Kerala High Court
State Of Kerala vs Smt. Aisha Beevi on 26 November, 2024
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
2024:KER:88941
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 26TH DAY OF NOVEMBER 2024 / 5TH AGRAHAYANA, 1946
OT.REV NO. 104 OF 2022
AGAINST THE ORDER DATED 09.03.2022 IN TAVAT NO.195 OF 2019 OF
KERALA VALUA ADDED TAX/AGRICULTURAL INCOME TAX & SALES TAX
APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM
REVISION PETITIONER/APPELLANT/RESPONDENT/REVENUE:
STATE OF KERALA,
REP. BY JOINT COMMISSIONER OF STATE TAX (LAW), STATE
GST DEPARTMENT, ERNAKULAM, PIN - 682011
BY ADV GP. SMT.RESMITHA RAMACHANDRAN
RESPONDENT:
SMT. AISHA BEEVI,
PRO. ARABIAN JEWELLERY, AMBIYIL HOUSE,ADINAD SOUTH,
KULASEKHARAPURAM P.O, KARUNAGAPALLY, PIN - 690544
BY ADVS.
ABRAHAM K.J
NIKHIL JOHN
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON
26.11.2024, ALONG WITH OT.Rev.105/2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
2024:KER:88941
OT.Rev Nos.104/2022, 105/2022
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 26TH DAY OF NOVEMBER 2024 / 5TH AGRAHAYANA, 1946
OT.REV NO. 105 OF 2022
AGAINST THE ORDER DATED 09.03.2022 IN TAVAT NO.56 OF 2020 OF
THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,
ERNAKULAM
REVISION PETITIONER/APPELLANT/REVENUE:
STATE OF KERALA,
REP. BY THE JOINT COMMISSIONER OF STATE TAX (LAW),
STATE GST DEPARTMENT, ERNAKULAM, PIN - 682011
BY ADV GOVERNMENT PLEADER
RESPONDENT:
SMT. AISHA BEEVI,
PRO. ARABIAN JEWELLERY, AMBIYIL HOUSE, ADINAD SOUTH,
KULASEKHARAPURAM P.O, KARUNAGAPPALLY, PIN - 690544
BY ADVS.
ABRAHAM K.J
NIKHIL JOHN
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON
26.11.2024, ALONG WITH OT.Rev.104/2022, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
2024:KER:88941
OT.Rev Nos.104/2022, 105/2022
3
ORDER
Dr. A.K. Jayasankaran Nambiar, J.
The State is the revision petitioner in both these revision petitions that impugn a common order dated 09.03.2022 of the Kerala Value Added Tax Appellate Tribunal (for short, 'the KVAT Act'), Kottayam in TA(VAT) Nos.195/2019 and 56/2020.
2. The brief facts necessary for disposal of these OT.Revisions are as follows:
The respondent assessee is a jeweller, who was registered as a dealer on the rolls of the Commercial Tax Officer, Ponkunnam. She had apparently stopped business with effect from 31.12.2014. On verification of the monthly returns for the months of November 2014 and December 2014, the Intelligence Officer, Squad No.IV, Kottayam, found that the assessee had declared a sale of bullion amounting to Rs.4,37,32,500/- in the monthly return for November 2014. The closing stock inventory filed by the assessee for the financial year ending 31.03.2014 and the monthly returns of the dealer for the period from April 2013 to December 2014 showed that the assessee had not effected any purchase of bullion. The Assessing Authority therefore issued a 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 4 penalty notice under Section 67(1) of the KVAT Act, proposing a penalty of double the amount of tax sought to be levied on the assessee towards unaccounted sale of bullion. After considering the objections of the assessee, the said demand was confirmed by the assessee. After an unsuccessful first appeal, the assessee preferred an appeal before the Appellate Tribunal, which allowed the appeal and dropped the penalty imposed on the assessee.
3. As regards the assessment pertaining to the assessee for the assessment year 2014-2015, it would appear that the Assessing Authority had completed the assessment under Section 25(1) of the KVAT Act by estimating the turnover by adding 10% gross profit to the cost of goods sold and levied tax at the rate of 5% on the estimated turnover. In an appeal carried by the assessee before the First Appellate Authority, the said Authority rejected the contentions of the assessee and dismissed the appeal. It was therefore that the assessee preferred the appeal before the Appellate Tribunal against the order of the First Appellate Authority.
