Kerala High Court
M.A.K Azad vs State Of Kerala on 11 September, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
S.T Rev.Nos.5,6 and 7 of 2021
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 11TH DAY OF SEPTEMBER 2024 / 20TH BHADRA, 1946
ST.REV. NO. 5 OF 2021
AGAINST THE ORDER/JUDGMENT DATED 08.12.2020 IN TA NO.42
OF 2015 OF AGRL.I.T.ADDITIONAL .BENCH,ERNAKULAM
REVISION PETITIONER
1 M.A.K AZAD,
PROPRIETOR,INTERNATIONAL TRADE LINKS,PANAMPALLY
NAGAR, COCHIN-682036.
BY ADVS.
RAJU JOSEPH (SR.)
C.JOSEPH ANTONY
JOHN MANJOORAN
RESPONDENT
STATE OF KERALA
REPRESENTED BY SALES TAX OFFICER,SECOND
CIRCLE,THRIPUNITHURA-682301.
BY SR. GOVERNMENT PLEADER-SRI.V.K. SHAMSUDHEEN
THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON
11.09.2024, ALONG WITH ST.Rev..7/2021, 6/2021, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 11TH DAY OF SEPTEMBER 2024 / 20TH BHADRA, 1946
ST.REV. NO. 6 OF 2021
AGAINST THE ORDER/JUDGMENT DATED 08.12.2020 IN TA NO.2
OF 2012 OF AGRL.I.T.ADDITIONAL .BENCH,ERNAKULAM
REVISION PETITIONER
1 M.A.K AZAD,
AGED 64 YEARS
PROPRIETOR, INTERNATIONAL TRADE LINKS,PANAMPALLY
NAGAR, COCHIN-682 036.
BY ADVS.
RAJU JOSEPH (SR.)
C.JOSEPH ANTONY
JOHN MANJOORAN
RESPONDENT
STATE OF KERALA,
REPRESENTED BY SALES TAX OFFICER, SECOND CIRCLE,
THRIPUNITURA-682 301
BY SR. GOVERNMENT PLEADER-SRI.V.K. SHAMSUDHEEN
THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON
11.09.2024, ALONG WITH ST.Rev..5/2021 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
S.T Rev.Nos.5,6 and 7 of 2021
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 11TH DAY OF SEPTEMBER 2024 / 20TH BHADRA, 1946
ST.REV. NO. 7 OF 2021
AGAINST THE ORDER/JUDGMENT DATED IN TA NO.1 OF 2012 OF
AGRL.I.T.ADDITIONAL .BENCH,ERNAKULAM
REVISION PETITIONER
1 M.A.K. AZAD,
PROPRIETOR,INTERNATIONAL TRADE LINKS, PANAMPALLY
NAGAR, COCHIN-682036.
BY ADVS.
RAJU JOSEPH (SR.)
C.JOSEPH ANTONY
JOHN MANJOORAN
RESPONDENT
STATE OF KERALA,
REPRESENTED BY SALES TAX OFFICER, SECOND CIRCLE,
THRIPUNITURA-682301.
BY SR. GOVERNMENT PLEADER-SRI.V.K. SHAMSUDHEEN
THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON
11.09.2024, ALONG WITH ST.Rev..5/2021 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT
============
Dr. A.K.Jayasankaran Nambiar, J.
These S.T.Revisions are filed by the revision petitioner
aggrieved by the common order dated 08.12.2020 in T.A.Nos
1/2012, 2/2012 and 42/2015 before the Kerala Agricultural Income
Tax and Sales Tax Appellate Tribunal, Additional Bench,
Ernakulam. As the revision petitions impugn the common order of
the Tribunal, they are taken up for consideration together and
dispose by this common judgment.
2. The brief facts necessary for disposal of these revision
petitions are as follows:
The revision petitioner-assessee was a dealer in wheat,
rice and pulses and registered as such on the roles of the
Commercial Tax Officer, Tripunithura. The issues involved pertain
to the assessment years 1998-99, 1999-2000 and 2000-2001 under
the KGST Act.
