Kerala High Court
M/S.Kanichai Hotels (P) Ltd vs State Of Kerala on 6 January, 2025
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
ST.REV. NOs.21 & 22/2023 1 2025:KER:388
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE EASWARAN S.
MONDAY, THE 6TH DAY OF JANUARY 2025 / 16TH POUSHA, 1946
ST.REV. NO. 21 OF 2023
AGAINST THE ORDER DATED 16.08.2023 IN TA NO.15 OF 2022 OF
KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH
THRIRUVANANTHAPURAM
PETITIONER/APPELLANT:
M/S.KANICHAI HOTELS (P) LTD.
HOTEL SAJ LUCIYA, EAST FORT, THIRUVANANTHAPURAM
REPRESENTED BY ITS DIRECTOR, REJI VARGHESE,
PIN - 695023
BY ADV M.SREEKUMAR
RESPONDENT/RESPONDENT:
STATE OF KERALA
REPRESENTED BY THE COMMISSIONER OF STATE TAXES, TAX
TOWERS, KARAMANA, THIRUVANANTHAPURAM DISTRICT,
PIN - 695002
BY SR. GOVERNMENT PLEADER SRI. V K SHAMSUDHEEN
THIS SALES TAX REVISION HAVING COME UP FOR FINAL HEARING ON
06.01.2025, ALONG WITH ST.Rev.22/2023, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
ST.REV. NOs.21 & 22/2023 2 2025:KER:388
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE EASWARAN S.
MONDAY, THE 6TH DAY OF JANUARY 2025 / 16TH POUSHA, 1946
ST.REV. NO. 22 OF 2023
AGAINST THE ORDER DATED 16.08.2023 IN TA NO.11 OF 2023 OF
KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH
THRIRUVANANTHAPURAM
PETITIONER/APPELLANT/APPELLANT/ASSESSEE:
M/S.KANICHAI HOTELS (P) LTD.,
HOTEL SAJ LUCIYA, EAST FORT, THIRUVANANTHAPURAM,
REPRESENTED BY ITS DIRECTOR, REJI VARGHESE, PIN -
695023
BY ADV M.SREEKUMAR
RESPONDENT/RESPONDENT/RESPONDENT/REVENUE:
STATE OF KERALA
REPRESENTED BY THE COMMISSIONER OF STATE TAXES, TAX
TOWERS, KARAMANA, THIRUVANANTHAPURAM DISTRICT, PIN -
695002
BY SR. GOVERNMENT PLEADER SRI. V K SHAMSUDHEEN
THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON
06.01.2025, ALONG WITH ST.Rev..21/2023, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
ST.REV. NOs.21 & 22/2023 3 2025:KER:388
ORDER
Dr. A.K.Jayasankaran Nambiar, J.
As both these S.T. Revision petitions preferred by the assessee impugn a
common order of the Kerala Value Added Tax Appellate Tribunal that covers
four assessment years, namely, 2014-2015 to 2017-2018, albeit to the limited
extent that they cover assessment years 2015-2016 and 2017-2018, they are
taken up consideration together and disposed by this common judgment.
2. The brief facts necessary for the disposal of these S.T.Revision
petitions are as follows:
The petitioner assessee is a registered dealer engaged, inter alia, in the
sale of Indian Made Foreign Liquor (IMFL). It had filed monthly returns and
annual returns for the assessment years mentioned above, but the gross profit
conceded by it in its annual returns was not accepted by the Assessing
Authority. The Assessing Authority, therefore, proceeded to revise the gross
profit for the various assessment years as follows:
Year Conceded GP Revised GP
2014-15 49.13% 100%
2015-16 27.48% 80%
2016-17 44.78% 150%
2017-18 92.62% 200%
ST.REV. NOs.21 & 22/2023 4 2025:KER:388
3. The assessments were accordingly finalised by taking into account the
revised gross profit fixed by the Assessing Authority.
4. In appeals preferred by the assessee against the assessment orders,
the First Appellate Authority granted limited relief by modifying the revised
gross profit arrived at by the Assessing Authority and reducing the same. In
further appeals preferred by the assessee before the Appellate Tribunal,
however, the Appellate Tribunal found that there was no basis whatsoever for
the Assessing Authority to have rejected the conceded gross profit offered by
the assessee in its returns, especially in the absence of any material to doubt
the correctness of the gross profit conceded by the assessee. Reliance was
placed by the Tribunal on the decisions in C.O. Devassy v. State of Kerala
[(1991) 81 STC 2] and Classic Marbles v. State of Kerala [(2008) 16 KTR
397] to hold that a mere finding that conceded gross profit does not tally with
the normal GP in the same line of business is not a ground for rejecting the
conceded profit, without there being any material indicating suppression of
turnover. While the said finding by the Tribunal ought to have been sufficient to
allow the appeals preferred by the assessee, the Tribunal went further and
remanded the matter to the Assessing Authority for a fresh consideration of the
matter after verifying the books of accounts and sale bills to be produced by the
assessee for determining the actual gross profit for the said assessment years.
The appeals preferred by the assessee were thus partly allowed, and the
Assessing Authority directed to redo the assessments in the following manner,
as suggested by the Appellate Tribunal:
ST.REV. NOs.21 & 22/2023 5 2025:KER:388
"1. The appellant shall produce the entire books of
accounts including purchase and sale bills for the
periods under assessment before the assessing
authority within one month from the date of receipt of a
copy of this order;
2. The assessing authority shall on receipt of such
materials as directed above, proceed to determine the
gross profit and turnover for the period after verifying
those materials at least in a random manner on monthly
basis with the aid of a tabular statement furnishing
those data and shall pass fresh assessment orders in
accordance with law. Appellant shall be given a
reasonable opportunity of hearing also while completing
the process above.
