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Judgment
K. Vinod Chandran, J.—The revision petitioner, a Bar Hotel, is before this Court aggrieved by the penalty imposed on it by the Intelligence Officer, Commercial Taxes, Thalasserry. On inspection of the place of business, complete physical stock of goods was recorded. Though the accounts were called for, the dealer produced only the Stock Analysis Report and Excise Stock Register. The Intelligence Officer then found that the statement of accounts could not be accepted as true and correct for four reasons cited in Annexure-A order. All of these relate to the absence of various registers, ledgers, invoices and books of accounts. The Intelligence Officer also, on the basis of nine bills, found that the gross profit revealed on sale of specific brands shown in the said bills would range from 78% to 94%. Hence, the purchase price of goods sold during the year upto 27.08.2009, the date of inspection, was added with gross profit at 80%, estimating the total sales turnover. Turnover tax due on such estimate was computed and penalty was imposed at twice the rate of tax. The dealer''s objections were considered by the Intelligence Officer in a peremptory manner and again the absence of books of accounts was highlighted to reject the same. The first appellate authority dismissed the appeal, while the Tribunal modified the gross profit to 65%.
The assessee is before us raising a number of questions of law in the revision and also seeking the amendment of the memorandum of revision, incorporating one additional question of law. We are of the opinion that we need answer only the question of law sought to be incorporated by amendment application, I.A.No.1768 of 2012. We allow the application for amendment and extract the question of law herein below:
Whether the authority exercising power to impose penalty U/s. 45A of the KGSD Act has the power to make an estimation of the turnover for the purpose of determining the penalty.
The assessee has been proceeded against u/s 45A of the Kerala General Sales Tax Act, 1963, hereinafter referred to as "the KGST Act". An inspection was conducted in the business premises and physical stock was recorded and it is also evident that the Stock Analysis Report and Excise Stock Register have been produced subsequently by the assessee. However, before an order was passed we do not find the Intelligence Officer making any attempt to verify the records produced with reference to the inspection report of stock verification to determine any attempt of evasion. Section 45A is in pari materia with the provisions of Section 67 of the Kerala Value Added Tax Act, 2003 (hereinafter referred to as "the KVAT Act"). This Bench had in fact in U.K. Monu Timbers v. State of Kerala (2012 (3) KHC 111 (DB)) considered the scope of Section 67 of the KVAT Act conferring powers on the authorities for imposition of penalty on detection of tax evasion or attemptedevasion. What is necessary is the determination of the actual tax sought to be evaded and it has been held that the powers conferred u/s 67, which is in pari materia with Section 45A of the KGST Act, does not confer any power to make "best judgment". No estimation could have been made by an officer imposing penalty. That would be the exclusive domain of the Assessing Officer as laid down by the statute. Following the dictum laid down in the above decision, we hold that the estimation of turnover made by the authority, in the instant case, is beyond the scope of the powers conferred u/s 45A of the KGST Act. The findings of the Tribunal to that extent confirming the findings of the first appellate authority and the Assessing Officer are hence vacated. Needless to say that the Assessing Officer considering the files of the Intelligence Officer would be competent to conclude assessment to the best of judgment; however on an independent consideration. However, the order of the Intelligence Officer speaks of specific violations with respect to maintenance of books, which would necessarily attract the penal provisions of Section 45A of the KGST Act. As provided in Section 45A, where no determination of tax evaded or sought to be evaded can be made, the penalty that could be imposed is only to the extent of Rs. 10,000/-. While setting aside the estimation made by the Assessing Officer, we confirm the imposition of penalty for failure of maintenance of books of accounts and impose a penalty of Rs. 10,000/- (Rupees ten thousand only).
The revision is, hence, partly allowed, answering the question of law in favour of the assessee and against the Revenue.