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3. The place of business of the revision petitioner was
inspected by the Investigating Branch of Intelligence Wing of the
Sales Tax Department on 02.02.2001, based on which, an
allegation was made regarding evasion of tax by the revision
petitioner by claiming exemption on second sales of scheduled
goods against bogus purchases. The returns and books of accounts
filed by the revision petitioner on the various assessment years was
rejected by the assessing authority and the assessment was
completed on best judgment basis. The balance taxable turnover
determined assessing authority for the various years was as
follows:
1998-1999 - Rs.59,64,25,590/-
1999-2000 - Rs.45,49,90,320/-
2000-2001 - Rs.4,31,08,329/-
4. The figures of taxable turnover determined as above
were arrived at after adding to the conceded turnover. The
suppressed turnover detected by the department and thereafter
estimating the actual turn over for the purposes of completing the
assessment.
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5. The revision petitioner carried the assessment orders
in appeal before the Deputy Commissioner of Appeals, who
directed a modification of the assessment order, on finding that the
revision petitioner was in fact entitled to claim the second sale
exemption in respect of purchases effected from the registered
dealers in the State. In further appeals carried by the State before
the Appellate Tribunal, however, the Tribunal set aside the order of
the First Appellate Authority and restored the assessment orders
for all the three years.
6. The revision petitioner thereafter filed revision
petitions before this Court, which set aside the orders of the
Appellate Tribunal and remanded the matter to the Appellate
Tribunal for a fresh consideration. While doing so, this Court found
that the finding of the Appellate Tribunal that in as much as the
revision petitioner had compounded the offence relating to non
maintenance of true accounts, he would not contest the findings of
irregular claim for exemption in respect of second sales in the
assessment proceedings, was not justified in view of the decisions
in Velimparambil Hardwares v. State of Kerala [(1994) 92 STC
98 and also in Yeses International Bharath Petroleum
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Corporation v. State of Kerala [2008 (4) KHC 79].
7. In the remand proceedings before the Appellate
Tribunal, the main issue that arose for consideration was
essentially as to whether the claim of the revision petitioner-
assessee for exemption towards second sale of goods purchased
from M/s.A-One Traders, Vadanapally and M/s.Star Trading, was
legally sustainable. The Appellate Tribunal found that the revision
petitioner did not produce any books of accounts or records before
it to prove the alleged first sale by the two firms mentioned above,
from whom the revision petitioner stated that he had purchased the
goods which were then resold by him. The Tribunal went on to
observe that the nature and mode of invoices involving huge
quantities in a single invoice was suggestive of a sham transaction.
It then relied on assessment proceedings that have been decided
against a sister concern of the revision petitioner, that was
managed by his wife, to find that in as much as it was the revision
petitioner who was effectively managing that concern also, the
findings rendered against the said concern would bind the revision
petitioner as well. Eventually, the Tribunal once again set aside the
orders of the First Appellate Authority and restored the assessment
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orders for all the three assessment years.
8. In the revision petitions before us, the questions of law
raised by revision petitioner-assessee can be paraphrased as
under:
a) Whether on the facts and circumstances available
in the case and based on the legal provisions can an
assessment be made on a turnover which had already suffered
tax at the hands of the previous seller within the State of
Kerala?
b) Can the claim of second sales be rejected merely
for want of certificate as contemplated under Rules 32(13) of
the KGST Rules when the factum of first sale is proved
otherwise?
c) Whether the Tribunal is justified in rejecting the
claim of second sales in regard to the purchases effected from
A One Traders, Vadanapally merely on the ground that there is
no such registered dealer on the rolls of the sales tax office,
Kunnumkulam, when the dealer pointed out that A One
Traders is a registered dealer as per the rolls of the Sales Tax
Office, Chavakkad, without ascertaining the said facts from
the department and also when the said facts are found in
favour of the assessee by the first appellate authority?
d) Whether the finding of the Tribunal is perverse
resulting in miscarriage of justice?
e) Can the Tribunal go beyond the scope of pre-
assessment notice and the assessment order issued by the
assessing officer?
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9. We have heard Sri.Raju Joseph, the learned Senior
Counsel, duly assisted by Sri.Joseph Antony, appearing for the
revision petitioner and Sri.V.K.Shamsudheen, the learned Senior
Government Pleader appearing for the respondent-State.
