Kerala High Court
The State Of Kerala vs M/S Bhima Jewellers on 3 March, 2025
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
O.T. Revision No.8 of 2024 1 2025:KER:17814
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 3RD DAY OF MARCH 2025 / 12TH PHALGUNA, 1946
OT.REV NO. 8 OF 2024
REVISION PETITIONER(S)/RESPONDENT :
THE STATE OF KERALA,
REPRESENTED BY THE JOINT COMMISSIONER OF STATE TAX
(LAW), DEPARTMENT OF KERALA STATE GOODS AND SERVICE
TAX, ERNAKULAM, PIN - 682011
BY ADV SMT RESMITHA RAMACHANDRAN, GOVERNMENT PLEADER
RESPONDENT(S)/APPELLANT :
M/S BHIMA JEWELLERS,
M.G.ROAD, THIRUVANANTHAPURAM, PIN - 695001
BY ADVS.
MINI G
A.KUMAR (SR.)(K/529/1992)
P.J.ANILKUMAR(K/265/1988)
P.S.SREE PRASAD(K/1181/2009)
BALASUBRAMANIAM
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON
03.03.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
O.T. Revision No.8 of 2024 2 2025:KER:17814
ORDER
Dr. A.K. Jayasankaran Nambiar, J.
This O.T. Revision preferred by the State impugns the order dated
7.6.2023 of the Kerala Value Added Tax Appellate Tribunal, Additional
Bench, Thiruvananthapuram in TA(VAT) No.149 of 2020.
2. The brief facts necessary for disposal of this O.T. Revision are as
follows:
The intelligence wing of the commercial taxes department
detained an employee of the respondent/assessee who was in possession
of gold ornaments, while he was on the way to a hallmarking centre at
Thiruvananthapuram on 18.1.2016. They found that the gold ornaments
carried by him were accompanied by a copy of a delivery chalan and a
goldsmith issue slip in the name of the assesee. However, it was found
that the gold in his possession was more in quantity than what was
specified in the delivery chalan. The Intelligence Inspector was therefore
of the view that the assessee had violated the provisions of Rule 58(18A)
of the Kerala Value Added Tax Rules (for short, 'the KVAT Rule') by not
intimating the use of own delivery chalan to the assessing authority.
Further, suspecting the genuineness of the transactions, a security
deposit was insisted and proceedings under Section 47(2) of the Kerala
Value Added Tax Act were initiated against the respondent/assessee
O.T. Revision No.8 of 2024 3 2025:KER:17814
which culminated in the imposition of a penalty to the tune of
Rs.16,32,040/- as per order dated 28.7.2016.
3. Aggrieved by the order of the intelligence officer, the assessee
preferred an appeal before the first appellate authority who dismissed
the appeal by an order dated 31.12.2019. The assessee, therefore,
preferred a further appeal before the appellate tribunal which allowed
the appeal by the order impugned before us by the State in this O.T.
Revision.
4. In this revision petition, the State raises the following
substantial questions of law :
a) Whether on the facts and circumstances of the case, the
Appellate Tribunal has erred in law in cancelling the penalty
imposed u/s 47(6) of the KVAT Act, considering the fact that
the documents accompanied has no connection with the gold
detained and said documents are not valid documents because
of variation of quantity, non declaration of the said delivery
chalan before the assessing authority and non mentioning the
date of transport?
b) Whether on the facts and circumstances of the case, the
Appellate Tribunal has erred in relying the judgment of this
Honourable Court in M/s Arafa Gold Vs. Assistant
Commissioner and others in WP(C) No. 3593/2017 dated
02.08.2017 as facts of the said case are entirely different with
the facts of the case considered by the Tribunal?
c) Whether on the facts and circumstances of the case,
Annexure F order passed by the Appellate Tribunal is per-
verse and not in accordance with law?
5. We have heard Smt. Resmitha Ramachandran, the learned
Government Pleader appearing for the State and Sri. Balasubramaniam,
the learned counsel appearing for the respondent/assessee.
O.T. Revision No.8 of 2024 4 2025:KER:17814
6. On a consideration of the rival submissions, we find that the
appellate tribunal took note of the factual position obtaining with regard
to the seizure of the gold ornaments from the employee of the
respondent/assessee. As is apparent from a reading of the proceedings
of the intelligence officer, the jewellery that was seized was found in the
possession of one Sumesh who was standing at the hallmarking centre
where he had been entrusted to take the gold ornaments by the
respondent/assessee. It was not in dispute that the jewellery in his
possession was being taken for the sole purpose of hallmarking and
thereafter returning to the store of the respondent/assessee. The
revenue also did not have a case that the goods were meant for sale and
that therefore there was a possible evasion of tax. It is also significant
that the respondent/assessee was paying tax on compounded basis,
based on the tax paid in the immediately preceding assessment year. In
the absence of any material to suggest that the gold ornaments that were
seized from the employee of the assessee were meant for sale either
within the State or inter-state, and finding that the assessee was paying
tax on compounded basis in which event any suppression of turnover in
the present year would have no bearing on his tax liability for the said
year, the appellate tribunal was of the view that there was no justification
for the imposition of any penalty based on the turn over computed of
O.T. Revision No.8 of 2024 5 2025:KER:17814
alleged suppressed sales. The tribunal accordingly confirmed the
penalty only to an extent of Rs.10,000/- as mandated under Section
67(1)(j) of the Kerala Value Added Tax Act.
On a perusal of the impugned order of the tribunal in the light of
the facts noticed above, we find no reason to interfere with the impugned
order of the appellate tribunal, more so when the revenue has not
brought to our notice any fact that would require us to do so. The O.T.
Revision therefore fails and is accordingly dismissed by answering the
questions of law raised against the revenue and in favour of the assessee.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR
JUDGE
Sd/-
EASWARAN S.
JUDGE
NS
O.T. Revision No.8 of 2024 6 2025:KER:17814
PETITIONER ANNEXURES
Annexure A TRUE COPY OF THE DELIVERY CHALAN ACCOMPANIED
WITH GOLD
Annexure B TRUE COPY OF THE GOLDSMITH ISSUE SLIP
BEARING NUMBER GIH- 492
Annexure C TRUE COPY OF THE NOTICE IN FORM NO:17 A
DATED 18-01-2016
Annexure D TRUE COPY OF THE ORDER BEARING NO: OR
481/2015 - 16 DATED 28-07-2016 PASSED BY
INTELLIGENCE OFFICER, SQUAD NO: V,
THIRUVANANTHAPURAM
Annexure E TRUE COPY OF THE ORDER PASSED BY THE DEPUTY
COMMISSIONER OF STATE TAX (APPEALS),
THIRUVANANTHAPURAM IN KVATA NO 1125/2016
DATED 31-12-2019
Annexure F TRUE COPY OF THE ORDER IN TA (VAT)
NO:149/2020 PASSED BY THE KERALA VALUE ADDED
TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,
THIRUVANANTHAPURAM DATED 07-06-2023
