Kerala High Court
Asokan Vasu vs State Of Kerala on 16 July, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 16TH DAY OF JULY 2021 / 25TH ASHADHA, 1943
ST.REV. NO. 3 OF 2018
AGAINST THE ORDER IN TA 9/2014 OF S.T.A.T. ADDITIONAL BENCH,TVM.,
THIRUVANANTHAPURAM
REVISION PETITIONER : (APPELLANT/ ASSESSEE)
M/S. HOTEL ASLIYA GRANDE,
NAVAIKULAM,
THIRUVANANTHAPURAM - 695 603.
BY ADV SRI.T.M.ABDUL LATHEEF
RESPONDENT : (RESPONDENT/ REVENUE) :
THE STATE OF KERALA,
REPRESENTED BY COMMERCIAL TAX OFFICER,
ATTINGAL - 695 101.
BY SR.GOVT.PLEADER SRI.SHAMSUDHEEN V.K.
THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON
16.07.2021, ALONG WITH ST.Rev.10/2018, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
ST.REV.NOS. 3 of 2018 & 10 of 2018
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 16TH DAY OF JULY 2021 / 25TH ASHADHA, 1943
ST.REV. NO. 10 OF 2018
AGAINST THE ORDER IN TA 2/2015 OF K.V.A.T./ AGRL. INCOME TAX &
SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM
REVISION PETITIONER :
ASOKAN VASU,
M/S.HOTEL ASLIYA GRANDE, NAVAIKULAM,
THIRUVANANTHAPURAM.
BY ADV SRI.T.M.ABDUL LATHEEF
RESPONDENT :
STATE OF KERALA,
REPRESENTED BY COMMERCIAL TAX OFFICER, ATTINGAL.
BY SR.GOVT.PLEADER SRI.V.K.SHAMSUDHEEN
THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON
16.07.2021, ALONG WITH ST.Rev..3/2018, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
ST.REV.NOS. 3 of 2018 & 10 of 2018
3
ORDER
Dated this the 16th day of July, 2021
Bechu Kurian Thomas, J.
These two appeals arise from the order dated 03.11.2017 in
TA.No.9/2014 and TA.No.2/2015 of the Sales Tax Appellate Tribunal,
Trivandrum. The appeals relate to the assessment years 2010-11 and 2011-
12 respectively. In both the assessment years, the issue involved are
almost identical. The assessee is also the same and hence we deem it
appropriate to dispose of both these appeals by this judgment.
2. Assessee is a registered Bar Hotel with three star facility at
Attingal. Due to non-production of books of account for the years 2010-11
and 2011-2012, assessing officer resorted to best judgment assessment.
The sales turnover was estimated in both the years at 70% of the purchase
value of liquor.
3. For the assessment year 2010-2011, the assessee preferred
appeal as STA.No.25/2012 before the Deputy Commissioner (Appeals). By
order dated 13.01.2014, the said appeal was dismissed.
4. As relating to the assessment year 2011-12, the assessee
preferred STA.No.9/2013 and by order dated 23.10.2014, the gross profit
was reduced to 65%.
5. Appeals were preferred to the Appellate Tribunal against the
ST.REV.NOS. 3 of 2018 & 10 of 2018
respective orders for the above two assessment years as mentioned earlier.
After considering the contentions raised, both the appeals were dismissed by
separate orders passed on the same day. Thus, for the year 2010-11, gross
profit has been calculated at 70% while for the year 2011-12, gross profit
was fixed at 65%.
6. We have heard Adv.T.M.Abdul Latheef on behalf of the
revision petitioner and Adv.V.K.Shamsudheen, the learned Senior
Government Pleader on behalf of the respondents.
7. The learned counsel for the petitioner submitted that the
reasoning adopted by the assessing officer as confirmed by the Tribunal is
not based upon any intelligible criteria and on the other hand, is based upon
assumptions which have no rationale or legal basis. The learned counsel
urged that the assumption of the assessing officer that Three Star Hotels
earned huge profits was palpably wrong and has no connection to reality.