4. When the appeals were taken up by the Tribunal, on the aspect of penalty, it found that the sale of bullion by the assessee to M/s Arabian Jewellers, Karunagappally, was proved 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 5 through the production of proper invoices which reflected the same, and therefore the factum of sale of bullion could not be disputed. The Tribunal thereafter found that the assessee had also explained the circumstances in which they were compelled to sell the gold after converting it to bullion. In doing so, it accepted the contention of the assessee that gold ornament hallmarked for a business would not be taken as such by another shop, and it was under those circumstances that they were compelled to convert the gold ornaments by acid melting to bullion and effect sale thereof. What is significant, however, is that there is no reasoning in the order of the Tribunal which justifies a reversal of the finding of the First Appellate Authority that had confirmed the penalty on the assessee for the reason that the assessee had not produced any material to substantiate his contention that he had converted gold ornaments into the gold bullion, which was subsequently sold to M/s Arabian Jewelers at Karunagappally. This was especially relevant because, as noticed by the Intelligence Officer and the First Appellate Authority, the stock position as reflected in the assessee's accounts for the period from the end of the assessment year 2012-13 till December 2014 clearly reveals that while there was no stock of bullion declared by the assessee, there was also no purchase of bullion by the 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 6 assessee during the said period. If, as a matter of fact the assessee had manufactured the bullion by melting existing gold ornaments that were in stock, then the books of accounts would have reflected the stock position by showing therein a decrease in the stock of gold ornaments and a corresponding increase in the stock of gold bullion. This aspect was not established by the assessee through the production of any document before the Intelligence Officer or the First Appellate Authority. As for the Tribunal, it appears to have completely overlooked this aspect while cancelling the penalty that was imposed on the assessee. In view of the above, we find ourselves unable to accept the findings of the Tribunal on the aspect of penalty to be imposed on the assessee, and we have no hesitation whatsoever to set aside the impugned order of the Tribunal insofar as it relates to the penalty imposed on the assessee for the assessment year in question.
5. As regards the assessment in relation to the assessee for the said assessment year, we find that the Tribunal had noticed that the Assessing Authority had completed the assessment against the assessee for the said year by merely relying on the penalty order that was passed against her. Since the Tribunal had set aside the penalty order in the appeal against the order of the First Appellate Authority that sustained it, the 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 7 Tribunal was of the view that the assessment order confirmed by the First Appellate Authority could not be sustained. The Tribunal, however, remanded the matter of assessment to the Assessing Authority for a fresh look into the matter after perusing the books of accounts and other materials produced by the assessee. We do not think it necessary to interfere with the impugned order of the Appellate Tribunal to the extent it remands the matter of assessment to the Assessing Authority. The revision of the State against the impugned order of the Appellate Tribunal on the aspect of assessment must therefore fail.
6. In the result, we set aside the impugned order of the Tribunal in OT.Rev. 104 of 2022 and remand the matter back to the Tribunal for a fresh consideration on the aspect of whether or not the assessee has material to substantiate the basic contention that it was the gold ornaments that it had in stock during the assessment year in question that it had converted into the bullion, that was sold to M/s Arabian Jewellery, Karunagappally. The Tribunal shall look into this aspect in the light of the material produced by the assessee, and other material available on record, and take a decision as to whether or not the order of the First Appellate Authority confirming the penalty should be sustained or not. For this limited purpose, the matter is remanded to the 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 8 Tribunal, which shall complete the exercise of fresh adjudication within a period of six months from today. We make it clear that if the Tribunal feels that the aspect of penalty can be decided simultaneously with the remanded assessment, if not already completed pursuant to the impugned order of the Tribunal, the Tribunal may remand the penalty issue also to the Assessing Authority for a fresh adjudication, after setting aside the impugned orders in the appeal before it. In either event, in the proceeding before the Appellate Tribunal, the assessee shall also be heard.
O.T.Rev.104/2022 is therefore disposed by answering the questions of law in favour of the revenue and against the assessee and remanding the matter to the Tribunal for a fresh adjudication.
In O.T.Rev. 105 of 2022 is dismissed by answering the questions of law raised therein against the revenue and in favour of the assessee.
Sd/-
DR. A.K.JAYASANKARAN NAMBIAR JUDGE Sd/-
K. V. JAYAKUMAR JUDGE msp 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 9 APPENDIX OF OT.REV 105/2022 PETITIONER ANNEXURES Annexure1 A TRUE COPY OF THE ASSESSMENT ORDER NO.
32050866936/2014-15 FOR THE ASSESSMENT YEAR 2014-2015 DATED 24-11-2017 ISSUED BY THE STATE TAX OFFICER, PONKUNNAM Annexure2 TRUE COPY OF THE ORDER OF THE STATUTORY I ST APPELLATE AUTHORITY ie., THE ASSISTANT COMMISSIONER (APPEALS) SGST DEPARTMENT, KOTTAYAM IN KVATA NO. 1011/2017 DATED 28-10- 2019 Annexure3 TRUE COPY OF THE TRIBUNAL ORDER DATED 09-03- 2019 IN TA(VAT) : 56/2020 2024:KER:88941 OT.Rev Nos.104/2022, 105/2022 10 APPENDIX OF OT.REV 104/2022 PETITIONER ANNEXURES Annexure1 A TRUE COPY OF THE PENALTY ORDER NO. ISK IV/CR/18/16-17 (14-15) FOR THE ASSESSMENT YEAR 2014-15 DATED 30-01-2017 ISSUED BY THE INTELLIGENCE OFFICER, SQUARD NO. IV, KOTTAYAM Annexure2 TRUE COPY OF THE ORDER OF THE STATUTORY 1ST APPELLATE AUTHORITY ie., THE DEPUTY COMMISSIONER (APPEALS), SGST DEPARTMENT, KOTTAYAM IN RP NO.114/2016-17 DATED 04-02- 2019 Annexure3 TRUE COPY OF THE ORDER OF THE TRIBUNAL ORDER DATED 09-03-2022 IN TA (VAT): 195/2019