Kerala High Court
Deepa Shibu vs State Of Kerala on 17 December, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
2024:KER:95941
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE EASWARAN S.
TUESDAY, THE 17TH DAY OF DECEMBER 2024 / 26TH AGRAHAYANA,
1946
OT.REV NO. 18 OF 2023
AGAINST THE ORDER DATED 14.12.2022 IN T.A.(VAT) NO.12 OF
2021 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL,
ADDITIONAL BENCH, ERNAKULAM
REVISION PETITIONER/APPELLANT/APPELLANT:
DEEPA SHIBU
AGED 51 YEARS
WIFE OF SHIBU, PROPRIETRESS, AGRO LINE, KARTHIKA
BUILDING, MANNOOR, KEEZHLLAM P.O., PERUMBAVOOR,
ERNAKULAM DISTRICT, PIN - 683541
BY ADVS.
R.MURALEEDHARAN
DR.ANIES GEORGE
RESPONDENT/RESPONDENT/RESPONDENT:
STATE OF KERALA
REPRESENTED BY THE JOINT COMMISSIONER (LAW) ,
DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM,
PIN - 682031
GP Resmitha Ramachandran
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
17.12.2024, ALONG WITH OT.Rev.19/2023, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
OT.Rev.Nos.18
and 19 of 2023
2
2024:KER:95941
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR. JUSTICE EASWARAN S.
TUESDAY, THE 17TH DAY OF DECEMBER 2024 / 26TH AGRAHAYANA,
1946
OT.REV NO. 19 OF 2023
AGAINST THE ORDER DATED 14.12.2022 IN T.A.(VAT) NO.14 OF
2022 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL,
ADDITIONAL BENCH, ERNAKULAM
REVISION PETITIONER/APPELLANT/APPELLANT:
DEEPA SHIBU
AGED 51 YEARS
WIFE OF SHIBU, PROPRIETRESS, AGRO LINE, KARTHIKA.
BUILDING, MANNOOR, KEEZHLLAM P.O. , PERUMBAVOOR,
ERNAKULAM DISTRICT., PIN - 683541
BY ADVS.
R.MURALEEDHARAN
DR.ANIES GEORGE
RESPONDENT/RESPONDENT/RESPONDENT:
STATE OF KERALA
REPRESENTED BY THE DEPUTY COMMISSIONER (LAW) ,
DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM,
PIN - 682031
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
17.12.2024, ALONG WITH OT.Rev.18/2023, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
OT.Rev.Nos.18
and 19 of 2023
3
2024:KER:95941
ORDER
Dr.A.K.Jayasankaran Nambiar, J.
As both these OT Revisions impugn a common order dated 14.12.2022 of the Kerala Value Added Tax Appellate Tribunal, Ernakulam, in T.A. (VAT) Nos.12 of 2021 and 14 of 2022, they are taken up for consideration together and disposed by this common judgment.
2. The brief facts necessary for disposal of these OT Revisions are as follows:
O.T.Rev.No.18 of 2023 arises from penalty proceedings initiated against the petitioner under Section 67(1) of the Kerala Value Added Tax Act, 2003 [hereinafter referred to as the "KVAT Act"] for the assessment year 2015-16. OT.Rev.No.19 of 2023 arises from the assessment proceedings that followed in the same assessment year. The petitioner is engaged in the procurement of eggs from poultry farms at Tirupur, Coimbatore or Namakal in the State of Tamil Nadu and getting the same hatched through hatcheries situated in Perumbavoor or Thrissur within the State of Kerala. The sale effected by the petitioner is thus of live chicks that are hatched within the State of Kerala and the sale is effected to people who run poultry OT.Rev.Nos.18 and 19 of 2023 4 2024:KER:95941 farms in and around Perumbavoor, Muvattupuzha and Thodupuzha. During the assessment year 2015-16, the premises of the petitioner was inspected and on verification of the documents along with the data uploaded in KVATIS certain discrepancies were noticed by the Intelligence Officer. In brief, the Intelligence Officer noticed that while the opening stock of eggs meant for hatching showed a figure 6,71,469 numbers, and the closing stock of eggs meant for hatching showed a figure of 30,042 numbers, the total number of broiler chicks sold during 2015-16 as per their accounts was only 2,96,522 numbers. The difference between the total number of eggs that were meant for hatching and sale, and the broiler chicks that were actually sold by the petitioner was taken as suppressed sale of broiler chicks, after making an allowance for the mortality rate noticed in the trade. The Intelligence Officer thereafter computed the tax due on the suppressed turn over at 14.5% and levied a penalty of Rs.24,78,478/-, being twice the amount of tax payable under Section 67(1) of the KVAT Act. The assessment proceedings was thereafter completed by relying on the findings of the Intelligence Officer in the penalty order.