3. In case the appellant fails to produce the
documents as directed above or omits to furnish details
for any particular period under assessment, it is open to
the assessing authority to resort to best judgment
assessment for the said period in a fair and reasonable
manner on the basis of trade result of the appellant
during previous years and gross profit declared by other
dealers in the locality with details thereof.
4. Orders in this regard shall be passed within six
months from the period given for submission of the
records by the appellant as directed above."
5. It is significant that although the order of the Appellate Tribunal
covered four assessment years, namely, 2014-2015 to 2017-2018, the petitioner
assessee has, for reasons best known to him, chosen to impugn the common
order of the Tribunal only in relation to assessment years 2015-2016 and 2017-
2018. As already observed above, the finding of the Tribunal that the
Assessing Authority did not have any material on the basis of which he could
have rejected the gross profit declared by the assessee was one that vitiated
the assessment orders passed for all the four assessment years. Despite that,
ST.REV. NOs.21 & 22/2023 6 2025:KER:388
however, the Tribunal proceeded to offer the revenue another chance at
reviewing the gross profit declared by the assessee by remanding the matter to
the Assessing Authority, who was then to look into the books of accounts of the
assessee and examine the issue afresh. Had the assessee impugned the
common order of the Tribunal on the ground that the remand was wholly
unjustifiable in the light of the earlier finding regarding the assessment order
being vitiated for lack of material to doubt the correctness of the gross profit
conceded by the assessee, we might have been inclined to allow these
S.T.Revision petitions since the defect pointed out would then have been in
relation to all the four assessment years mentioned above. However, the
assessee has chosen to impugn the common order of the Tribunal only in
relation to two assessment years, namely, 2015-2016 and 2017-2018, in these
revision petitions. In other words, the assessee has accepted the Tribunal order
in relation to the other two assessment years, namely, 2014-2015 and 2016-
2017. In our view, the assessee cannot be permitted to take conflicting stands
in the matter of impugning a common order of the Tribunal. Since the
impugned order of the appellate tribunal merely remands the matters to the
assessing authority for fresh consideration of the issue, and the assessee isnt
aggrieved by the remand in respect of the other two assessment years, We see
no reason to interfere with the common order of the Tribunal impugned in
these S.T.Revision petitions at the instance of the present assessee.
6. The S.T. Revision petitions are therefore dismissed without prejudice
to the right of the assessee to raise all possible contentions in the remand
proceedings including those specifically raised in these S.T. Revision petitions
before us. The directions of the Appellate Tribunal in the orders impugned in
ST.REV. NOs.21 & 22/2023 7 2025:KER:388
these S.T. Revision petitions shall continue to hold good and govern the remand
proceedings, save for the last direction with regard to the time within which
orders are to be passed by the Assessing Authority, which shall now stand
extended to six months from the date of receipt of a copy of this judgment.
The S.T. Revision petitions are disposed as above.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
EASWARAN S.
JUDGE
mns
ST.REV. NOs.21 & 22/2023 8 2025:KER:388
PETITIONER ANNEXURES
Annexure-A TRUE COPY OF THE ASSESSMENT ORDER
NO.32010196432/17-18 DATED 07..03..2022
ISSUED BY THE STATE TAX OFFICER, STATE GOODS
AND SERVICES TAX DEPARTMENT, WORKS CONTRACT,
THIRUVANANTHAPURAM
Annexure-B TRUE COPY OF THE ORDER DATED 26..09..2022
ISSUED BY THE JOINT COMMISSIONER (APPEALS)
II, THIRUVANANTHAPURAM
Annexure-C TRUE COPY OF THE APPEAL FILED BY THE REVISION
PETITIONER BEFORE THE KERALA VALUE ADDED
TAX/AGRL. INCOME TAX & SALES TAX APPELLATE
TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM DATED 20..03..2023 WITHOUT
ANNEXURES
Annexure-D TRUE COPY OF THE ORDER OF THE KERALA VALUE
ADDED TAX/AGRL. INCOME TAX & SALES TAX
APPELLATE TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM DATED 16..08..2023 IN
ST.REV. NOs.21 & 22/2023 9 2025:KER:388
PETITIONER ANNEXURES
Annexure-A TRUE COPY OF THE LETTER NO.KSBC/RSLPM/S1/FL-
3-CHQ/2015 DATED 29.9.2015
Annexure-B TRUE COPY OF THE LETTER NO.KSBC/RSLPM/S6/FL-3
CHQ/2016/10 DATED 27.02.2016
Annexure-C TRUE COPY OF THE ASSESSMENT ORDER DATED
19.06.2020 ISSUED BY THE DEPUTY COMMISSIONER-
III, SPECIAL CIRCLE, THIRUVANANTHAPURAM
Annexure-D TRUE COPY OF THE ORDER DATED 26.10.2021
ISSUED BY THE JOINT COMMISSIONER OF STATE
TAX(APPEALS), THIRUVANANTHAPURAM
Annexure-E TRUE COPY OF THE APPEAL FILED BY THE REVISION
PETITIONER BEFORE THE KERALA VALUE ADDED
TAX/AGRL. INCOME TAX & SALES TAX APPELLATE
TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM DATED 27.01.2022 WITHOUT
ANNEXURES
Annexure-F CERTIFIED COPY OF THE ORDER OF THE KERALA
VALUE ADDED TAX/AGRL. INCOME TAX & SALES TAX
APPELLATE TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM DATED 16.08.2023 IN
