This review petition challenged a best judgment assessment under the Kerala VAT Act. The High Court held that Section 22(10)'s deeming provision does not bar further best judgment assessment if a pattern of suppression is detected.
The Review Petition was rejected and the parties ordered to bear their respective costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
&
THE HONOURABLE MR. JUSTICE ASHOK MENON
WEDNESDAY,THE 16TH DAY OF JANUARY 2019 / 26TH POUSHA, 1940 RP.No. 1101 of 2018 IN OT.Rev. 224/2014
REVIEW PETITIONER/S:/RESPONDENT/ASSESSEE:
JAMES THOMAS, AGED 56 YEARS PROPRIETOR, M/S. THOMSUN RUBBERS, CHITTADY, ALATHUR TALUK, PALAKKAD.
BY ADVS. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON
RESPONDENT/S:/REVN.PETITIONER/REVENUE:
STATE OF KERALA
REP.BY ITS SECRETARY TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695 001.
SRI V K SHAMSUDHEEN, SR GP
THIS REVIEW PETITION HAVING COME UP FOR ADMISSION ON 16.01.2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
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K.VINOD CHANDRAN & ASHOK MENON, JJ.
RP No.1101 of 2018 in O.T.Rev.No.224 of 2014
------------------------------------------Dated this the 16th day of January, 2019
O R D E R
Vinod Chandran, J.
The Review Petition is filed by the respondent-assessee in one of the five revision petitions disposed of by a common order dated 26.06.2018. The above Review Petition arises from O.T.Rev.No.224/2018. The learned counsel appearing for the review petitioner draws a distinction on facts which according to him, would place the matter in a totally different perspective and the assessee would be saved from the best judgment assessment and the power of estimation as conferred on the Assessing Officer.
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transactions. The assessee immediately applied for compounding under Section 74 of the Kerala Value Added Tax Act, 2003 ('Act' for short) and after computation of the actual suppression detected, the Intelligence Officer passed an order fixing the compounding fee at the maximum permitted in the provision. The assessee paid up the said amount and then filed a return as provided under sub-Section (10) of Section 22 of the Act, including the turnover suppression detected on inspection. The assessee also had paid up the entire tax and the interest due simultaneous to the payment of the compounding fee.
counsel that the return having been filed and the tax with respect to the suppressed turnover having been satisfied with interest; the provision under subsection (10) of Section 22 deems it to be a regular assessment and then there could be no further estimation made, based on the aforesaid suppression detected.
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“ 22. Assessment in case of non-filing of return and filing of defective return:xxx xxx xxx
(9) Notwithstanding anything contained in this Act, where an offence has been detected under the Act in respect of a return filed by a dealer or otherwise and proceedings initiated under this Act, the dealer shall not be permitted to revise the return till such proceedings are finalised.
(10) Where the proceedings referred to in the above sub-section are finalised under section 74 on payment of tax due along with the compounding fee, the dealer may thereafter file a revised return incorporating such turnover covered in such proceedings within a period of three months from the finalisation of such proceedings and on the receipt of such return by the Assessing Authority, the assessment for the return period or periods shall, subject to the provisions of sections 24 and 25, be deemed to have been completed:
Provided that where a pattern of suppression is detected the Assessing Authority shall proceed with best judgment assessment in accordance with the provisions of Sections 24 and 25, as the case may be.”
the contention of the learned counsel for the review petitioner, then the proviso to sub-Section (10) would be rendered redundant and otiose. However, the learned counsel would submit that the proviso will have application only if a further suppression is detected. We cannot agree. If a further suppression is detected,
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then there is absolutely no need to make an estimation so as to bring such turnover for assessment. Any suppression detected could be added on and an estimation is warranted only when there is a best judgment assessment proposed which has to have a reasonable nexus with the detected offence.
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fiction of regularisation of assessment and completion, under sub-section (10) only saves the assessee from an assessment under Section 22 for reason of the return originally filed being defective. Section 22 (10) is also subject to Sections 24 and 25 of the Act; ie: an assessment completed under Section 21 is capable of being re-opened under Section 25 for assessment of escaped turnover wherein the Assessing Officer is conferred with the power to carry out assessment to the best of his judgment. The proviso is an abundant caution ensuring that merely because a return is filed and the deeming provision is applied, the Assessing Officer is not divested of the power of best judgment assessment and estimation to cover up probable omissions and suppressions.
What has to be looked at is only as to whether there could be an estimation made on the basis of the suppression detected, especially on the finding that there is a clear and definite pattern of suppression over the year. In the present case, we see that three diaries were recovered from the premises of the assessee. There can be no presumption that there were no other suppressions. The assessee would not keep the
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entire details of suppression available for detection. The three diaries also found 72 instances of suppression over nine months of the subject year. There is a definite pattern of suppression established from the recovered documents and best judgment is permissible to cover up the probable omissions and suppressions. In such circumstances, we do not think that the case of the review petitioner stands on a different footing from the other cases decided by us in the batch of revisions. We, hence, reject the Review Petition leaving the parties to suffer their respective costs.
Sd/-
K.VINOD CHANDRAN
JUDGE
ASHOK MENON
JUDGE
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APPENDIX
PETITIONER'S ANNEXURES
ANNEXURE COPY OF ORDER NO.IPD/VII/42/10-11 DATED 31.03.2011.
[True Copy]
jg
2 issues framed by the court
Whether best judgment assessment under Sections 24 and 25 is permissible even after the assessment is deemed completed under Section 22(10) upon filing a revised return.
Whether the detection of a pattern of suppression justifies an estimation of probable omissions in addition to the confirmed suppression.
4 provisions across 1 enactments
JAMES THOMAS
STATE OF KERALA
K.VINOD CHANDRAN
ASHOK MENON
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