10. During the course of hearing before us, and on a
query raised by us, we have been shown the assessment orders
passed in relation to M/s.Star Trading, wherein the said firm has
been assessed in respect of a turnover of Rs.9,83,17,430/- towards
sales effected to the revision petitioner firm during the assessment
year 1998-99 and in respect of a turnover of Rs.14,85,93,130/-
towards sales effected to the revision petitioner during the
assessment year 1999-2000. In as much as the Department has
already assessed M/s. Star Trading to tax on the said turnover, it is
clear from the scheme of the KGST Act that the same amount
cannot be brought to tax in the hands of the revision petitioner-
assessee for the said years. Although, it is the submission of the
learned Government Pleader, Sri.V.K. Shamsudheen that the
amounts ought to have been assessed in the hands of the revision
petitioner and not in the hands of M/s.Star Trading, the fact
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remains that so long as the assessment in the hands of M/s. Star
Trading has attained finality, the very same sales turnover in
respect of the same goods in the hands of the revision petitioner-
assessee would qualify as second sales that stood exempt from tax
under the KGST Act.
11. We are therefore of the view that in respect of the
said turnover, that has already been assessed in the hands of M/s.
Star Trading, there will be no necessity to go into the issue of
whether or not the revision petitioner-assessee had produced proof
to evidence the factum of second sales since, going by the fact of
payment of tax by M/s.Star Trading, a registered dealer within the
State, there will be no liability on the revision petitioner-assessee
in respect of the same turnover under the KGST Act.
12. As regards the assessment year 2000-2001, we find
that the finding of the Tribunal with regard to non-production of
any documents by the revision petitioner to prove the factum of
second sales is to be sustained in as much as no documents have
been produced even before us by the petitioner. The learned
Senior Counsel for revision petitioner-assessee however points out
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that there is a discrepancy with regard to the figure taken by the
assessing authority as representing tax actually paid by the
revision petitioner-assessee and this requires to be examined by
the assessing authority in the remand proceedings consequent to
this order.
In the light of the above findings, we dispose these
S.T.Revisions, by answering the questions of law raised above,
partly in favour of the assessee in relation to the turnover of
purchases from M/s.Star Trading during the assessment years
1998-99 and 1999-2000 and against the assessee in respect of the
balance turnover. For the assessment year 2000-2001, the above
questions of law are answered against the assessee. The impugned
order of the Appellate Tribunal is modified as above and the matter
remanded to the assessing authority for passing consequential
assessment orders for the aforesaid years within a period of two
weeks from the date of receipt of a copy of this judgment, so as to
enable the revision petitioner-assessee to avail the benefit of the
Amnesty Scheme, which is stated to be in force till the end of the
month. While passing the consequential orders of assessment, the
assessing authority shall reduce the amounts of Rs.9,83,17,430/-
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(assessment year 1998-99) and Rs.14,85,93,130/- (assessment year
1999-2000) from the suppressed turnover (arrived at before
estimation in the original assessment order) and then pass the
fresh assessment order as a consequential order to this judgment.
For the assessment year 2000-2001, the assessing authority shall
maintain the original assessment order but shall only look into the
aspect of actual tax paid by the assessee, based on the documents
produced before him, as also his own records, and give credit to
the assessee for the tax amounts already paid by the assessee for
the said assessment year. In view of the urgency projected by the
learned counsel for the assessee, we direct that the assessing
authority shall strictly comply with the time limit granted in this
judgment for passing the consequential orders.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
SYAM KUMAR V.M.
JUDGE
smm
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PETITIONER ANNEXURES
ANNEXURE I TRUE COPY OF THE NOTICE UNDER SECTION
17(3) OF THE KGST ACT DATED 07.11.2002
ANNEXURE II TRUE COPY OF THE ASSESSMENT ORDER DATED
22.11.2002
ANNEXURE III TRUE COPY OF THE ORDER IN STA NO.848/2006
DATED 30.06.2010
ANNEXURE IV TRUE COPY OF THE JUDGMENT IN WP(C)35122 OF
2010 DATED 11.11.2014
ANNEXURE V TRUE COPY OF THE JUDGMENT IN WA 1395 OF
2015 DATED 03.07.2015
ANNEXURE VI TRU COPY OF THE COMMON ORDER PASSED BY THE
SALES TAX APPELLATE TRIBUNAL ADDITIONAL
BENCH ERNAKULAM IN TA
NOS.NO.42/2015,1/2012 AND 2/2012 DATED
25.03.2019.
