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O.T.Revision No.84 of 2020 1 2025:KER:29402
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR. JUSTICE EASWARAN S. FRIDAY, THE 4TH DAY OF APRIL 2025 / 14TH CHAITHRA, 1947 OT.REV NO. 84 OF 2020 AGAINST THE ORDER DATED 16.4.2019 IN T.A.(VAT) NO.740 OF 2014 OF KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX & SALES APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE REVISION PETITIONER/APPELLANT/RESPONDENT/REVENUE :
STATE OF KERALA REP. BY THE DEPUTY COMMISSIONER (LAW), KERALA GST DEPARTMENT, ERNAKULAM.
BY ADV SMT. RESKITHA RAMACHANDRAN, GOVERNMENT PLEADER RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE :
1 M/S.LUBINA GOLD WORKS WEST HILL, KOZHIKODE-673005.
*ADDITIONAL RESPONDENTS IMPLEADED
ADDL.R2 THADAYIL SHANU W/O LATE SHAIJAL P.K,PANAKKADANKANDY, PALERI,KUTTIADY-673508. MOBILE:9846668321
ADDL.R3 SHRI.KAZI MAIDUL ISLAM AYMAPAHAR PUR,THARAKESHWAR, WBHOO (DIST) WEST BANGAL, PIN-712410 MOBILE:7034999444,9446952890,8138982890.
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 04.04.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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ORDER
Dr. A.K. Jayasankaran Nambiar, J. This O.T.(Revision) is preferred by the State impugning the order dated 16.4.2016 of the Kerala Value Added Tax Appellate Tribunal, Kozhikode in T.A.(VAT) No.740 of 2014. 2. The brief facts necessary for the disposal of this O.T.Revision are as follows: The respondent dealer was engaged in the manufacturing of gold ornaments. The business place was inspected on 8.10.2010, and the complete physical stock of goods (2135.230 grams of gold ornaments) was found valued at Rs.38,64,766/-. On enquiry and inspection of the books of accounts, it was found that a transaction of 3665.870 grams of gold ornaments (estimated value of Rs.66,35,234/-) had taken place, and a suppression of taxable turnover was estimated at Rs.1,05,00,000/-. 3. The respondent dealer opted to compound the offence of non maintenance of complete books of accounts for the year 2010-2011 under Section 74 of the Kerala Value Added Tax Act (for short, ‘the KVAT Act’) and remitted an amount of Rs.4 Lakhs towards the compounding fee. An amount of Rs.4,24,200/- was also collected from the dealer by way of tax. Subsequently, the escaped turnover of the respondent dealer for the year 2010-2011 was estimated on best judgment basis under Section 25(1) of the KVAT Act. The turnover suppression was assumed
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at Rs.1,05,00,000/-. The assessing authority, however, added an equal amount towards probable omission and suppression and assessed the respondent dealer on the said turnover. While doing so, credit was also given to the dealer for the tax amount collected from him (Rs.4,24,200). 4. In the first appeal preferred by the respondent dealer, the appellate authority modified the assessment order by reducing the addition towards the probable omission and suppression from an equal amount to 50% of the turnover suppression detected on inspection. Both the assessee as also the State preferred further appeals before the appellate tribunal against the said finding with regard to additions towards probable omission and suppression. While the assessee preferred the appeal T.A.(VAT) No.694 of 2014 challenging the addition of an amount equal to 50% of the suppressed turnover to the total taxable turnover, the State preferred T.A.(VAT) No.740 of 2014 challenging the order of the 1st appellate authority to the extent it reduced the addition towards probable omission and suppression from 100% to 50% of the turnover suppression detected on inspection. 5. By the common order of the appellate tribunal that is impugned before us by the State, the tribunal found at paragraphs Nos.7 and 8 as follows: “ 7. The secondary issue involved in the impugned assessment proceedings is the further addition (on best of judgement) of turnover towards similar probable omission and suppression. Even though equal amount
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of the turnover suppression detected on inspection was originally added in that account, it was reduced to 50% of the same in 1st appeal, on the findings that there were no documents to justify further addition of equal amount of the suppression detected. It is pertinent to note that the whole stock of goods (Gold jewellery) found in the business place of the Dealer at the time of inspection and the whole turnover involved in all the documents recovered from the place of business were reckoned for estimating the turnover suppression and also for quantifying the attempted tax evasion/Compounding fee. This might be on the presumption that the Dealer would have already sold (in the foregone days), all the goods, the turnover which were reflected in the documents recovered and would sell all the stock of goods in the forthcoming days and also that since the Dealer has not been enrolled under the Act, there is no probability for their remitting the tax due on such turnover. 8. If variation in the stock of goods (physically present at the time of Inspection with reference to the relevant figures in the books accounts or connected documents produced by the Dealer) only was reckoned for estimating the suppressed turnover, there would have been probability for further similar omission and suppression. This bench of the Tribunal finds that since the whole Stock of goods found in the business place of the Dealer at the time of inspection and the whole turnover involved in all the documents recovered from the place of business were reckoned for estimating the turnover suppression and also for quantifying the attempted tax evasion / Compounding fee, the turnover suppression estimated due to the inspection will be the
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maximum probable quantum of turnover escaped on the part of the Dealer and hence further addition towards similar probable omission and suppression is not warranted and the same is liable to be deleted.”
It was on finding that there was no justification whatsoever for adding any amount towards probable omission and suppression that the appellate tribunal allowed the assessee’s appeal [T.A.(VAT) No.694 of 2014] and dismissed the department’s appeal [T.A.(VAT) No.740 of 2014]. 7. In the revision before us, the department has come up only against the order of the appellate tribunal in T.A.(VAT) No.740 of 2014. The State has not chosen to impugn the order of the tribunal in T.A.(VAT) No.694 of 2014. In other words, while the State challenges the impugned order of the tribunal to the extent it reduces the addition towards probable omission and suppression from 100% to 50% of the suppressed turnover detected at the time of inspection, for reasons best known to it, it has not chosen to impugn that portion of the order of the tribunal that accepts the assessee’s contention that there was no justification for making any addition towards the probable omission or suppression. We also find that the reasons given by the tribunal for the deletion of any addition to the turnover on account of probable omission and suppression do not require any interference.
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Thus, in any view of the matter, this O.T.(Revision) preferred by the State cannot be maintained since the State has not challenged the findings in favour of the assessee in its appeal, namely, T.A.(VAT) No.694 of 2014. Resultantly, this O.T.(Revision ) fails and the same is dismissed.
Sd/-
DR. A.K. JAYASANKARAN NAMBIAR JUDGE
Sd/- EASWARAN S. JUDGE NS
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APPENDIX OF OT.REV 84/2020
PETITIONER ANNEXURES
ANNEXURE A A TRUE COPY OF ASSESSMENT ORDER UNDER SECTION 25(1) OF KVAT ACT DATED 15.02.2012 BEARING NO.A-524/2010-II PASSED BY THE COMMERCIAL TAX OFFICER, SECOND CIRCLE, KOZHIKODE.
ANNEXURE B A TRUE COPY OF THE ORDER DATED 12.02.2014 IN KVATA NO.579 OF 2012.
ANNEXURE C CERTIFIED COPY OF THE COMMON ORDER OF THE TRIBUNAL IN T.A.(VAT)NO.740 OF 2014 DATED 16.04.2019.