I.K. Muneer vs. STATE OF KERALA
What did the High Court hold?
The High Court found no reason to interfere with the Tribunal's remand order. However, it clarified that during the re-assessment, the assessing authority must examine whether there was an actual variation in the physical stock of goods before assuming turnover suppression based on valuation. To facilitate this, the Court deleted the Tribunal's findings in paragraph 9 of its order, which upheld the stock variation detected for 14.5% items. The assessing authority is directed to re-do the assessment, considering the assessee's explanations and making specific findings on the nature of entries, as per the Tribunal's direction, modified by the High Court's clarification on physical stock verification. The revision petition was disposed of by answering question No.2 in favour of the assessee and against the revenue, and questions Nos.1 and 3 in favour of the revenue and against the assessee. The specific questions numbered 1 and 3 were not explicitly detailed in the provided text.
What were the facts?
The assessee, I.K. Muneer, proprietor of M/s Plastoware Traders, filed a revision petition before the High Court of Kerala challenging an order dated 30.01.2023 passed by the Kerala Value Added Tax Appellate Tribunal. The Tribunal's order was in appeal (TA(VAT)No.20 of 2019) concerning assessment years not explicitly stated. The core issue revolved around an alleged suppression of goods attracting tax at 14.5% ad valorem, amounting to Rs. 15,09,300/-. The assessee contended that the alleged suppression was based on a difference in sale value computed by the department, comparing sale invoices with departmental estimates, without any finding of physical stock variation. The Tribunal had previously remanded the matter to the assessing authority.
What were the issues?
1. Whether the Tribunal erred in upholding the finding of stock variation in respect of goods attracting tax at the rate of 14.5% ad valorem, thereby leading to an assumption of turnover suppression based solely on differential valuation, without establishing a physical stock discrepancy? (Question of law and fact, concerning the interpretation and application of VAT provisions related to turnover and stock verification). Assessee's contention: The alleged suppression is based on a difference in sale value computed by the department, comparing sale invoices with departmental estimates. There is no finding of any difference in the physical quantity of stock available with the petitioner. In the absence of any physical stock variation, there cannot be an allegation of suppression of turnover, as suppression cannot be assumed merely on a differential value of physical stock. Revenue's contention: The revenue did not explicitly record any contentions in the provided judgment excerpt. However, their implicit stance is that the departmental estimation of value, leading to the suppression finding, is valid.
AI-generated summary — verify with the full judgment below
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P. MONDAY, THE 12TH DAY OF JUNE 2023 / 22ND JYAISHTA, 1945 OT.REV NO. 25 OF 2023 AGAINST THE ORDER IN TA(VAT) 20/2019 OF KERALA VALUE ADDED TAX / AGRL.INCOME TAX & SALES TAX APPELLATE TRIBUNAL, ADDL.BENCH, THRIRUVANANTHAPURAM DATED 30.01.2023 REVISION PETITIONER/APPELLANT/ASSESSEE: I.K. MUNEER PROPRIETOR, M/S PLASTOWARE TRADERS, MULAMKADAKOM , KOLLAM DISTRICT, PIN - 691012 BY ADVS. BOBBY JOHN S.AJAYGHOSH KUMAR RESPONDENT/REVENUE: STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIATE, THIRUVANANTHAPURAM, PIN – 695001 BY SMT.M.M.JASMINE, GP THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 12.06.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
OT(Rev.)25 of 2023 2 A.K. JAYASANKARAN NAMBIAR & MOHAMMED NIAS C.P., JJ …................................................... OT(Rev.)No.25 of 2023 ….............................................................. Dated this the 12th day of June, 2023 ORDER A.K.Jayasankaran Nambiar.J. The petitioner impugns the order dated 30.01.2023 of the Value Added Tax Appellate Tribunal in TA(VAT)No.20 of 2019. Briefly stated, the only substantial issue that was urged by the petitioner at the time of hearing of the revision petition was with regard to the finding regarding suppression entered by the authorities below in relation to goods that attract tax at the rate of 14.5% ad valorem. The learned counsel takes us through the order of the Tribunal, and in particular, the table extracted at internal page No.8 of the Tribunal order to point out that the authorities below had alleged suppression of goods attracting tax at the rate 14.5% ad valorem to an extent of Rs,15,09,300/-. It is his submission that the alleged suppression is based on the difference in sale value computed by the department based on the sale invoices recovered from the petitioner and comparing it with the value of the goods as estimated by the department. His specific contention is that there is no finding by
OT(Rev.)25 of 2023 3 the department that there was any difference in the physical quantity of stock of goods available with the petitioner and that in the absence of any physical stock variation there cannot be an allegation of suppression of turn over since the suppression cannot be assumed based merely on a differential value of the physical stock of goods. 2. We have heard Sri.Bobby John Pulickaparambil, the learned counsel for the petitioner and Smt.M.M.Jasmine, the learned Government Pleader for the respondent. 3. On a consideration of the facts and circumstances of the case and the submission made across the Bar, we find that by the impugned order of the Tribunal, the Tribunal has already remanded the matter to the assessing authority by setting aside the assessment based on the various recoveries made by the intelligence wing and directing the assessing authority to re-do the assessment after considering the explanation given by the assessee against the entries in each recovery and making specific findings as to the nature of entry in those materials. While we see no reason to interfere with the said remand order of the Tribunal, we would only make it clear that in the exercise to be done by the assessing authority pursuant to the remand, it shall also look into the aspect of whether or not there was an actual variation in physical stock of the goods, before proceeding to assume that there was suppression of
OT(Rev.)25 of 2023 4 the turn over on the basis of valuation in respect of the goods attracting tax at the rate of 14.5% ad valorem. To enable the assessing authority to so do, we delete the findings of the Tribunal in paragraph 9 of their order, which uphold the stock variation as detected in respect of 14.5% items. The assessing authority shall re-do the assessment in the manner directed by the appellate Tribunal, as modified by us in this order, and pass a fresh order after hearing the petitioner. The revision petition is thus disposed by answering question No.2 in favour of the assessee and against the revenue and question Nos.1 and 3 in favour the revenue and against the assessee.
Sd/- A.K. JAYASANKARAN NAMBIAR, JUDGE Sd/- MOHAMMED NIAS C.P. JUDGE dlk/12.6.2023
OT(Rev.)25 of 2023 5 APPENDIX OF OT.REV 25/2023 PETITIONER'S ANNEXURES Annexure I TRUE COPY OF THE ASSESSMENT ORDER DATED 06.05.2016 PASSED BY THE COMMERCIAL TAX OFFICER, THIRD CIRCLE, KOLLAM Annexure II TRUE COPY OF THE FIRST APPELLATE ORDER DATED 28.11.2018 IN KVATA (KLM) 1473/2018 PASSED BY THE ASSISTANT COMMISSIONER (APPEALS) KOLLAM Annexure III TRUE COPY OF THE SECOND APPEAL FILED BY THE REVISION PETITIONER/ASSESSEE BEFORE THE TRIBUNAL ON 21.01.2019, (DATED14.01.2019) Annexure IV TRUE COPY THE ORDER DATED 30.01.2023 PASSED BY THE KERALA VALUE ADDED TAX/ AGRL. INCOME TAX & SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, THIRUVANANTHAPURAM IN T.A. (V.A.T.) NO. 20 OF 2019
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