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 26TH SEPTEMBER 2008 / 4TH ASWINA 1930 S.T.Rev..No. 68 of 2006 -------------------------------------- ORDER DATED 30.5.2005 IN TA.243/2005 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, PALAKKAD .................... REVISION PETITIONER/APPELLANT/ASSESSEE: -------------------------------------------------------------------- M/S. LULU ENTERPRISES (INDIA) PVT. LTD., KOTTAKKAL. BY ADV. DR.K.B.MUHAMED KUTTY (SR.) & SRI.K.M.FIROZ RESPONDENT/RESPONDENT/REVENUE: ---------------------------------------------------------- THE 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 COME UP FOR ADMISSION ON 26/09/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.Rev.No.68 of 2006 ------------------------------------------ Dated, this the 26th day of September, 2008 ORDER H.L.Dattu, C.J. This Sales Tax Revision arises under the provisions of the Kerala General Sales Tax Act, 1963 ('the Act' for short). (2) Petitioner is a dealer registered both under the provisions of the Kerala General Sales Tax Act and the Central Sales Tax Act. It is a dealer in textiles and hosiery and ready made garments. (3) The relevant assessment year is 2002-03. (4) The assessee had filed its annual returns before the assessing authority for the assessment year 2002-03. Before finalizing the assessments for the assessment year in question, the assessing authority had received information from the Sales Tax Inspector, Malappuram who had detected unaccounted purchase of ready made garments in a sum of Rs.50,429.00 when the vehicle in which the goods of the petitioner was carried on 11.7.2002. The assessee had compounded the offence departmentally. (5) Yet another inspection was conducted by the Intelligence Officer of the Department on 30.1.2002. In the said shop inspection it S.T.Rev.No.68 of 2006 2 was revealed that there was sales suppression of Rs.2000.00 and accordingly had seized the records and the records disclosed unaccounted purchase and sales of Rs.30,564.00 and Rs.63,928.00 respectively. Even this offence was compounded by the assessee departmentally. The assessing authority also had the advantage of looking into the check post declaration wherein it was found that there was unaccounted purchase of the textiles in a sum of Rs.48,288.00. (6) Keeping all these aspects of the matter in view, the assessing authority has rejected the books of accounts and also the annual returns filed by the assessee and thereafter had issued a pre-assessment notice incorporating the reports that were received by him from the Sales Tax Inspector as well as from the Intelligence Officer of the Department, and further had directed the assessee to offer its explanation, if any, to the proposals made in the pre-assessment notice. After receipt of the pre- assessment notice, the assessee had filed its objections. The assessing authority has completed the best judgment assessment under Section 17(3) of the Act and in that has made certain additions towards the probable omissions and suppressions in the returns filed. S.T.Rev.No.68 of 2006 3 (7) Questioning the correctness or otherwise of the additions made by the assessing authority, the assessee had preferred appeal before the first appellate authority. The first appellate authority being of the opinion that the addition made by the assessing authority is excessive, has modified the same and has reduced the addition made by the assessing authority. (8) Not being satisfied with the orders of the first appellate authority, the assessee had filed second appeal before the Sales Tax Appellate Tribunal. The Tribunal taking into consideration the omissions pointed out by the assessing authority in the pre-assessment notice issued, has come to the conclusion that the order of the first appellate authority need not be interfered with and accordingly, has rejected the second appeal. (9) The order of assessment passed by the assessing authority is on estimation basis. (10) Time and again the apex Court has observed that in exercise of this Court's power under Section 41 of the Act, it can only look into whether the Tribunal has failed to decide a question of law or has erroneously decided a question of law. S.T.Rev.No.68 of 2006 4 (11) The Supreme Court in the case of Commissioner of Sales Tax Madhya Pradesh Vs. H.M.Esufali H.M.Abdulali {1973 (32) STC 77) has stated as under: “The reassessments were valid. From the circumstance that the assessee had dealings outside the accounts of the value of Rs.31,171.28 for 19 days, it was open to the officer to infer that the assessee had large scale dealings outside the accounts. In such a situation, it was not possible for the officer to find out precisely the turnover suppressed and he could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him was not arbitrary and had a reasonable nexus with the facts discovered, it could not be questioned. It was wrong to hold that the officer must have material before him to prove the exact turnover suppressed.” (12) This is a case of best judgment assessment. In that best judgment assessment the assessing authority had the advantage of seeing the reports received by the Sales Tax Inspector and also the Intelligence Officer of the Department who had intercepted the vehicle and also conducted a search in the business premises of the petitioner. Based on the information available, the assessing authority has completed the best judgment assessment. It is not a case where the best judgment assessment has been made without any basis whatsoever. S.T.Rev.No.68 of 2006 5 (13) In that view of the matter, we are of the opinion that no question of law as such would arise in this revision petition for our consideration and decision. (14) Therefore, while rejecting the revision petition, we confirm the orders passed by the Tribunal. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns