Kerala High Court
M/S. Sunny Diamonds vs State Of Kerala on 11 February, 2025
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
OT.REV NO. 75 OF 2023 1 2025:KER:11066
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 11TH DAY OF FEBRUARY 2025 / 22ND MAGHA, 1946
OT.REV NO. 75 OF 2023
ORDER DATED 19.07.2023 IN TA(VAT) NO.297/2019 OF THE KERALA VALUE
ADDED TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM
REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:
M/S. SUNNY DIAMONDS
PATTOM PALACE P.O., THIRUVANANTHAPURAM, REPRESENTED BY
ITS CHAIRMAN & MANAGING DIRECTOR, P.P. SUNNY.,
PIN - 695004
BY ADVS.
SMT.MEERA V.MENON
SRI.R.SREEJITH
SMT.K.KRISHNA
SMT.PARVATHY MENON
RESPONDENT/RESPONDENT/RESPONDENT/REVENUE:
STATE OF KERALA
REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT. GOVT.
SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
BY GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR FINAL
HEARING ON 11.02.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
OT.REV NO. 75 OF 2023 2 2025:KER:11066
ORDER
DR. A.K.Jayasankaran Nambiar, J.
This OT Revision impugns the order dated 19.07.2023 of the Kerala Value Added Tax Appellate Tribunal, Thiruvananthapuram, in TA(VAT) No.297 of 2019 on a limited issue pertaining to the validity of two 'F' Forms dated 06.06.2014 covering a total amount of Rs.6,59,63,756/- in respect of which the petitioner's claim for stock transfer was rejected by the authorities below.
2. The brief facts necessary for the disposal of this OT. Revision are as follows:
The petitioner is a dealer in gold and diamond ornaments having its place of business at Pattom, Thiruvananthapuram, and is registered as an assessee on the rolls of the Assessing Authority under the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act') and the Central Sales Tax Act (hereinafter referred to as 'the CST Act). In the annual return for the year 2013-2014, while declaring its total turnover, it had claimed exemption towards interstate stock transfer of goods, which was disallowed by the Assessing Authority for the reason that the dealer had failed to produce the statutory forms to support the claim of interstate stock transfer. The disallowed amount was treated as part of the local sales turnover and subjected to tax within the State.
3. In the appeal preferred by the petitioner before the First Appellate Authority, the petitioner relied on the two 'F' Forms dated 06.06.2014 to OT.REV NO. 75 OF 2023 3 2025:KER:11066 contend that inasmuch as the amount of Rs.6,59,63,756/- that was covered by the two 'F' Forms validly proved the interstate stock transfer, the exemption in respect of that quantity had to be granted. The First Appellate Authority, however, found that the 'F' Forms in question pertain to the period from April to June 2013 and January to March 2014, respectively, and since the statutory provisions required the 'F' Forms to be submitted within one month from the date of transfer of the goods, the said 'F' Forms could not be seen as valid since they were issued beyond the period of one month as mandated by the statute. The claim of the petitioner for exemption was, therefore, rejected in respect of these transactions by the First Appellate Authority.
4. In the further appeal before the Appellate Tribunal, although the Appellate Tribunal found that merely because there was a delay in issuing the 'F' Forms, the exemption available to the petitioner could not be denied, the Tribunal went on to find that apart from the 'F' Forms no evidence was produced by the petitioner to demonstrate the despatch of goods from Kerala to Tamilnadu to prove the movement of the goods from Kerala to Tamilnadu as was required under Section 6A of the CST Act. The Tribunal, therefore, found that in the absence of any such documents to show the movement of the goods covered by the "F' Forms, the exemption claimed by the petitioner could not be granted. It is aggrieved by this finding of the Tribunal that the petitioner is before us through this revision petition by raising the following questions of law:
A) Whether on the facts and in the circumstances of the case, has not the appellate tribunal erred in finding that the stand adopted by the revision petitioner is self speaking of the fact OT.REV NO. 75 OF 2023 4 2025:KER:11066 that a portion of stock transferred items were sold in the State of Kerala, when the assessment is completed under the CST Act by taking the stock transfer value of interstate sales?
B) Ought not the tribunal have noticed that the revision petitioner was relying on the books of accounts and other records forming part of the assessment and the matter requires to be re-examined with reference to the stand that a major portion of the stock transferred item have been later brought back to Kerala, included in the stock and later sold?
C) Is not the findings rendered by the learned tribunal perverse and illegal?
5. We have heard Smt.K.Krishna, the learned counsel for the petitioner and Sri.V.K.Shamsudheen, the learned Senior Government Pleader for the respondent State.
