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M/S.Bhima Jewellery & Diamonds vs The Deputy Commissioner ... on 24 August, 2012 cites

State Of Kerala vs Molly Baby Proprietress on 2 March, 2009

10. There is yet an another view of the matter. In these cases, I note that the grievance of the respondents is essentially with regard to the prejudice that is caused to the revenue on account of an erroneous order passed by the Intelligence Officer, limiting the tax liability of the petitioner to an amount stated to be substantiatly lower than what ought to have been assessed, if the turnover had been correctly determined. It is -14- W.P.(C) Nos.14220 & 14233 of 2017 necessary to note in this connection, that the tax liability of an assessee, under the KVAT Act, is to be determined not by the Intelligence Officer but by the Assessing officer in assessment proceedings under the Act. In the instant cases, although in the penalty proceedings which were initiated against the assessee, and which were subsequently compounded by the assessee, there was a determination of the tax liability of the assessee for the purposes of completing the compounding proceedings, the said determination of tax liability cannot, by any stretch of imagination, be said to be final and binding on the Department for the purposes of assessment. This legal position has also been settled through a line of decisions of this Court including the decision of a Division Bench in State of Kerala v. Molly Babu [(2010) 29 VST 75 KER]. In other words, despite the determination of tax liability by an Intelligence Officer in penalty proceedings, the assessing authorities under the Act can independently proceed to determine the actual amounts that are due to the revenue by way of tax in the assessment proceedings. Viewed in that sense, there was no prejudice caused to the revenue simply on account of the Intelligence Officer having determined the tax liability of the petitioner assessee in a lower amount than what was actually due. The assessing authorities -15- W.P.(C) Nos.14220 & 14233 of 2017 could have independently, in the assessment proceedings, determined the actual liability of the petitioners assessees under the KVAT Act. I note from the facts in the writ petitions that the assessment proceedings were also completed against the assessees, where, once again, the authorities did not take note of the mistake occassioned by the Intelligence Officer and adopted a lower turnover for the purposes of the assessment. No doubt, there were additions made to the turnover reported, towards suppressed turnover and a further addition of 50% of the suppressed turnover. The said addition of 50% of the suppressed turnover was however reduced by the First Appellate authority to 10% in the case of the petitioner in W.P. (C).No.14220/2017, and maintained by the First Appellate authority in the case of the petitioner in W.P.(C). No.14233/2017. In both these cases, although appeals have been filed before the Appellate Tribunal, I find that it may still be open to the Department to initiate proceedings for bringing to tax the escaped turnover, in terms of Section 25 (1) of the KVAT Act. This, however, is something that the department would have to explore, and I make it clear that nothing in this judgment shall stand in the way of the department pursuing such a course of action, in accordance with law. -16- W.P.(C) Nos.14220 & 14233 of 2017 In the result, I find that the writ petitions, in their challenge against Ext.P15 order, must necessarily succeed. I therefore allow these writ petitions, by quashing Ext.P15 order in both the writ petitions, with consequential reliefs to the petitioners.
Kerala High Court Cites 4 - Cited by 2 - Full Document
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