3. Aggrieved by the penalty order and the assessment order, the petitioner preferred appeals before the First Appellate Authority who dismissed the appeals as devoid of merit. In the further appeals before the Appellate Tribunal, the Tribunal considered the issue as to whether the estimation done by the Intelligence Officer at first OT.Rev.Nos.18 and 19 of 2023 5 2024:KER:95941 instance, and adopted by the Assessing Officer in the assessment proceedings, could be seen as erroneous. The Tribunal found that on the aspect of estimation, reliance had to be placed either on the certificate obtained from the Animal Husbandry Department that showed the mortality rate of hatched chicks to be only 15%, and the certificate produced by the petitioner that showed the mortality rate to be 50% . The Tribunal found that the balance of convenience lay in going by the certificate produced by the District Animal Husbandry Officer. The Tribunal also relied on Circular No.6/2006 and the judgment of this Court in W.P.(C) No.22185 of 2005 for the purposes of confirming the demand against the petitioner.
4. Before us the petitioner raises the following questions of law:
OT.Rev.No.18 of 2023
1. Whether the findings of the Tribunal is correct in upholding the order of Penalty passed by the State Tax Officer (IB), relying simply on the opinion given by the District Animal Husbandry Officer, Ernakulam without any corroborative evidences for turnover suppression, against the petitioner?
2. Whether a simple and general opinion given by the District Animal Husbandry Officer, without testing at least some OT.Rev.Nos.18 and 19 of 2023 6 2024:KER:95941 sample eggs used by the petitioner, is applicable to all cases generally especially when different classes of hatchable eggs are available in market?
3. Whether the State Tax Officer is justified in utilizing the opinion taken from the District Animal Husbandry Officer, behind the back of the revision petitioner without giving her an opportunity to cross examine the witness, to draw an inference of suppression of turnover?
4. Whether the Tribunal is justified in overlooking the expert opinion obtained and produced by the revision petitioner from the Associate Professor, University of Agriculture, Mannuthy with a petition under Regulation 48 of the Kerala VAT Appellate Tribunal Regulations?
5. Whether the judgment in W.P.(C). No.22182/2005 dated and Circular No.6 of 2006 dated 27.06.2006 issued by the Commissioner of Commercial Taxes, are squarely applicable in the case of the revision petitioner, as there in the judgment and circular mortality rate and weight loss of live birds in farms where rearing of hens were carried out and not hatching of eggs and obtaining live birds from eggs?
6. Whether the Tribunal is justified in upholding imposition OT.Rev.Nos.18 and 19 of 2023 7 2024:KER:95941 of maximum penalty drawing inference of sales suppression, without conducting any survey in the line of business, and among the dealers who engage in the same class of business? O.T.Rev.No.19 of 2023
1. Whether the findings of the 'Tribunal is correct in upholding the order of Penalty passed by the State Tax Officer (IB), relying simply on the opinion given by the District Animal Husbandry Officer, Ernakulam without any corroborative evidences for turnover suppression, against the petitioner?
2. Whether a simple and general opinion given by the District Animal Husbandry Officer, without testing at least some sample eggs used by the petitioner, is applicable to all cases generally especially when different classes of hatchable eggs are available in market?
