IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH TUESDAY, THE 5TH FEBRUARY 2008 / 16TH MAGHA 1929 S.T.Rev.No.33 of 2008 -------------------------------------------- (AGAINST THE ORDER DATED 20.7.2007 IN T.A.60/2007 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM - ASSESSMENT YEAR 1999-2000) .................... REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:- --------------------------------------------------------------------------------------- M/S.MATHURA MARBLES PVT.LTD., ALUVA, REPRESENTED BY ITS MANAGING DIRECTOR, P.V.JOSE. BY ADV. SRI.K.SRIKUMAR SRI.K.MANOJ CHANDRAN SRI.P.R.AJITHKUMAR RESPONDENT/RESPONDENT/RESPONDENT/REVENUE:- --------------------------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY THE GOVERNMENT PLEADER, HIGH COURT OF KERALA.. BY SENIOR GOVERNMENT PLEADER MR.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 05/02/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu, C.J. & K.M.Joseph, J. ---------------------------------------- S.T.Rev.No.33 of 2008 ---------------------------------------- Dated, this the 5th day of February, 2008 ORDER H.L.Dattu,C.J. Though the matter is posted for admission, by consent of the learned counsel appearing for the parties to the lis, the matter is taken up for final hearing, since the issues involved in this revision petition lie in a narrow compass. (2) The assessee is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 (“K.G.S.T.Act” for short) and the Central Sales Tax Act, 1956 (“C.S.T.Act” for short). (3) The petitioner is aggrieved by the order passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench-II, Ernakulam in T.A.No.60 of 2007 dated 20.07.2007. By the impugned order, the Tribunal has confirmed the order passed by the assessing authority for the assessment year 1999-2000. (4) The petitioner is a dealer in Cudappa and Marble stones. He had conceded a particular total and taxable turnover. In that, he had shown the freight charges in the range of Rs.15,000/- to Rs.17,000/- per load. The assessing authority being of the opinion that the freight charges so shown in the returns filed by the assessee will not even meet the expenditure incurred for purchase of diesel, has rejected the return so filed and has proceeded to pass the best judgment assessment order after issuing an appropriate pre-assessment notice. The best judgment assessment order passed by the assessing authority was unsuccessfully challenged by the assessee, both before the first appellate authority as well as before the Tribunal. S.T.Rev.No.33 of 2008 - 2 - The Tribunal while rejecting the assessee's appeal, at paragraph 3 of the order, has observed as under: “The assessment was completed based on inspection conducted at the business place including the branch of the appellant. The books of accounts were not available at the time of inspection. Stock difference and suppression in purchases and sales were found at the time of inspection and huge amount of penalty was also imposed. The freight charges accounted towards the purchase of marbles were too low considering the distance from Rajasthan from where major portion of the purchases are made. What is accounted as Rs.15,000/- to Rs.17,000/- per load is not sufficient to meet the Diesel charges. This is done to suppress the sale value and under those circumstances the assessing authority had estimated the freight charges at Rs.2,500/- per ton in the assessment order. The appellant had not placed any materials either before the first appellate authority or before us to deviate from the estimation made relating to freight charges. In the circumstance there is no merit in the appeal and is accordingly dismissed”. (5) Aggrieved by the orders so passed by the Tribunal, the assessee is before us in this revision petition filed under Section 41 of the K.G.S.T.Act. (6) The assessee has framed the following questions of law for our consideration and decision. They are as under: (A) Whether the Tribunal was justified in refusing to interfere with the order of the lower authority by saying that since the appellant had not placed any materials either before the first appellate authority or before us to deviate from the estimation made relating to freight charges when the account books were rejected and turnover enhanced for the sole reason that freight charges disclosed was low? (B) Whether the Tribunal was justified in confirming estimation of the freight charges when the evidences on record and the books of accounts shows to actual freight charges paid by the petitioner? (C) Whether the Tribunal was justified in confirming the estimation of freight charges when there are no evidences that the assessee paid over and above the freight charges shown in the books of accounts? (D) Whether the Tribunal, in the absence of any specific instance of suppression or omission in purchases and sales or in payment of freight charges or any other irregularity, was justified in upholding the rejection of accounts and sustaining enhancement of turnover? S.T.Rev.No.33 of 2008 - 3 - (E) Whether the Tribunal was justified in confirming the best judgment order of the assessing authority when the return filed tallies with the books of accounts of the petitioner?” (7) Sri.K.Srikumar, learned counsel appearing for the petitioner, would submit that the assessing authority even while passing the best judgment assessment has to assign appropriate reasons. The order cannot be on presumptions and assumptions and therefore, the tribunal was not justified in sustaining the impugned order passed by the assessing authority in so far as the addition of freight charges. (8) Sri.Muhammed Rafiq, learned Senior Government Pleader sought to justify the orders passed by the first appellate authority as well as the Tribunal. (9) We have carefully perused the orders passed by the Tribunal. It is admitted fact that the assessee who is a registered dealer under the Act, has purchased Cudappa and Marble stones from Rajasthan. In the returns filed, he had shown freight charges at the rate of Rs.15,000/- to Rs.17,000/- per load. The assessing authority is of the opinion that freight charges should be at the rate of Rs.2,500/- per ton. To come to this conclusion, the assessing authority had not assigned any reasons. Even the best judgment assessment is an assessment. An estimation by best judgment may take into account an element of guess work, but it is nevertheless a 'Judgment' and hence must have some basis. By no stretch of imagination, the assessing authority merely on presumptions and assumptions cannot adopt a particular figure as the freight charges without assigning cogent reason. Further, the orders of the assessing authority cannot be on mere whims and fancies. It should be based on some materials. The law on the point is well settled. Reiteration of the same principle is not warranted in the present case. In that view of the matter, we are not inclined to sustain the best judgment assessment passed by the assessing authority in so far as the quantification of freight charges at the rate of Rs.2500/- per ton is concerned. S.T.Rev.No.33 of 2008 - 4 - (10) Accordingly, we pass the following: O r d e r The order passed by the assessing authority in so far as the addition made by the assessing authority towards freight charges and confirmed by the Tribunal is set aside. The matter is remanded to the assessing authority to reframe the assessment order for the assessment year in question, after affording an opportunity of hearing to the assessee. (11) In view of the order passed in the revision petition, no orders need be passed in I.A.No.271 of 2008. Accordingly, the said application is closed. Ordered accordingly. H.L.Dattu Chief Justice K.M. Joseph Judge vku/dk.