Allowed

A.v.Abdul Majeed v. the State of Kerala

Kerala HC10 Aug 2023OT.Rev/64/2017

Case brief

AI extract

What is this about?

The High Court of Kerala held that the Tribunal erred in sustaining a penalty imposed by an Intelligence Officer based on turnover estimation. The court ruled that such powers belong to the Assessing Officer, allowing the revision petition in favor of the assessee.

What did the court decide?

The O.T. Revision was allowed by answering the questions of law raised in favour of the assessee and against the revenue, quashing the impugned order.

A.v.Abdul Majeed Vs the State of Kerala — Writ and Judicial Review | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR

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THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.

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THURSDAY, THE 10^TH DAY OF AUGUST 2023 / 19TH SRAVANA, 1945

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OT.REV NO. 64 OF 2017 AGAINST THE ORDER DATED 30.03.2016 IN OT.REVISION NO.466/2014 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM

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REVISION PETITIONER/APPELLANT/ASSESSEE:

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A.V.ABDUL MAJEED NISSARA METALS,SOUTH EZHIPURAM,S.VAZHAKULAM.P.O, ALUVA-5,ERNAKULAM DISTRICT.

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BY ADVS. DR.K.B.MUHAMED KUTTY (SR.) SRI.E.C.AHAMED FAZIL SRI.K.M.FIROZ SMT.M.SHAJNA SMT.UMMUL FIDA

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RESPONDENT/RESPONDENT/REVENUE:

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THE STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT,TAXES DEPARTMENT,SECRETARIAT,THIRUVANANTHAPURAM-695001.

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BY GOVERNMENT PLEADER SMT. M.M JASMINE

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THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION

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ON 10.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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O.T..Rev.No.64 of 2017

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O R D E R

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Dr. A.K.Jayasankaran Nambiar, J.

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The assessee under the Kerala Value Added Tax Act Sri.A.V. Abdul Majeed is the proprietor of Nissara Metals and the petitioner herein aggrieved by the order dated 30.03.2016 of the Kerala Value Added Tax Appellate Tribunal, Ernakulam, in TA(VAT) No.466 of 2014.

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The brief facts necessary for the disposal of this revision are as follows:

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The petitioner assessee had commenced the business of operating a metal crusher unit in 2007. Pursuant to an inspection carried out at the unit on 17.09.2007 and finding that books of accounts had not been produced by the petitioner, the Intelligence Officer proceeded to collect details regarding electricity consumption at the unit belonging to the petitioner, and thereafter, estimated the production achieved at the unit. On the basis of such estimation, he arrived at a figure of Rs.92,807/- as the tax amount and imposed twice the said amount as penalty (Rs.1,85,614) u/s 67 of the KVAT Act.

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O.T..Rev.No.64 of 2017

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Although the petitioner preferred an appeal before the First Appellate Authority contending, inter alia, that the Intelligence Officer could not carry out the assessment based on estimation and impose a penalty based on such estimation, the First Appellate Authority merely reduced the penalty to an amount equal to the tax amount quantified against the petitioner. It is significant, however, that the First Appellate Authority found that there could not be a determination of tax liability based on an estimation at the instance of the Intelligence Officer.

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In the further appeal carried by the petitioner before the Tribunal, the Tribunal, while clearly agreeing with the finding of the First Appellate Authority as regards the lack of power in the Intelligence Officer to estimate the turnover on best judgment basis and impose a penalty on the dealer, went on to hold that there was no reason to interfere with the order of the First Appellate Authority and dismissed the appeal.

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We have heard Sri.K.M. Firoz, the learned counsel for the petitioner and Smt.M.M. Jasmine, the learned Government Pleader for the respondent.

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On a consideration of the rival submissions, we are of the view

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O.T..Rev.No.64 of 2017

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that the order of the Tribunal impugned in this revision petition cannot be legally sustained. It is not in dispute that there was no assessment done to determine the tax liability of the petitioner's crusher unit despite the fact that he was a registered dealer. The decision in U.K. Monu Timbers (M/s.) v. State of Kerala [2012 (3) KHC 111] is authority for the proposition that the Intelligence Officer does not have the power to impose a penalty based on an estimation of the turnover and consequent determination of tax liability since that is a role more suited for the Assessing Officer. The said decision has since been followed in State of Kerala v. Joemon Rajan [2018 (4) KHC 513] and State of Kerala v. M.K.Marakkar [2018 KHC 5259] . The authorities below were therefore clearly in error in sustaining the penalty against the petitioner. We therefore allow this O.T.Revision by answering the questions of law raised in favour of the assessee and against the revenue.

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Sd/-

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Dr. A.K.JAYASANKARAN NAMBIAR JUDGE

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Sd/- MOHAMMED NIAS C.P. JUDGE

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mns

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O.T..Rev.No.64 of 2017

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APPENDIX OF OT.REV 64/2017

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PETITIONER ANNEXURES

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ANNEXURE A TRUE COPY OF THE PENALTY ORDER DATED 31.3.2009 PASSED BY THE INTELLIGENCE OFFICER, SQUAD NO VI, ERNAKULAM ANNEXURE B TRUE COPY OF THE FIRST APPEAL ORDER DATED 20.8.2013IN KVAT APPEAL NO 1667/2009 PASSED BY THE DEPUTY COMMISSIONER (APPEALS)11, COMMERCIAL TAXES, ERNAKULAM

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ANNEXURE C TRUE COPY OF THE TRIBUNAL APPEAL ORDER DATED 30.3.2016 IN TA(VAT) NO 466/2014 OF KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, ERNAKULAM

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ANNEXURE D TRUE COPY OF THE GROUNDS OF APPEAL DATED 10.9.2014 SUBMITTED BY THE PETITIONER BEFORE THE APPELLATE TRIBUNAL ERNAKULAM.

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ANNEXURE E A TRUE COPY OF THE TRIBUNAL ORDER DATED 29.12.2015 IN TA(VAT) NO 33 OF 2014 AGAINST THE FIRST APPEAL ORDER IN KVATA NO 1667 OF 2009 FILED BY THE STATE.

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ANNEXURE F A TRUE COPY OF THE PAY-IN-SLIP DATED 10.3.2015 OF STATE BANK OF TRAVANCORE REMITTED BY THE REVISION PETITIONER AS A CONDITION FOR STAY ASPER ORDER DATED 12.1.2015 IN INTP NO 469 OF 2014 IN TA(VAT) NO 466 OF 2014.

A.v.Abdul Majeed v. the State of Kerala

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A.v.Abdul Majeed v. the State of Kerala

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