3. Whether the State Tax Officer (IB) is justified in utilizing the opinion taken from the District Animal Husbandry Officer, behind the back of the revision petitioner without giving her an opportunity to cross examine the witness, to draw an inference of suppression of turnover?
4. Whether the Tribunal is justified in overlooking the expert opinion obtained and produced by the revision petitioner from OT.Rev.Nos.18 and 19 of 2023 8 2024:KER:95941 the Associate Professor, University of Agriculture, Mannuthy with a petition under Regulation 48 of the Kerala VAT Appellate Tribunal Regulations?
5. Whether the judgment in W.P.(C). No.22182/2005 dated and Circular No.6 of 2006 dated 27.06.2006 issued by the Commissioner of Commercial Taxes, are squarely applicable in the case of the revision petitioner, as there in the judgment and circular mortality rate and weight loss of live birds in farms where rearing of hens were carried out and not hatching of eggs and obtaining live birds from eggs?
6. Whether the Tribunal is justified in upholding imposition of maximum penalty drawing inference of sales suppression, without conducting any survey in the line of business, and among the dealers who engage in the same class of business?
7. Whether the Tribunal is justified in upholding the assessment order passed by the assessing authority by estimation of turnover in the light of the penalty order passed by the State Tax Officer (IB), Mattancherry at Aluva and thereby raising huge demand?
5. We have heard Sri.Muraleedharan, learned counsel appearing for the petitioner in both the revisions and Smt.Resmitha OT.Rev.Nos.18 and 19 of 2023 9 2024:KER:95941 Ramachandran, learned Government Pleader appearing on behalf of respondent State.
6. On a consideration of the rival submissions, we are of the view that the finding of the Appellate Tribunal in the order impugned before us, being entirely on facts, and based on a comparison between the two certificates produced to evidence the mortality rate of chicks in the process of hatching from fertilized eggs, and on finding that the certificate produced by the Animal Husbandry Department was more reliable, cannot be found fault with. It is trite that in any case where an assessment has to be done on best judgment basis, the books of accounts maintained by an assessee has to be first perused by the Department and it is only in the event of the books of accounts being found to be improperly maintained and requiring rejection, that the Department can proceed further to estimate the turn over based on accepted principles of estimation.
7. On the facts of the instance case, we find that there is nothing to suggest that in the books of accounts maintained by the petitioner, there was a true account kept of the eggs that did not hatch during the hatching process. Had the petitioner maintained accounts with regard to the unhatched eggs from the lot that was sent to the hatcheries for hatching, then there would not have been any occasion for estimating the number of hatched eggs and OT.Rev.Nos.18 and 19 of 2023 10 2024:KER:95941 consequently, the total number of chicks that were available for sale in the market. It is only in the absence of proper accounts pertaining to the unhatched eggs that the Department and the petitioner had to resort to an estimation process by relying on certificates that would evidence the ordinary mortality rate noticed during a hatching process.
8. Since the finding of the Tribunal is on facts and based entirely on the confidence inspired in the Tribunal by the certificates produced before it, we do not find any question of law that arises from the impugned order of the Tribunal. We, therefore, dismiss these OT Revisions by finding that no question of law arises for consideration in these OT Revisions.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
EASWARAN S. JUDGE ACR OT.Rev.Nos.18 and 19 of 2023 11 2024:KER:95941 APPENDIX OF OT.REV 18/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE PENALTY ORDER PASSED BY THE STATE TAX OFFICER (1B), MATTANCHERRY AT ALUVA, DATED 25.03.2019..
Annexure B TRUE COPY OF THE ORDER PASSED BY THE JOINT COMMISSIONER (APPEALS) -I, ERNAKULAM IN KVATA NO.1225 OF 2019 DATED 20.10.2020 Annexure C TRUE COPY OF THE REQUEST MADE BY THE STATE TAX OFFICER (1B) TO THE DISTRICT ANIMAL HUSBANDRY OFFICER, DATED 21.03 .2018 .
