Judgment:
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE WEDNESDAY, THE9H DAY OF OCTOBER201317TH ASWINA, 1935 OT.Rev.No. 120 of 2013 () -------------------------- AGAINST THE ORDER
/JUDGMENT
IN TA (V2762013 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM DATED2606-2013 REVISION PETITIONER(S): ----------------------- SAJ BATTERIES PRIVATE LIMITED, 18/1490, KALLUTHANKADAVU, PUTHIYARA.P.O., CALICUT673004, REPRESENTED BY ITS MANAGING DIRECTOR, SMT.ALIYAMMA JOSEPH. BY ADV. SMT.INDU SUSAN JACOB RESPONDENT(S): -------------- STATE OF KERALA BY GOVERNMENT PLEADER SRI.BOBBY JOHN PULIKKAPARAMBIL THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON0910-2013, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: MANJULA CHELLUR, C.J & A.M.SHAFFIQUE, J.
---------------------------------------------- O.T.Rev.No. 120 of 2013 ---------------------------------------------- Dated this the 9th October, 2013 JUDGMENT
Manjula Chellur, C.J.
Heard learned counsel for the revision petitioner. We have also gone through the orders of Appellate Tribunal.
2. We are concerned with the assessment year 2010-2011. It is not in dispute that revision petitioner herein is carrying on business in manufacturing of lead acid batteries. Intelligence Wing of the Tax Department inspected the premises of the Company and after enquiry they found eight unaccounted invoices for the year 2008-2009 and one unaccounted invoice for the year 2010-2011. However, revision petitioner, without any resistance conceded to the above fact. The Tax Department allowed him to compound the above offence and he was permitted to remit a sum of 25,400/- so far as assessment year 2010-2011 as compounding fee.
3. Thereafter assessing authority proceeded to reopen the assessment not only for 2010-2011, but also for 2008-2009 and OTRev.120/13 2 proceeded to make best judgment assessment for the above said assessment years. So far as assessment year 2010-2011, estimated turnover was arrived at 1,71,23,560/-.
4. Aggrieved by the said order of assessment, Commercial Tax Officer, III Circle, Kozhikode, an appeal came to be preferred before the Deputy Commissioner (Appeals), who confirmed the orders of the assessing authority. Aggrieved by the same, further appeal came to be filed before Appellate Tribunal. Appellate Tribunal also concurred with the opinion of the assessing authority as well as first appellate authority. Aggrieved by the same, present Revision Petition is filed contending that the assessing authority had not used any other material for arriving at the estimated turnover, except taking inspection report of the Intelligence Wing of the Tax Department as the basis. According to revision petitioner, in the absence of any material or clinching evidence, the estimated turnover on mere suspicion and surmises is not sustainable, therefore, none of the authorities were justified in arriving at the said figures based on best judgment method. According to learned counsel for the revision petitioner, in the light of unused invoices being produced before the first Appellate OTRev.120/13 3 Authority, there was no justification to reject the material to accept the stand of the assessee.
5. Till the Intelligence Wing of the Tax Department found the irregularities, especially eight unaccounted invoices for the assessment year 2008-2009 and one for the year 2010-2011 indicating there was suppression of true accounts, no genuine material regarding the turnover of the business of the revision petitioner was produced.
6. Then coming to the reopening of the assessment by the assessing officer, it was very much within the authority of the assessee to produce all necessary material clarifying the doubts raised in the proposal communicated to the assessee, but unfortunately, in spite of inspection by the Intelligence Wing of the Tax Department and in spite of proposal for best judgment estimation of the turnover being communicated, the assessee did not take any steps to explain anything before the assessing officer. In the absence of producing any material and in the light of admitting the existence and issuance of parallel invoices and even agreeing to compound the same, it would only indicate, as OTRev.120/13 4 on the date of fresh assessment order being passed by the assessing authority, he did not have any documents. Even otherwise, burden is on the assessee to establish that there was no issuance of parallel invoices and the best way to establish this fact was to produce unused invoices in order to show why there was serial number 37, which was out of turn. In the absence of any explanation and what happened to serial numbers 1 to 36, the only conclusion that could be arrived at is that the assessee was concealing the transactions as he was in the habit of issuance of parallel invoices.
7. The argument of learned counsel appearing for the revision petitioner is that it was the duty of the assessing officer to take into account the bills produced by the assessee so far as the expenditure and details of power consumption to arrive at a conclusion on average basis what could have been the quantity of batteries that could have been manufactured in the unit of the assessee Company. We fail to understand how this argument would sustain in one way or other. The controversy was with regard to issuance of parallel invoices in order to conceal actual turnover of the business. The best evidence was unused invoices OTRev.120/13 5 or duplicate copy of the invoices which were maintained by the assessee for accounting purpose. In the absence of verifying what happened to earlier invoices when serial number 37 invoice was unearthed during the inspection, on the basis of best judgment method, the assessing officer had proceeded to estimate the turnover which would have escaped from the assessment. He has adopted proper method to assess and has arrived at fair conclusion, therefore we find no irregularity or arbitrariness in the procedure adopted by the assessing officer.
8. The two judgments relied upon by learned counsel for the revision petitioner are perused. So far as M/s.Yeses International Bharath Petroleum Corpn., Ernakulam v. State of Kerala (2008(4) KHC79, it indicates that even in the case of best judgment assessment, the procedure indicated for such assessment should be in compliance with the principles of natural justice, otherwise it would be violative of Articles 14 and 19 of the Constitution of India. In that case Their Lordships opined that there was no proper opportunity to explain every material gathered and intended to be used against the assessee by the authority. Here, while communicating the proposal, the details OTRev.120/13 6 including the proposed estimation of turnover on what basis it was estimated was communicated to the assessee, but assessee failed to explain with proper documentation, therefore, question of breach of principles of natural justice would not arise in this case.
9. Then coming to The State of Kerala v. C.Velukutty [(1966) XVII STC465, Their Lordships held that when best judgment assessment is made, available material has to be looked into.
10. In this case, other than the amounts which were already subject matter of assessment and the report of the Intelligence Wing of the Department, no other material was available so as to take into consideration the explanation, if any, offered by the assessee. As a matter of fact, before the assessing authority it was not even the case of assessee that invoices 1 to 36 were unused. If they were unused, why out of turn invoice No.37 alone was used and what happened to serial numbers 1 to 36 has to be explained by the assessee. In the absence of taking any such defence or explanation before assessing authority but coming out with such explanation only before the first Appellate Authority, it OTRev.120/13 7 would only indicate that the assessee was not bringing out true facts before the authorities concerned and was taking different stands at different stages.
11. In the light of material available and the nature of defence, not explaining anything before the assessing authority but coming out with a different version before the first Appellate Authority, we are of the opinion, the assessing authority was justified in passing the assessment orders under challenge based on best judgment method and there are no good grounds to interfere with the same. Accordingly, the Revision Petition is dismissed. MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE vgs10.10