Allowed

M/S Tnvr Cafe v. State of Kerala

Kerala HC25 Jun 2018OT.Rev/76/2016

Case brief

AI extract

What is this about?

The High Court of Kerala in this tax revision ordered the Assessing Officer to delete an addition of Rs.5,85,000 made on estimated suppressed turnover of LPG cylinders, finding that existing additions for actual suppression were sufficient.

What did the court decide?

Directing the Add'l Assessing Officer to delete Rs.5,85,000 being the unaccounted turnover on the basis of purchase suppression of LPG cylinders.

M/S Tnvr Cafe Vs State of Kerala — Writ and Judicial Review | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN &

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THE HONOURABLE MR. JUSTICE ASHOK MENON

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MONDAY, THE 25TH DAY OF JUNE 2018 / 4TH ASHADHA, 1940

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AGAINST THE ORDER/JUDGMENT IN TAVAT 4/2015 of KERALA VALUE ADDED TAX APPELLATE TRIBUNAL,ADDL.BENCH,PKD DATED 25-04-2015

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REVISION PETITIONER(S)/RESPONDENT/ASSESSEE:

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M/S TNVR CAFE MARKET ROAD, PALAKKAD.

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BY ADVS.SRI.A.KUMAR

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SRI.P.J.ANILKUMAR SMT.G.MINI(1748) SRI.P.S.SREE PRASAD

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RESPONDENT(S):/APPELLANT/STATE

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STATE OF KERALA REPRESENTED BY ITS COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM 695 001.

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BY SRI.MOHAMMED RAFIQ, SR. GOVERNMENT PLEADER

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THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 25-06-2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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O.T.REV.76/2016

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APPENDIX

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REVISION PETITIONER'S EXHIBITS

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ANNEXURE-A : COPY OF ORDER OF THE OFFICER COMMERCIAL TAXES, PALAKKAD DATED 1.7.2014. ANNEXURE-B : COPY OF ORDER OF THE ASSISTANT COMMISSIONER (APPEALS), PALAKKAD KVAT APPEAL NO.554/14 DATED 27.11.2014. ANNEXURE-C : COPY OF ORDER OF THE ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD, KVAT NO.04/2015 DATED 25.4.2015. //TRUE COPY// PS TO JUDGE.

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jg-27/6

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K.VINOD CHANDRAN & ASHOK MENON, JJ.

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O.T.Rev.No.76 of 2016

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------------------------------------------Dated this the 25^th day of June, 2018

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O R D E R

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Vinod Chandran, J.

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The assesee, a vegetarian hotel dealing in cooked food as also sweets and savories, is concerned with the assessment made for the year 2011-12. Additions are made under various heads in Annexure-A assessment order passed on best judgment. The Assessing Officer found that there was a suppression detected on shop inspection which turnover was determined at Rs.4,05,049/-. The assessee admitted the same and paid compounding fees. There was also noticed purchase of chairs in which bills, the PIN number was disclosed; which according to the Department was to avail concessional rate of tax. The purchase was also not accounted by the assessee and hence it was added to the turnover. There was also an addition made on the turnover, with GP added at 25%, coming to Rs.25,19,768/-. Later this addition was revised by the AO and the sales turnover of cooked food was fixed on the basis of the suppression of purchase of LPG

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O.T.Rev.76/2016

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cylinders. Eventually, the AO on the basis of estimation that each cylinder would be utilised in cooking at least 500 meals determined the suppressed turnover at Rs.5,85,000/-.

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The assessment was challenged in appeal before the first appellate authority and before the Tribunal. There was also an issue raised as to permission for compounding which the Tribunal on examination of the records found no application having been filed. The estimation made on account of the purchase suppression of LPG cylinders was found to be excessive and the same was sent back for fresh consideration. The assessee is in revision with the following questions of law:-

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(a) Whether on the facts and in the circumstances of the case, the turnover of inter-State purchase of chairs, capital goods for own use in the hotel, could have been added on to the sales turnover without any evidence of sale of chairs having been carried out?

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(b) Whether in the facts and in the circumstances of the case, the estimation made on the basis of the suppressed purchase of LPG cylinders could be sustained?

O.T.Rev.76/2016

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(d) On the AO having estimated the turnover of cooked food on the basis of the purchase suppression of cylinders, could there be further addition of the purchase turnover detected on shop inspection or for probable omissions and suppressions?

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With respect to the sale of chairs, we find that there was a detention of transport of chairs showing the PIN number in the invoices and there was also a penalty imposed of Rs.10,000/- finding no possibility of tax evasion. In such circumstances, there is no question of the sales turnover being added on to the sales turnover of the assessee, who is carrying on a vegetarian hotel. There cannot be any assumption made of the assessee having sold the chairs. Nor is the allegation of concessional rate having been availed in the inter-state purchase sustainable, since the assessee was not registered under the Central Sales Tax Act.

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The assessee, admittedly, has both sale of cooked food as also sweets and savories. Obviously both are manufactured in the common kitchen available

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to the assessee wherein the LPG cylinders are used. When the total turnover suppression is assessed on the basis of the suppression of LPG cylinders, the entire suppression for the year is to be estimated. If suppression is estimated for the entire year, then there is no scope for adding the suppression detected in the middle of the year or for making any further additions on the basis of the suppression detected for probable omissions and suppression.

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We notice that the Tribunal has remanded the issue of estimation based on the suppressed purchase of LPG cylinders finding the estimation already made to be excessive. It is to be noticed that on detection of a suppression there was made an addition of Rs.4,05,049/and there is also an addition made of an equal amount. The suppression was detected in an inspection conducted in August of the subject year. There was no further inspection carried out other than that carried out in the middle of the year. Hence an addition of an equal amount would suffice and there is no necessity to further estimate on the basis of the suppression detected of LPG cylinders. The additions made, of the actual suppression along with an equal amount, would

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cover the food, sweets and savories cooked by the assessee and sold in the subject year, using the LPG cylinders. Noticing the fact that the assessment is of the year 2010-11, we are of the opinion that a quietus can be given to the issue by accepting the estimation made by the AO on the actual suppression detected on inspection. Hence, the orders of the lower authorities are interfered with directing the AO to delete Rs.5,85,000/- being the unaccounted turnover on the basis of the purchase suppression of LPG cylinders.

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With respect to the compounding, we find that the Tribunal has looked into the records and found that there is no compounding application. In such circumstances, we do not think that we should interfere with that finding on facts.

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Question (a) is answered in favour of the assessee and against the Revenue finding the addition made of the purchase value of chairs, not possible of being added on to the sales turnover of the asessee; who is a vegetarian hotel. Questions (b) & (d) are also answered in favour of the assessee finding the estimation made on the suppression detected of LPG cylinders being not possible when the actual suppression detected in the

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middle of the year was added along with an equal addition for probable omissions and suppression. We refuse to answer the question raised on compounding since it is on facts. The Revision is disposed off leaving the parties to suffer their own costs.

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Sd/-

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K.VINOD CHANDRAN JUDGE

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Sd/ASHOK MENON JUDGE

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M/S Tnvr Cafe v. State of Kerala

Case brief

What is this about?

What did the court decide?

M/S Tnvr Cafe v. State of Kerala

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

Parties & counsel

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Case details

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