IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 13TH NOVEMBER 2008 / 22ND KARTHIKA 1930 ST.Rev..No. 116 of 2004 ------------------------------- TA.644/1999 of COMMR.KERALA AGR.IT & STAT,TVM. .................... REVISION PETITIONER/(ASSESSEE/APPELLANT): ---------------------------------------------------------------------- M/S. C.D.BABY AND COMPANY, RICE AND PROVISIONS DEALER, KADAMPANADU, KOLLAM. BY ADV. DR.K.B.MUHAMED KUTTY (SR.) SRI.K.M.FIROZ RESPONDENT(S): REVENUE/RESPONDENT: ------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 13/11/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L. DATTU, C.J. & A.K. BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T. Rev. No. 116 of 2004 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 13th day of November, 2008 Order H.L. Dattu, C. J: Petitioner is an assessee under the provisions of Kerala General Sales Tax Act (the Act, for short). He is a dealer in rice and other commodities. According to him, he is the second seller of all the items dealt with by him and therefore is not liable to pay tax. 2. The assessment year in question is 1995-96. 3. The assessee had filed his annual returns before the assessing authority and in that had conceded taxable turnover at Rs.29,84,310/- and the tax payable as nil. 4. The business premises of the asessee was inspected by the Intelligence Squad on 19/12/1995 and on such inspection they have recorded stock variations in various items. 5. Basing on the shop inspection report, the assessing authority, after verifying the books of accounts, had issued a pre-assessment notice proposing to reject the books of accounts and to proceed with the best judgment assessment for the assessment year in question. In the proposal made, the assessing authority had informed the petitioner the following defects: ST.Rev.116/2004 2 (i) The shop inspection report revealed stock variation in 28 items. (ii) Verification of recovered business slips revealed that sales of provisions and stationery articles valued at Rs.14562.40 were not billed. (iii) Sales tax due on the sales turnover of 103.5 Kg. Lobba had not been accounted. (iv) Penalty of Rs.79,558/-, being double the amount of tax sought to be evaded on a turnover of Rs.8,19,930/- was imposed by the Intelligence Officer under Section 45A of the act. 6. The assessee, after receipt of the re-assessment notice, had filed his objections. 7. The assessing authority, after considering the objections so filed, and based on the shop inspection report and the penalty imposed by the authority under section 45A of the Act, has concluded the assessment and in that has made an addition of 7 times of the suppressions detected to the conceded turnover. 8. The order so passed by the assessing authority was the subject matter of the appeal before the first appellate authority in STA.No.1637 of 1998. The first appellate authority by its order dated 30/9/1999 being of ST.Rev.116/2004 3 the opinion that the additions so made by the assessing authority is excessive/on the higher side has reduced the same to 4 ½ times of the suppression detected. The assessee was not satisfied with the order so passed by the first appellate authority and therefore had filed an appeal before the Tribunal. The Tribunal while concurring with the omissions pointed out by the assessing authority as well as the appellate authority, and further being of the opinion that the additions made towards the probable omissions and suppressions is again on the higher side, has reduced the addition from 4 ½ times to 3 times. It is the correctness or otherwise of the orders passed by the Kerala State Appellate Tribunal in TA.No.644 of 1999 dated 31st of May 2003 that is called in question by the assessee in this Tax Revision Case. 9. 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 and especially the petitioner being a second seller not liable to pay tax, and the stock variation alleged is incorrect, is not the entire addition to the conceded turnover (exempted) unwarranted? ST.Rev.116/2004 4 (ii) Whether on the facts and in view of the fact that the inspection was during the middle of December and there is no proof that suppression continued after inspection, is not the addition sustained by the Appellate Tribunal excessive?” 10. So far as the first question is concerned, the assessing authority in the pre- passessment notice has indicated that the claim of the petitioner that he is the second seller of all the commodities cannot be accepted, in view of the shop inspection report. The finding of the assessing authority is based on the shop inspection report and therefore the assessee cannot claim that he is a second seller of all the commodities in his business premises. Therefore the first question of law framed by the assessee requires to be answered against the assessee. 11. So far as the second question of law is concerned, it is necessary to notice the date of shop inspection that was conducted by the Intelligence Squad . The inspection was conducted on 19/12/1995. The assessment year in question is 1995-96, commencing from 01/04/1995 to 31/3/1996. It is not at the fag end of the year that the shop inspection was conducted by the Intelligence Squad and therefore the assessing authority may be justified in his opinion that if there was no shop inspection, the assessee would not ST.Rev.116/2004 5 have disclosed the sales turnover in his annual returns. Therefore the additions made by the assessing authority depending on the shop inspection dated 19/12/1995 can be made use of by the assessing authority for making certain additions to the conceded turnover. Therefore the second question of law framed by the assessee also requires to be answered against the assessee and in favour of the Revenue. 12. Accordingly, we do not see any merit in the Revision Petition filed by the assessee. Therefore we reject this revision petition. Ordered accordingly. H.L. DATTU Chief Justice A.K. BASHEER Judge an.