Allowed

State of Kerala v. Sri.v.P.Hemachandran

Kerala HC12 Mar 2014OT.Rev/61/2012

Case brief

AI extract

What is this about?

The High Court of Kerala allowed revenue revision petitions against the Kerala VAT Appellate Tribunal's order. The Court upheld the rejection of voluntary disclosure under Section 74A because proceedings had already been initiated, and confirmed the penalty for suppression of turnover as differential returns failed to explain vast variance.

What did the court decide?

Updated penalty and interest orders of the Tribunal were set aside; revenue's assessment and penalty orders were upheld.

State of Kerala Vs Sri.v.P.Hemachandran — Kerala HC (2014) — LawSathi Research

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &

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THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE

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WEDNESDAY, THE 12TH DAY OF MARCH 2014/21ST PHALGUNA, 1935

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OT.Rev.No. 61 of 2012

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AGAINST THE ORDER IN TA(VAT) 424/2011 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM DATED 17/10/2011

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REVISION PETITIONER/RESPONDENT/REVENUE:-:

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STATE OF KERALA, REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.

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BY GOVERNMENT PLEADER SRI.BOBBY JOHN

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RESPONDENT(S)/APPELLANT/ASSESSEE:-:

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SRI.V.P.HEMACHANDRAN, PROPRIETOR, POPULAR HARDWARE, ORKKATTERY VADAKARA, PIN - 673 101.

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BY ADV. SRI.N.K.SANATH KUMAR

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THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 12-03-2014, ALONG WITH OTRV. 62/2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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OT.Rev.No. 61 of 2012

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APPENDIX

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PETITIONERS' ANNEXURES

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ANNEXURE A: COPY OF THE PENALTY DATED 4/8/2009

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ANNEXURE B: COPY OF THE FIRST APPELLATE ORDER DATED 16/9/2010

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ANNEXURE C: COPY OF THE COMMON ORDER OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL DATED 17/10/11.

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RESPONDENTS' ANNEXURE

NIL.

/ TRUE COPY /

P.S. TO JUDGE

**MANJULA CHELLUR, CJ & A.M.SHAFFIQUE, J. * * * * * * * * * * * * *** O.T.REV (VAT) Nos.61 & 62 of 2012

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Dated this the 12^th day of March 2014

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J U D G M E N T

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MANJULA CHELLUR, CJ

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Revenue is before us in these revision petitions aggrieved by the common order of Kerala Value Added Tax Appellate Tribunal dated 17/10/2011. The admitted facts in brief are as under:

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Respondent/assessee, a dealer in hardware items at Vatakara in Kozhikode district was served with an order imposing penalty of Rs.66,198/- under Section 67(1) of the Kerala Value Added Tax Act (hereinafter referred to as ‘KVAT Act’) and also levy of interest totalling Rs.12,845/- for the period 2005-2006. An analysis of financial statement by the assessing officer for the period 2005-2006 indicated that appellant had suppressed sales to the tune of Rs.8,05,716/-. After issuing notice on 02/06/2009 proposing to estimate the

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O.T.(Rev) No.61 & 62 of 2012

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turnover for the relevant period on best judgment basis passed an order which is the subject matter in O.T.(Rev) No.62 of 2012.

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Meanwhile, respondent dealer on 29/06/2009 filed a petition seeking permission to disclose voluntarily under Section 74A, certain turnover which came to be rejected by the assessing authority. Rejecting the same, assessment was completed taking turnover as per revised return. According to assessing authority, there was a difference in turn amounting to Rs.6,22,330/- as per the original return and revised return for the months of January, February and March 2006 and further opined that differential turnover represents suppressed turnover. Therefore, penalty of Rs.66,198/-, twice the amount of tax sought to be evaded was imposed and so also the above mentioned interest. This is the subject matter of O.T.(Rev) No.61/2012.

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Aggrieved by the said orders of assessment and also penalty, dealer filed appeals which came to be

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O.T.(Rev) No.61 & 62 of 2012

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dismissed. Against the same, he filed second appeal before the Tribunal which was allowed. Therefore the department is before this Court in the above two revision petitions.

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The entire issue revolves around one question, whether this respondent dealer had the knowledge of suppression of turnover detected by the assessing officer when he opted to file voluntary disclosure that is revised returns. Admittedly, there is difference of an amount of Rs.6,22,330/- so far as turnover initially indicated in the original return and the revised return for three months. that is January, February and March 2006. Differential turnover has to be explained by the dealer i.e. why such vast difference exists. If no proper explanation is offered, the opinion of the assessing authority has to be accepted as correct. Till date, no sufficient cause whatsoever is shown by the respondent dealer so far as this vast variance of Rs.6,22,330/- differential turnover for three months.

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O.T.(Rev) No.61 & 62 of 2012

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Then coming to the rejection of permission to disclose voluntarily under Section 74A, as early as on 17/12/2008 a notice was issued to the respondent dealer indicating certain defects in the submission of records and also proposal to impose penalty. This was received by the dealer on 26/12/2008. Application for permission to disclose voluntarily under Section 74A of KVAT Act came to be filed only on 29/06/2009, subsequent to receipt of notice dated 17/12/2008 and also orders dated 04/08/2009 which is available in the file of the department. This clearly indicates, only after becoming alert about the procedure adopted by the assessing officer which resulted in issuance of a proposed notice, the dealer came up with permission to disclose voluntarily under Section 74A of KVAT Act. Section 74A of KVAT Act clearly indicates, such benefit will not be extended to a dealer who comes up with application after initiation of proceedings by the authorities under the Act. In the light of such condition to sanction permission to disclose

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O.T.(Rev) No.61 & 62 of 2012

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voluntarily, as proceedings were already initiated against the dealer, we are of the opinion, assessing officer was justified in rejecting such permission. So far as best judgment assessment, based on differential turnover disclosed by the dealer himself, such assessment came to be passed.

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In the light of above observations, we do not find

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any good reason for the appellate authority to interfere with orders of the assessing authority which came to be confirmed by first appellate authority.

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Accordingly, the above two revision petitions are allowed setting aside the orders of the Tribunal.

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(sd/-)

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(MANJULA CHELLUR, CHIEF JUSTICE)

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(sd/-)

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(A.M.SHAFFIQUE, JUDGE)

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jsr/13/03/2014

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O.T.(Rev) No.61 & 62 of 2012 6

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O.T.(Rev) No.61 & 62 of 2012 7

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O.T.(Rev) No.61 & 62 of 2012 8

State of Kerala v. Sri.v.P.Hemachandran

Case brief

What is this about?

What did the court decide?

State of Kerala v. Sri.v.P.Hemachandran

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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