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 TUESDAY, THE 16TH SEPTEMBER 2008 / 25TH BHADRA 1930 S.T.Rev.No.244 of 2008 -------------------------------- T.A.NO.199/2007 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM (ORDER DATED 13.3.2008). (ASSESSMENT YEAR 1999-2000) .................... REVISION PETITIONER/ASSESSEE:- ---------------------------------------------------- M/S. INTEGRATED RUBIAN FOODS PRODUCT LIMITED, CHANDIROOR, AROOR, ALAPPUZHA DISTICT, REPRESENTED BY ITS DIRECTOR, MR. K.A. KUNJUMOIDHEEN, BY ADV. SRI.ALIAS M.CHERIAN RESPONDENT/REVENUE:- -------------------------------------- STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 16/09/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.Rev. No.244 of 2008 ------------------------------------------ Dated, this the 16th day of September, 2008 ORDER H.L.Dattu, C.J. This sales tax revision pertains to the assessment year 1999-2000. (2) Petitioner is a company engaged in the business of export of marine products and meat items. The petitioner company has also its own poultry farm, processing plant and factory in its premises. Petitioner exports dressed chicken. It is stated in the revision petition that it also exports buffalo meat and marine products. (3) Petitioner company is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) and the Central Sales Tax Act, 1956 ('CST Act' for short). For the earlier assessment years, the petitioner had filed its monthly and annual returns and in that had claimed exemption from payment of tax both under the KGST Act and CST Act, on the ground that the marine products are exempt from payment of tax under the KGST Act. It is stated in the petition that, in fact, the claim of the assessee was accepted by the assessing authority for all the earlier assessment years. (4) For the assessment year in question, admittedly, the petitioner had not filed its annual returns. But it is not disputed nor it can S.T.Rev.No.244 of 2008 2 be disputed by the Revenue that the petitioner had filed its monthly returns for a period of ten months. In all those monthly returns the assessee had claimed exemption from payment of tax under the Act, as has been done in the previous assessment years. (5) The assessing authority has completed the best judgment assessment, on the ground that the assessee had failed to file its annual returns and also failed to produce the books of accounts, ledgers, etc. for his verification. In the best judgment assessment order passed, the assessing authority has quantified the tax liability of the petitioner in a sum of Rs.13,26,448/- merely on the ground that the assessee had failed to file its annual returns and also failed to produce the books of accounts in spite of service of the pre-assessment notice. (6) It appears that there was revenue recovery proceedings initiated by the department for realisation of the tax due under the Act. It is informed to us by the learned counsel appearing for the petitioner that aggrieved by the orders of assessment passed for the assessment year in question, the assessee had filed an appeal before the first appellate authority. A writ petition also came to be filed before this Court, inter alia, questioning the revenue recovery proceedings initiated by the department for realisation of the tax due under the Act, in view of the pendency of the first appeal before the first appellate authority. It is informed to us by the learned counsel appearing for the petitioner that this S.T.Rev.No.244 of 2008 3 Court had directed the petitioner to deposit the entire amount demanded in the revenue recovery notice and further had directed the first appellate authority to dispose of the appeal said to have been filed by the assessee for the assessment year in question within a particular time. (7) After such remand, the petitioner could not appear before the first appellate authority after receipt of the hearing notice, mainly on the ground that the hearing had been fixed on 7.3.2007, whereas the notice came to be received by the assessee only on 9.3.2007. It appears that the petitioner had filed an application before the first appellate authority, inter alia, requesting him to grant sufficient time, since its Chartered Accountant was laid up with Chikungunia fever. (8) The first appellate authority had disposed of the appeal without affording an opportunity of hearing to the petitioner, mainly on the ground that this Court while disposing of the writ petition filed by the petitioner had fixed a time limit within which time the appeal requires to be disposed of. (9) Aggrieved by the orders passed by the first appellate authority, the petitioner was before the Tribunal in T.A.No.199 of 2007. In the said appeal the assessee had taken up several contentions including that the goods sold by the petitioner are exempted from payment of tax under the Act and further had contended that it has now prepared the annual returns and also the books of accounts which he would be in a S.T.Rev.No.244 of 2008 4 position to produce before the first appellate authority if an opportunity is given to him. (10) The Tribunal has rejected both the contentions of the assessee and has disposed of the appeal by confirming the orders passed by the assessing authority and the first appellate authority. That is how the assessee is before us in this sales tax revision. (11) In our opinion, the one and the only question that would arise for our consideration and decision is whether the assessing authority was justified in passing the best judgment assessment order? (12) It is not in dispute, nor it can be disputed, that the petitioner company is a dealer in marine products. It is also not in dispute that for the previous assessment years, the assessee's claim for exemption from payment of tax was accepted by the assessing authority. (13) For the assessment year in question, the assessee had filed its monthly returns for a period of ten months, but could not file its annual returns for the reason that the assessee had closed down its business. In the monthly returns filed, the assessee had claimed exemption from payment of tax on the ground that it is a dealer in marine products and the same are exempted from payment of tax. (14) The assessing authority without noticing this aspect of the matter and merely because the assessee had not filed its annual returns and also not produced the books of accounts, has proceeded to complete S.T.Rev.No.244 of 2008 5 the best judgment assessment. In our opinion, even for passing a best judgment assessment there must be a basis and it cannot be by wild imagination and presumption by the assessing authority. In the instant case, as we see from the order passed by the assessing authority, there is no basis whatsoever for quantifying the huge tax liability payable by the assessee. If for any reason, the assessing authority had noticed the monthly returns filed by the assessee in a proper perspective and also had taken into consideration the orders of assessment passed for the earlier assessment years, in our opinion, it would not have quantified the tax liability in a sum of Rs.13,26,448/-. (15) These aspects of the matter were brought to the notice of the Tribunal. In our opinion, the Tribunal should have remanded the matter directing the assessee to file its annual returns before the assessing authority and also to produce the books of accounts to justify the claim made in the monthly returns filed for the assessment year in question. Since that has not been done by the Tribunal, in our opinion, we cannot sustain the order passed by the Tribunal. (16) In view of the above discussion and in the peculiar facts and circumstances of the case, we are of the opinion, that, the matter requires to be remanded to the assessing authority with a specific direction to the assessee company to file its annual returns within a month's time from today before the assessing authority and also to produce S.T.Rev.No.244 of 2008 6 the books of accounts whenever it is demanded by the assessing authority for its verification. The assessing authority is directed to consider the claim of the assessee and pass a fresh order in accordance with law. Till such time, the amount deposited by the petitioner company pursuant to the direction issued by this Court will lie with the department. (17) This revision petition is disposed of as above. (18) Consequently, I.A.Nos.1921 of 2008 and 2068 of 2008 stand rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk