the assessing authority to modify the assessment order by adding only the suppressed turnover that was detected on the date of inspection, viz., 18.09.2004. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-