Annexure C(1) TRUE COPY OF THE OPINION GIVEN BY THE DISTRICT ANIMAL HUSBANDRY OFFICER, DATED 03.04.2018 Annexure C(2) TRUE COPY OF THE INVOICE FOR PURCHASE OF EGGS ISSUED BY M/S. KUPPANNA POULTRY FARM, TIRUPUR DATED 05.03.2016 Annexure C(3) TRUE COPY OF THE RECEIPT FOR PAYMENT OF SERVICE CHARGES PAID TO LIBERTY HATCHERY SERVICE, DATED 28.03.2016 AND THE DELIVERY CHALAN.
Annexure C(4) TRUE COPIES OF THE CERTIFICATES ISSUED BY KOZHIKKOTTU POULTRY FARMS, FARM INDIA CHICKEN AND CJS HATCHERIES, NELLAD Annexure C(5) TRUE COPY OF THE TRADING AND PROFIT & LOSS ACCOUNT OF THE REVISION PETITIONER FOR THE YEAR ENDED 31.03.2016 Annexure D TRUE COPY OF THE INTERLOCUTORY APPLICATION FILED BY THE REVISION PETITIONER BEFORE THE TRIBUNAL WITH ENCLOSURES DT.09.06.2022 OT.Rev.Nos.18 and 19 of 2023 12 2024:KER:95941 Annexure E CERTIFIED COPY OF THE COMMON ORDER PASSED BY THE APPELLATE TRIBUNAL IN T.A. (VAT) NO.12/2021 & 14/2022 DT.14.12.2022 OT.Rev.Nos.18 and 19 of 2023 13 2024:KER:95941 APPENDIX OF OT.REV 19/2023 PETITIONER ANNEXURES Annexure A TRUE COPY OF THE PENALTY ORDER PASSED BY THE STATE TAX OFFICER(IB), MATTANCHERRY AT ALUVA, DATED 25 .03 2019.
Annexure B TRUE COPY OF THE ORDER PASSED BY THE JOINT COMMISSIONER (APPEALS), ERNAKULAM IN KVATA NO.1225 OF 2019 DATED 20.10.2020 Annexure C TRUE COPY OF THE REQUEST MADE BY THE STATE TAX OFFICER (IB) TO THE DISTRICT ANIMAL HUSBANDRY OFFICER, DATED 21.03.2018.
Annexure C1 TRUE COPY OF THE OPINION GIVEN BY THE DISTRICT ANIMAL HUSBANDRY OFFICER, DATED 03.04.2019 Annexure C2 TRUE COPY OF THE INVOICE FOR PURCHASE OF EGGS ISSUED BY M/S. KUPPANNA POULTRY FARM, TIRUPUR DATED 05.03.2016 Annexure C3 TRUE COPY OF THE RECEIPT FOR PAYMENT OF SERVICE CHARGES PAID TO LIBERTY HATCHERY SERVICE, DATED 28.03.2016 AND THE DELIVERY CHALAN.
Annexure C4 TRUE COPIES OF THE CERTIFICATES ISSUED BY KOZHIKKOTTU POULTRY FARMS, FARM INDIA CHICKEN AND CJS HATCHERIES, NELLAD Annexure C5 TRUE COPY OF THE TRADING AND PROFIT & LOSS ACCOUNT OF THE REVISION PETITIONER FOR THE YEAR ENDED 31.03.2016 Annexure D TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE STATE TAX OFFICER, MUVATTUPUZHA DATED 18.102019 FOR THE YEAR 2015-16 Annexure E TRUE COPY OF THE ORDER PASSED BY THE OT.Rev.Nos.18 and 19 of 2023 14 2024:KER:95941 APPELLATE AUTHORITY LN KVATA (ALPY) NO. 22/21(3067/19) DATED 21.12.2021 Annexure F TRUE COPY OF THE INTERLOCUTORY APPLICATION FILED BY THE REVISION PETITIONER BEFORE THE TRIBUNAL WITH ENCLOSURES DT.09.06.2022 Annexure G TRUE COPY OF THE COMMON ORDER PASSED BY THE APPELLATE TRIBUNAL IN TA(VAT) NO.12/2021 & 14/2022 DT.14.12.2022