ANNEXURE VII TRUE COPY OF THE COMMON ORDER PASSED IN
ST.REVN.NO.29/2019 AND CONNECTED CASES
DATED 20.2.2020
ANNEXURE VIII TRUE COPY OF THE AGRUMENT NOTE EXCEPT THE
ANNEXURES
ANNEXURE IX TRUE COPY OF THE ORDER OF INTELLIGENCE
OFFICER PASSED AGAINST STAR TRADERS DATED
30.03.2013
ANNEXURE X TRUE COPY OF THE ASSESSMENT ORDER IN
RESPECT OF THE YEAR 1999-2000 DATED
19.09.2014.
ANNEXURE XI TRUE COPY OF THE APPELLATE ORDER
CHALLENGING THE PENALTY ORDER DATED
24.01.2017
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ANNEXURE XII TRUE COPY OF THE APPELLATE ORDER
CHALLENGING THE ASSESSMENT ORDERS IN
RESPECT OF THE ASSESSMENT YEARS 1998-1999
TOI 2000-2001 DATED 31.01.2017.
ANNEXURE XIII TRUE COPY OF THE COMMON APPELLATE ORDER IN
TA.NO.1/2012,AND CONNECTED CASES DATED
08.12.2020.
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PETITIONER ANNEXURES
ANNEXURE 1 TRUE COPY OF THE ASSESSMENT ORDER DATED
30.12.2002
ANNEXURE 11 TRUE COPY OF THE ORDER IN STA NO 1673/2005
DATED 1.7.2011
ANNEXURE 111 TRUE COPY OF THE COMMON ORDER PASSED BY
THE SALES TAX APPELLATE TRIBUNAL
ADDITIONAL BENCH ERNAKULAM IN TA NOS
42/2015, 1/2012 AND 2/2012 DATED 25.3.2019
ANNEXURE IV TRUE COPY OF THE COMMON ORDER PASSED IN
ST.REV NO 29/2019, 30/2019 & 32/2019 DATED
20.2.2020
ANNEXURE V TRUE COPY OF THE COMMON APPELLATE ORDER IN
TA NO 2/2012, AND CONNECTED CASES DATED
8.12.2020
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PETITIONER ANNEXURES
ANNEXURE-I TRUE COPY OF THE ASSESSMENT ORDER DATED
22.11.2002.
ANNEXURE-II TRUE COPY OF THE ORDER IN STA NO.882/2005
DATED 01.07.2011.
ANNEXURE-III TRUE COPY OF THE COMMON ORDER PASSED BY
THE SALES TAX APPELLATE TRIBUNAL
ADDITIONAL BENCH ERNAKULAM IN TA
NOS.42/2015, 1/2012 AND 2/2012 DATED
25.03.2019.
ANNEXURE-IV TRUE COPY OF THE COMMON ORDER PASSED IN
ST.REV.NO. 30/2019 AND CONNECTED CASES
DATED 20.02.2020.
ANNEXURE-V TRUE COPY OF THE ARGUMENT NOTE EXCEPT THE
ANNEXURES.
ANNEXURE-VI TRUE COPY OF THE ORDER OF INTELLIGENCE
OFFICER PASSED AGAINST STAR TRADERS DATED
30.03.2013.
ANNEXURE-VII TRUE COPY OF THE ASSESSMENT ORDER IN
RESPECT OF THE YEAR 199-2000 DATED
19.09.2014.
ANNEXURE-VIII TRUE COPY OF THE APPELLATE ORDER
CHALLENGING THE PENALTY ORDER DATED
24.01.2017.
ANNEXURE-IX TRUE COPY OF THE APPELLATE ORDER
CHALLENGING THE ASSESSMENT ORDERS IN
RESPECT OF THE ASSESSMENT YEARS 1998-1999
TO 2000-2001 DATED 31.01.2017.
ANNEXURE-X TRUE COPY OF THE COMMON APPELLATE ORDER IN
TA NO.1/2012, AND CONNECTED CASES DATED
08.12.2020.
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