Kancor Flavours and Extracts vs State of Kerala

H.L. Dattu, C.J.—Petitioner is an industrial unit. It is also registered under the provisions of the Kerala General Sales Tax Act ("K.G.S.T.Act" for short) and Central Sales Tax Act ("C.S.T.Act" for short). In this revision petition, we are concerned with the assessment year 1997-98.

For the assessment year 1997-98, the assessee has filed his annual return, conceding a particular total and taxable turnover.

During the pendency of the assessment proceedings, the assessing authority had received certain information from the Check Post authorities. Since the declarations made before the Check Post authorities were not reflected either in the books of accounts or in the returns filed, the assessing authority, after rejecting the return filed by the assessee, has issued a pre-assessment notice. After receipt of the pre-assessment notice, the assessee had filed his objections, inter alia contending that the proposals made in the pre-assessment notice need not be confirmed. The assessing authority, not being satisfied with the explanation offered by the assessee, has proceeded to make an addition of 2% for probable omission and suppression of purchases and sales effected by the dealer.

The orders of the assessing authority was the subject matter of appeal before the first appellate authority. The said authority has modified the assessments and has limited the additions made by the assessing authority to a lump sum of Rs. 25 lakhs.

The assessee, not being satisfied with the orders passed by the first appellate authority, was before the Tribunal in T.A. No. 495 of 2003. The Tribunal by its order dated 2.3.2005 has rejected the assessee''s appeal. The findings and conclusions reached by the Tribunal in this regard is as under:

The assessing authority rejected the books of accounts and made best judgment assessment mainly based on unaccounted purchases as revealed from checkpost declarations and also on the basis of certain differences between the books of accounts and the returns filed. For the irregularities noticed, the assessing authority made 2% addition to the total turnover conceded. On evaluating and considering the entire contentions raised, the 1st appellate authority reduced the addition to 25 lakhs. On verification, it was seen that the appellant could not satisfactorily explain the unaccounted purchases found out by the assessing authority. In the above circumstances, we do not see any reason to further interfere with the order of the 1st appellate authority.

Assessee being aggrieved by the orders so passed by the Tribunal is before us in this revision petition.

The assessee has framed the following questions of law for our consideration and decision. They are as under:

a) Is not the Tribunal in error in confirming the best judgment addition while the revised return filed by the petitioner tallies with the books of accounts?

b) Is not the Tribunal in error in confirming the best judgment addition while there was no suppression or omission in the purchases or sales?

c) Whether best judgment addition is warranted when no case of suppression or omission is found out by the assessing and appellate authority?

d) Is not the Tribunal being the highest fact finding authority erred in confirming the addition when no case of suppression or omission is unearthed by the assessing authority?

e) Is not the Tribunal in error in confirming the addition, while the petitioner had proved beyond the doubt that there was no suppression or mission in the purchases or sales to the satisfaction of the 1st appellate authority?

At the outset, we would make it clear that the questions of law framed by the assessee does not emanate either from the order passed by the assessing authority or from the order passed by the Tribunal. Now, it is the well settled position that what is not urged or argued before the authorities under the Act and before the Tribunal cannot be argued for the first time in a revision petition before this Court.

The legal issues raised by the assessee were never even canvassed before the assessing authority. It appears from the grounds of appeal filed before the Tribunal that the assessee had raised a ground that the revised returns filed by the assessee tallies with the books of accounts and, therefore, there was no occasion for the assessing authority to have finalised the pre-assessment on the basis of best judgment assessment. Though that ground was raised in the memorandum of appeal, it is not forthcoming whether the said ground was agitated by the assessee or his representative before the Tribunal. Therefore, in our opinion, what was not urged and argued before the Tribunal or before the assessing authority cannot be argued before this Court for the first time in this revision petition.

In the above view of the matter, the revision petition requires to be rejected and it is rejected. Ordered accordingly.