6. On a consideration of the rival submissions, we find that the sole reason for the Tribunal to have denied the benefit of exemption in respect of the transactions covered by belated 'F' Forms was the fact that the petitioner had not produced evidence as required under Section 6A of the CST Act to prove the movement of the goods from Kerala to Tamilnadu and the return of the goods from Tamilnadu to Kerala so as to establish the factum of initial stock transfer in respect of which the exemption was claimed. Although the learned counsel for the petitioner would rely on an order dated 23.03.2022 of the Appellate Tribunal in TA(VAT) No.103 of 2016 to contend that in almost similar circumstances, the Tribunal had accepted the documents like Form 15 delivery note, inventory OT.REV NO. 75 OF 2023 5 2025:KER:11066 summary, Form JJ, ledger copy and day book that was produced by the petitioner to substantiate their contention regarding the movement of the goods in that case from Tamilnadu to Kerala, and the said documents were accepted by the Tribunal for the purpose of reducing the penalty that was imposed on the petitioner on that occasion, we see no connection with those documents so far as the transactions in the instant case are concerned. On the facts of the instant case, the findings of the Appellate Tribunal are in paragraphs 9 and 10 of the impugned order, which read as follows:
"9. As per S.6A, apart from 'F' Forms, there must be evidence of despatch of goods from the transferor State to the transferee State to prove the transaction. Then the next issue is whether the dealer succeeded in establishing despatch of gold and other ornaments from Kerala to Nagercoil in Tamilnadu State. As per the assessment order, dealer produced documents like delivery notes in F.15 and Form JJ under Tamilnadu VAT Act generated in e mode in support of despatch of the goods covered by stock transfer. But the said documents were not accepted by the assessing authority as sufficient proof in the absence of check post declaration in Form 8F. Appellant submitted that no check post declaration was made while transporting the precious items, given the high security risk involved in such transport. But statute does not provide any exemption from compliance of the provisions in this regard in the case of transport of valuable items like gold, diamond etc. it is further submitted by the dealer that the stock transferred items were duly declared in the return and books of accounts of Nagecoil branch. Those documents were also not acceptable to the authorities below for the reason that veracity of the contents thereof cannot be ensured since they are not authenticated documents. Considering all the above aspects, we directed the appellant to produce copy of the formal assessment order passed by the authorities under Tamilnadu VAT Act having jurisdiction in Nagercoil or to which Nagercoil branch is registered to show that the self assessed return declaring the stock transfer for the period has been either accepted or assessed in accordance with the provisions of the said statue. But the OT.REV NO. 75 OF 2023 6 2025:KER:11066 appellant was not able to produce any such order, though time was granted to produce it. The authorised representative submitted that no such order is available to the appellant.
10. Surprisingly the appellant made a new contention in the written arguments notes filed at the time of hearing of this appeal to the effect that the Nagercoil branch being a small outlet, main purpose of stock transfer to that branch was exhibition display and the items remained after sales in Nagercoil were brought back to the stock in Pattom and sold here. Documents styled as statement showing stock movement to Nagercoil, sales in Nagercoil, return to Kerala, sales in Kerala etc are stated to be produced along with the argument notes as Annexure VI to VIII. Those documents are also self generated statements not authenticated by any statutory authority in Tamilnadu or Kerala. Moreover the above version of the appellant is a retraction from its case before the authorities below and in the self assessed return claiming exemption from CST on the basis of stock transfer (out). The deviated version now adopted by the appellant itself is self speaking of the fact that a portion of the stock transferred items were sold in the State of Kerala. This is in dilution of the previous stand taken by the assessee and in confirmation of the finding of the assessing authority that the entire stock transferred items to Nagercoil formed part of sales exigible to tax liability. Therefore we do not find any illegality in the assessment and appellate orders to that extent.
It can be seen from the extracted portion of the Tribunal order that the Tribunal was not satisfied with the explanation offered by the petitioner, in the absence of valid documents, that the goods actually moved from Kerala to Tamilnadu by way of interstate stock transfer. Under the said circumstances, we see no reason to doubt the correctness of the finding of the Tribunal, which was arrived at because it was not satisfied on facts, and in the absence of documents, to accept the contention of the petitioner with regard to the OT.REV NO. 75 OF 2023 7 2025:KER:11066 genuineness of the interstate stock transfer. Resultantly, the OT. Revision fails and is dismissed by answering the questions of law raised against the assessee and in favour of the revenue.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
EASWARAN S.
JUDGE
mns
OT.REV NO. 75 OF 2023 8 2025:KER:11066
APPENDIX OF OT.REV 75/2023
PETITIONER ANNEXURES
Annexure A COPY OF ASSESSMENT ORDER FOR THE YEAR 21013-
14 ISSUED BY THE ASST. COMMISSIONER, SPECIAL CIRCLE, THIRUVANANTHAPURAM DTD. 28-03-2018 Annexure B COPY OF APPELLATE ORDER IN KVATA NO. 560/18 FOR THE YEAR 2013-14 ISSUED BY THE DEPUTY COMMISSIONER OF STATE TAX (APPEALS), THIRUVANANTHAPURAM DTD. 26-06-2019 Annexure C COPY OF STATEMENT SHOWING THE TOTAL STOCK MOVEMENT TO NAGERCOIL WITH STOCK TRANSFER OUT CHALLANS DTD. NIL Annexure D COPY OF SALE INVOICES NOS. IN NAGERCOIL, WHEN SOLD DTD. NIL Annexure E COPY OF STOCK RETURN DELIVERY CHALLANS DTD.
NIL Annexure F COPIES OF SUBSEQUENT SALE INVOICE DETAILS - 5 INVOICES IN VARIOUS NOS & DATES Annexure G COPY OF LIST OF DETAILS OF SALE IN NAGERCOIL BRANCH DTD. NIL Annexure H COPY OF STOCK TRANSFER VOUCHER/DELIVERY NOTE IN FORM NO.15 DTD. 12-04-2013 Annexure I CERTIFIED COPYOF ORDER IN TA (VAT) NO.
297/2019 ISSUED BY THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM DTD. 19-07-2023