Opal Combination vs State of Kerala

H.L. Dattu, C.J.—The revision petitioner is a dealer in sanitary ware, sintex tanks, wash basins etc.

Petitioner is a registered dealer both under the provisions of the Kerala General Sales Act and Central Sales Tax Act, hereinafter, for the sake of brevity referred to as ''KGST Act'' and ''CST Act'' respectively.

The revision petition pertains to assessment year 1997-98.

The assessee had filed its annual return before the assessing authority and in that had conceded a particular turnover as its total and taxable turnover. The Intelligence Officer of the Department had conducted a shop inspection and had prepared a report dated 16/10/1997. The said report had been passed on to the assessing authority.

In view of the shop inspection report, the assessing authority, after verifying the books of accounts, had rejected the books of accounts and also the return filed and thereafter had issued a notice u/s 17(3) of the KGST Act, inter alia, proposing to reject the return and to complete the assessment proceedings by passing an order by way of best judgment.

The assessee had filed its objection to the said notice.

The assessing authority, after considering the objections so filed, has completed the best judgment proceedings by making an addition of two times the suppression detected by the Intelligence Officer of the Department to the conceded turnover.

The orders passed by the assessing authority had been called in question by the assessee before the first appellate authority. The appellate authority had passed the following order:

...The addition of two times the suppressions over and above actual suppressions, is therefore reduced to one time the suppression over and above the actual suppression....

The assessee was not satisfied with the orders passed by the appellate authority and therefore had carried the matter by way of Second Appeal before the Tribunal in T.A. No. 129/2003. The Tribunal has rejected the assessee''s appeal by its order dated 30th September, 2005. In that the Tribunal has observed as under:

We have considered the contentions raised by both sides. The authority below after having convinced the fact of keeping incorrect accounts and suppression in sales modified the assessment reducing the addition given over and above the actual suppression. The records reveal that there was suppression in stock as well as sales and penalty was imposed on the said irregularities. According to the learned authorised representative allegation regarding the defect of differences in the turnover as per return and accounts and the turnover declared in Form No. II are non-existent or incorrect. Even admitting the above fact we find that the stock variation found on inspection still exist. The argument of the learned authorised representative that the order imposing penalty was not become final is not sustainable since the said order was issued by a competent authority under the law and not cancelled by any authority in revision. Moreover, addition was based on the turnover of suppression detected on inspection. Since the addition was based on the suppression detected only, the contention of the learned authorised representative is found to have no merit. The authority below has considered the defect of suppression and the turnover suppressed in detail and reduced the addition to one time of the suppression detected over and above the actual suppression. Considering the circumstances of the case we are of the view that 1st appellate authority has taken a just and fair view in the matter of giving relief. Therefore we do not find any reason for any interference.

The correctness or otherwise of the orders passed by the Appellate Tribunal is the subject matter of this revision petition.

In the petition filed, the primary ground that is urged by the assessee is that the orders passed by the assessing authority for the assessment year in question is barred by limitation. The subsidiary question that is raised in the Revision Petition is that the Tribunal has not passed a speaking order.

Learned Counsel Sri. Madhavan appearing for the assessee would submit that the orders of assessment passed by the assessing authority for the assessment year 1997-98 is barred by limitation and therefore the orders of assessment requires to be annulled by this Court. When we enquired the learned Counsel whether the aforesaid contention was canvassed either before the first appellate authority or before the Tribunal, the learned Counsel fairly submits that such a contention was never raised nor canvassed before the Tribunal. However, the learned Counsel would submit that since the question of limitation is a pure question of law, the same can be raised in a revision petition filed before this Court u/s 41 of the KGST Act. In support of that contention learned Counsel has invited our attention to a decision of the Allahabad High Court in the case of Commissioner of Sales Tax Vs. Ram Chand, .

That was a case where the assessee had not filed its returns for the assessment year 1959-60. The Sales Tax Officer had issued a notice u/s 21 of the U.P. Sales Tax Act. Though notice was served upon the assessee, he has not chosen to appear before the assessing authority. Therefore the assessing authority had passed an order of assessment against the assessee for the assessment year 1959-60.

The assessee had carried the matter by way of first appeal before the first appellate authority. The appellate authority had set aside the orders of assessment passed by the assessing authority and had remanded the matter to the assessing authority to pass a fresh order in accordance with law.

After such remand, the assessing authority had proceeded to pass the best judgment assessment. That order had been called in question by the assessee before the first appellate authority. In the first appeal, the assessee had taken up a contention that the notice u/s 21 was not validly served upon him and therefore the assessment proceedings are bad, irregular, illegal and improper. The first appellate authority, after accepting the plea of the assessee, had allowed the assessee''s appeal and had set aside the orders of assessment passed by the assessing authority for the assessment year 1959-60.

The Revenue had carried the matter before the revisional authority under the Act. The question of law that was framed by the Revenue before the revisional authority was, whether the first appellate authority was justified in entertaining the plea of the assessee that notice u/s 21 of the Act had not been validly served upon him in the second round of litigation.

The revisional authority, while rejecting the revision petition filed by the Revenue, had confirmed the orders passed by the first appellate authority. The Revenue had carried the matter before the Allahabad High Court. The question that was raised in the said revision petition was, whether the first appellate authority was justified in entertaining the plea of non service of notice u/s 21 of the Act in the second round of litigation.

The Court is of the opinion that such a plea can be raised for the first time either before the first appellate authority or before the revisional authority. In our opinion, the decision on which reliance is placed by the learned Counsel for the assessee would not assist him in any manner whatsoever.

Section 41 of the KGST Act enables a person aggrieved by the order passed by the Tribunal to file a revision petition before this Court. The Statute mandates that such a revision can be entertained by this Curt only in two circumstances. Firstly if the Tribunal has failed to decide the question of law or has erroneously decided the question of law.

This Court also has observed time and again that what is not urged and argued before the Tribunal, cannot be permitted to be urged and argued for the first time in a revision petition.

In view of the above, the first contention canvassed by the learned Counsel for the assessee has no merit and therefore requires to be rejected.

The learned Counsel for the assessee would submit before us that the orders passed by the Tribunal is not a speaking order and therefore the said order requires to be interfered with by us.

In our considered opinion, even this contention of the learned Counsel for the assessee has no merit whatsoever.

A best judgment assessment was passed by the assessing authority taking into consideration suppressed turnover. The assessing authority had made certain additions to the same while passing best judgment assessment. The orders passed by the assessing authority is modified by the first appellate authority. The Tribunal, keeping in view the orders of assessment passed by the assessing authority, first appellate authority and the shop inspection report, has come to the conclusion that none of the authorities have committed any error whatsoever which would called for their interference. The findings and conclusion reached by the Tribunal is purely based on facts and yet again the findings on facts cannot be said as either perverse or illegal. The Tribunal while passing the impugned order has adverted to the contentions raised by the assessee and has answered the same meticulously. Therefore it cannot be said that the orders passed by the Tribunal is a non speaking order. In that view of the matter, even the second contention of the assessee has no merit whatsoever.

Therefore we pass the following:

ORDER

(i) Revision petition requires to be rejected and accordingly it is rejected.

(ii) The questions of law framed by the assessee are answered against the assessee and in favour of the Revenue.

(iii) In the facts and circumstances of the case, the parties are directed to bear their own costs.

Ordered accordingly.