8. The learned Senior Government Pleader, on the other hand,
pointed out that the assessee had been defaulting in maintaining books of
account and in the two assessment years, he had wilfully omitted to produce
the same. According to the learned Senior Government Pleader, the
assessee does not deserve any leniency.
9. We find from Annexure B produced in STR.No.03/2018 that
for the year 2005-06, the Tribunal had directed adoption of gross profit
@45% against the very same assessee. Of course, the facts for the said
ST.REV.NOS. 3 of 2018 & 10 of 2018
assessment year were different since the assessee had maintained books of
account though the same were not proper and correct. On a consideration
of the facts in the present case especially for these two assessment years,
we are of the view that the order produced as Annexure-B in
STR.No.03/2018 cannot be relied as such.
10. However, taking note of the contentions raised in these
revision petitions and also the fact that for the two assessment years,
different percentage of gross profits have been taken, the addition for the
two years is on the higher side. The assumption of the assessing officer that
three star hotels earn huge profits cannot be a proposition of general
application. Various factors will determine the extent of profits. Since the
assessee failed to maintain the books of account, best judgment assessment
was validly resorted to. Though the assessing officer is entitled to enter into
some guess work while carrying out the best judgment assessment, we are
of the opinion that 70% or even 65% was excessive for the said two years.
We are of the considered view that 55% of the gross profit would be a
justifiable addition in these two revision petitions.
In the aforesaid circumstances, we allow these two revision
petitions and direct the sales turn over of liquor to be estimated for the
assessment years 2010-11 and 2011-12 by adding gross profit at 55% of
the purchase value of liquor and beer sold by the assessee. We clarify that
the discretion we exercised in this case to reduce the addition is
ST.REV.NOS. 3 of 2018 & 10 of 2018
commensurate to the facts arising in this case alone and the same shall not
be treated as a precedent or a guiding factor in other cases including other
assessment years for the same assessee.
The revision petitions are allowed to the above extent.
Sd/-
S.V.BHATTI, JUDGE
Sd/-
BECHU KURIAN THOMAS, JUDGE
RKM
ST.REV.NOS. 3 of 2018 & 10 of 2018
APPENDIX OF S.T.REV.NO.03 OF 2018
PETITIONER'S ANNEXURES :
A : COPY OF THE ASSESSMENT ORDER NO.32011143884 DATED 28.01.2013
PASSED BY THE COMMERCIAL TAX OFFICER, ATTINGAL
B : COPY OF THE ORDER DATED 18.03.2014 PASSED BY THE SALES TAX
APPELLATE TRIBUNAL IN T.A.32/2011
C : COPY OF THE ORDER DATED 17.01.2017 PASSED BY THIS HON'BLE
COURT IN ST.REV.NO.29/2014
D : COPY OF THE ORDER DATED 18.03.2014 PASSED BY THE SALES TAX
APPELLATE TRIBUNAL IN T.A.33/2011
E : COPY OF THE ORDER DATED 03.11.2017 PASSED BY THIS HON'BLE
COURT IN T.A.NO.9/2014.
ST.REV.NOS. 3 of 2018 & 10 of 2018
APPENDIX OF S.T.REV.NO.10 OF 2018
PETITIONER'S ANNEXURES :
A : COPY OF ASSESSMENT ORDER DATED 19.03.2013 PASSED BY THE
COMMERCIAL TAX OFFICER, ATTINGAL.
B : COPY OF ORDER NO.STA.09/13 DATED 23.10.2014 PASSED BY THE
DEPUTY COMMISSIONER (APPEALS), THIRUVANANTHAPURAM
C : COPY OF THE ORDER DATED 03.11.2017 PASSED BY THE SALES TAX
APPELLATE TRIBUNAL, THIRUVANANTHAPURAM IN T.A.NO.2 OF 2015.
