Allowed

M/S.Modern Sanitary, v. State of Kerala

Kerala HC28 Nov 2022OT.Rev/87/2019

Case brief

AI extract

What is this about?

The High Court set aside the assessing officer's order imposing reverse tax on deleted stock of broken unsalable goods. The order was quashed for failing to verify records or afford an opportunity before drawing adverse inferences. The matter was remitted for fresh determination.

What did the court decide?

The order dated 02.07.2013 and confirming orders were set aside. The matter was remitted to the Assessing Officer for fresh determination with a two-month deadline to file supporting documents.

M/S.Modern Sanitary, Vs State of Kerala — GST and Indirect Tax | Kerala HC (2022)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE S.V. BHATTI &

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THE HONOURABLE MR.JUSTICE BASANT BALAJI

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MONDAY, THE 28^TH DAY OF NOVEMBER 2022 / 7TH AGRAHAYANA, 1944 OT.REV NO. 87 OF 2019

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AGAINST THE ORDER IN TAVAT 215/2015 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM

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REVISION PETITIONER:

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M/S.MODERN SANITARY, CHETTUPUZHA BUILDING, KURUPPAM ROAD, THRISSUR DISTRICT680001, REPRESENTED BY ITS PROPRIETOR, SEBASTIAN MATHEW.

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BY ADVS. K.J.ABRAHAM SRI.NIKHIL JOHN

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RESPONDENT:

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STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM DISTRICT-695001.

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BY ADV GOVERNMENT PLEADER

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GP M.M. JASMIN,

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THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 28.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

OT.REV 87/2019

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O R D E R

S.V.Bhatti, J.

The petitioner states a short point for our consideration. The petitioner is a dealer registered under the Kerala Value Added Tax Act, 2003 (for short, the Act), and the subject matter relates to the return period 2010-11. The issue is the reckoning of the opening and closing stock by taking note of the deleted stock of broken and unsalable sanitary wares and tiles. The Assessing Officer issued notice dated 17.06.2013 proposing to make the best assessment judgment on the return filed by the dealer. The dealer filed a reply on 26.06.2013. The assessment order dated 02.07.2013 was made, and the operative portion reads thus:

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“Verification of the records revealed that during the year 10-11 the assessee had claimed and availed an IPT credit of Rs. 12,82,086/- ie., 35.6% of the total purchase. During 08-09 and 09-10 also the assessee had availed IPT of 39.3% and 42.9% respectively. The above stock are accumulated stock of broken goods. Hence 35.6% of Rs. 12,82.086/- has to be reversed. Therefore the objections raised are overruled and the assessee is directed to pay the reverse tax due as shown below:”

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35.6% of the deleted stock of Rs.7105073/- - Rs.25,29,405.00

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Reverse tax due @ 12.5% on Rs.2529405/- -Rs.3,16,176.00

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OT.REV 87/2019

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Cess due @ 1% Rs. 3,162.00 Total -- Rs.3,19,338.00 Less paid - Rs. 43,795.00 Balance - Rs.2,75,543.00 =================

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Adv. Abraham K.J appearing for the dealer, contends that

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the figures arrived at by the Assessing Officer are not correct, and the inference drawn on input tax credit suffers from material illegality . The nature of the business carried on by the dealer has a substantial percentage of damaged, broken, and unsalable goods as closing stock . Suppose the details furnished by the dealer are not accepted, it is a matter of verification of record, and without verifying the records and books of accounts, redetermining the taxable turnover is illegal and liable to be set aside. He prayed that an opportunity would be provided, and the dealer would be able to establish the claim of the broken and unsaleable goods for the return period. Though it is argued that the claim made by the dealer is tenable, the Assessing Officer should accept returns in the manner the dealer files.

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We are persuaded not to take up this contention, for, from the

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OT.REV 87/2019

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two dates referred to above, we are convinced conclusions have been arrived at and recorded without examining the records/books of accounts and affording an opportunity on this behalf. On the short ground, the order in Annexure-A dated 02.07.2013 is set aside. Consequently, the confirming orders passed by the Deputy Commissioner and the Tribunal are set aside, and the matter is remitted to the Assessing Officer for determination afresh. The dealer is given two months from the date of receipt of copy of the judgment to file documents/records in support of its claim on the percentage of the broken and unsaleable goods suffered by the dealer for the return period.

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O.T. revision is allowed, as indicated above.

Sd/-

S.V. BHATTI

JUDGE

Sd/ BASANT BALAJI JUDGE

OT.REV 87/2019

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APPENDIX OF OT.REV 87/2019

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PETITIONER ANNEXURES

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ANNEXURE A TRUE COPY OF THE ORDER NO.32080710565/10-11 DATED 02.07.2013. ANNEXURE B TRUE COPY OF APPELLATE ORDER IN KVATA-2532/13 DATED 22.07.2015. ANNEXURE C ORIGINAL TRIBUNAL ORDER IN T.A.(VAT)NO.215/2015 DATED 28.02.2019.

M/S.Modern Sanitary, v. State of Kerala

Case brief

What is this about?

What did the court decide?

M/S.Modern Sanitary, v. State of Kerala

Case brief

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