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 1ST JANUARY 2008 / 11TH POUSHA 1929 S.T.Rev.No.188 of 2005 -------------------------------------------- T.A.No.215/2003 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-I, ERNAKULAM (ORDER DATED 21.10.2004) (ASSESSMENT YEAR 1997-98) ------ REVISION PETITIONER/APPELLANT/ASSESSEE:- ---------------------------------------------------------------------- M/S. ACE CURRENT CONTROLS, 199 GIRI NAGAR, KADAVANTHARA P.O., COCHIN, ERNAKULAM DISTRICT. BY ADV. SRI.E.P.GOVINDAN RESPONDENT/RESPONDENT/REVENUE:- ----------------------------------------------------------- STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES DEPARTMENT, GOVT.SECRETARIAT, THIRUVANANTHAPURAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 01/01/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.DATTU, C.J. & K.M.JOSEPH, J. ------------------------------------------ S.T.Rev. No.188 of 2005 ------------------------------------------ Dated, this the 1st day of January, 2008 ORDER K.M.Joseph, J. Petitioner firm is engaged in the business of manufacturing and selling of Inverters, UPS, etc. This sales tax revision relates to the assessment year 1997-98. Not being satisfied with the return filed by the assessee, after issuing notice and after considering the explanation offered by the petitioner, the assessing officer has proceeded to complete the assessment by best judgment assessment. In doing so, the assessing officer had added 50% of the total turnover conceded, towards probable omissions and suppressions and also added corresponding purchase turnover under Section 5A of the Kerala General Sales Tax Act, 1963 ('the Act' for short). 2. The assessee carried the matter in appeal before the Deputy Commissioner (Appeals) and by Annexure B order dated 16.12.2002, the first appellate authority reduced the addition to 20% with corresponding reduction in the purchase turnover under Section 5A of the Act. Being dissatisfied with the same, the assessee carried the matter in further appeal before the Tribunal. The Tribunal again has reduced the addition to 10% with corresponding reduction to the purchase turnover. Feeling aggrieved by the orders so passed, the assessee is before us in this revision. 3. The petitioner has raised the following questions of law for our consideration and decision: S.T.Rev.No.188 of 2005 2 “(i) Whether on the facts and in the circumstances of the case the Tribunal was justified in confirming the rejection of books of accounts, when no offence of suppression, or omission was detected against the petitioners. (ii) Whether on the facts and in the circumstances of the case the Tribunal was justified in sustaining the addition. Has not the Tribunal committed an error in following the dictum laid down by this Hon'ble Court in several cases, with regard to best judgment assessment? (iii) Whether on the facts and in the circumstances of the case the Tribunal was justified in sustaining the addition without appreciating the evidence on records judiciously. Has not the Tribunal committed an error in appreciating the evidence produced by the petitioners.” 4. We heard Mr.E.P.Govindan, learned counsel appearing for the petitioner and Mr.Mohammed Rafiq, learned senior Government Pleader appearing for the Revenue. 5. Learned counsel appearing for the petitioner would contend that no addition is permitted without proving any case of omission or suppression. In support of that contention he relies on the decision of this Court in Roy Jacob v. State of Kerala, reported in 128 STC 256. We notice that five grounds have weighed with the assessing authority for rejecting the return filed by the petitioner. They are as follows: “1. In the annual return itself contradictory figures are given in respect of total turnover and taxable turnover as S.T.Rev.No.188 of 2005 3 Rs.1,06,56,410.00 and Rs.1,10,79,591.20 respectively. 2. Being an SSI Unit, manufacturing invertors and UPS no MANUFACTURING ACCOUNT IS PRODUCED AS STIPULATED UNDER Rule 32(15) of the KGST Rules. 3. Even though purchases are said to have been effected for a turnover of Rs.93,89,713.00 purchases worth Rs.89,45,390.00 has only been proved. Hence the balance turnover of Rs.4,44,323.00 would be assessed under sec.5A of the Act. 4. Scrap sales to the tune of Rs.24,355.00 would be assessed to tax @ 8%. 5. On verification of the assessment records in respect of the dealer M/s.Index Informatics Ltd. for the year 97-98, it is noticed that they had purchased his products for a turnover of Rs.1,15,73,357.00 whereas he had disclosed a total sales turnover of Rs.1,06,56.410.00. This itself is a concrete evidence that the books of accounts produced is not correct and complete. In the circumstances the assessment under KGST Act for the year 97-98 is proposed to be revised.” 6. Learned counsel appearing for the petitioner, with reference to the said defects, pointed out that though he may not have maintained the manufacturing account as mandated under Rule 32(15) of the KGST Rules, he has maintained the necessary accounts as required under the Central Excise Rules and therefore, that defect cannot be relied on for making the best S.T.Rev.No.188 of 2005 4 judgment assessment and sustaining the addition as finally made by the Tribunal. He would further contend that so far as defect No.5 is concerned, the Tribunal was requested to verify the figures with the dealer M/s.Index Informatics Limited, but that was not verified. 7. We are of the view that there is absolutely no merit in this contention. This is a petition under Section 41 of the Act. Section 41 of the Act provides for powers of the High Court to revise an order of the Tribunal in a case where a question of law has been erroneously decided or there has been failure to decide a question of law. The powers vested in the High Court to interfere with the findings of fact are limited to cases where the findings are perverse. 8. We notice that admittedly the petitioner has not maintained the manufacturing account as required of it under Rule 32(15) of the KGST Rules. A perusal of defect No.5 as noted above would reveal that the accounts of the petitioner shows a lower sales figure in regard to its products in comparison with the purchase turnover of its purchaser. This incompatible accounts reveals that the petitioner has not maintained the accounts in a proper way. We are, therefore, of the view that this is a fit case where the assessing authority was fully justified in rejecting the return filed by the assessee and making his best judgment assessment and making addition. While a best judgment assessment cannot be capricious or whimsical, we are not satisfied that this is a case where the best judgment assessment or the addition which has been finally sustained by the Tribunal is arbitrary or whimsical in any manner, to invoke our revisional jurisdiction under Section 41 of the Act. S.T.Rev.No.188 of 2005 5 Therefore, the sales tax revision requires to be rejected and it is rejected. We answer the questions of law framed by the petitioner against the petitioner and in favour of the Revenue. Consequently, I.A.No.1041 of 2005 is dismissed. (H.L.DATTU) CHIEF JUSTICE (K.M.JOSEPH) JUDGE vns