Kerala High CourtM/S.Empees Traders vs State Of Kerala on 11 November, 2020Bench:K.Vinod Chandran,T.R.RaviIN THE HIGH COURT OF KERALA AT ERNAKULAM\n\n                                  PRESENT\n\n             THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN\n\n                                     &\n\n                 THE HONOURABLE MR. JUSTICE T.R.RAVI\n\n   WEDNESDAY, THE 11TH DAY OF NOVEMBER 2020 / 20TH KARTHIKA, 1942\n\n                        O.T.Rev.No.5 OF 2016\n\n      AGAINST THE ORDER IN TA(VAT) NO.729/2014 DATED 09-09-2015\n       OF KERALA VALUE ADDED TAX/AGRL.INCOME TAX AND SALES TAX\n           APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE.\n\n                     [ASSESSMENT YEAR 2006-07]\n\n\nREVISION PETITIONER/ APPELLANT/ASSESSEE:\n\n             M/S.EMPEES TRADERS,\n             KOYILANDY, KOZHIKODE DISTRICT,\n             REPRESENTED BY ITS MANAGING PARTNER\n             SRI.M.P.RAMADAS.\n\n             BY ADVS.\n             SRI.T.M.SREEDHARAN (SR.)\n             SMT.DIVYA RAVINDRAN\n             SRI.V.P.NARAYANAN\n             SRI.V.V.VARGHESE\n\nRESPONDENT/ RESPONDENT/REVENUE:\n\n             STATE OF KERALA,\n             REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT,\n             SECRETARIAT, THIRUVANANTHAPURAM.\n\n             BY SENIOR GOVERNMENT PLEADER SRI.MOHAMMED RAFIQ.\n\n\n     THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON\n11-11-2020, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:\n O.T.Rev.No.5 of 2016            - 2 -\n\n\n\n\n              K. Vinod Chandran & T.R.Ravi, JJ.\n              -----------------------------------\n                    O.T.(Rev.) No.5 of 2016\n              -----------------------------------\n          Dated, this the 11th day of November, 2020\n\n                                ORDERVinod Chandran, J.The following questions of law, as modified by us,\n\narise in the above revision:(i)   Ought not the Tribunal have found that there is\n         no valid reason for assumption of jurisdiction\n         underSection 25(1)of the KVAT Act and there\n         is no material or evidence for the assessment\n         to be completed with estimation as has been\n         done by the Assessing Officer?(ii) Ought not the Tribunal have interfered with the\n         levy of interest underSection 31(6)of the\n         KVAT Act?2. The assessment year is 2006-07 and the assessee\n\nis a dealer in live chicken. The Tribunal affirmed the\n\nassessment   order     which,    on     best   judgment,   made   an\n\nestimation of the turnover, based on the sale value of live\n\nchicken conceded by another dealer in the same district and\n\nalleged enquiry made by the Assessing Officer.O.T.Rev.No.5 of 2016                - 3 -3.    Sri.V.P.Narayanan,       learned    Counsel   appearing\n\nfor the assessee, would argue that the assessment is made\n\nin an arbitrary manner and the estimation is without any\n\nreasonable basis. Even the cross-examination of the other\n\ndealer   was      declined.    Learned   Senior      Government    Pleader\n\nSri.Mohamed Rafiq would argue on the basis of the records.\n\nIt is submitted that the purchase bills would indicate that\n\nthe sale has been made with a marginal profit, based on\n\nwhich no dealer can survive. It is asserted that there was\n\nvalid reason for rejection of books of accounts.4. At the outset it is to be emphasized that the\n\nargument raised by the learned Government Pleader on the\n\nbasis of purchase bills is a new argument raised for the\n\nfirst time before us. It does not even find a place in the\n\nnotice issued or the final assessment order. The assessment\n\norder merely says that another dealer sold live chicken at\n\nRs.37/- per kilogram, who is also operating within Calicut\n\ndistrict.    We    cannot     but   observe   that   there   are   various\n\nfactors which weigh insofar as determination of sale value\n\nof   live   chicken    by     individual      dealers,   even   within   a\n\ndistrict. Mere assumption that there is under-valuation on\n\nthe basis of the sale price conceded by another dealer\n\ncannot hold good. There is also no reason other than theO.T.Rev.No.5 of 2016                  - 4 -price conceded by another dealer to reject the books of\n\naccounts.5. The cross-examination of the dealer sought for\n\nwas     declined      by     the    Assessing       Officer      on     the     mere\n\nassumption that the price per kilogram fixed at one rupee\n\nbelow that conceded by the other dealer is reasonable and\n\nfair     and   that        her    independent       enquiry     validated        the\n\nestimation. We cannot but observe that the Tribunal also\n\nmisdirected itself in finding that since there was no sworn\n\nstatement      taken       from     the     other    dealer     there     was     no\n\nrequirement of cross-examination.6. We are of the opinion that there is absolutely\n\nno valid reason to reject the accounts or carry out an\n\nestimation on best judgment as discernible from Annexure-B\n\nnotice or Annexure-A order. The Assessing Officer, as we\n\nfound, had relied on her own reasonableness and fairness to\n\ndecline    cross    examination,          which     vitiates    the   action      as\n\nbeing    subjective.        We     answer    the    first     question    of    law\n\nframed    against      the        Department       and   in    favour     of     the\n\nassessee. The assessment at Annexure-A and the appellate\n\norders stand set aside. The assessment itself having been\n\nset aside, there is no requirement to examine the levy of\n\ninterest, which also falls to the ground.O.T.Rev.No.5 of 2016        - 5 -The   revision   petition   is   allowed,    without   any\n\norder as to costs.Sd/-K.VINOD CHANDRAN\n                                            JUDGE\n\n\n\n                                              Sd/-T.R.RAVI\n                                             JUDGE\nVku/-O.T.Rev.No.5 of 2016         - 6 -APPENDIX\nPETITIONER'S/S ANNEXURES:ANNEXURE A       TRUE COPY OF ASSESSMENT ORDER\n                 DATED 23-05-2012 ALONG WITH DEMAND NOTICE\n                 PASSED BY THE COMMERCIAL TAX OFFICER,\n                 KOYILANDY.ANNEXURE B       TRUE COPY OF NOTICE DATED 8-3-2012\n                 ISSUED BY THE COMMERCIAL TAX OFFICER,\n                 DEPARTMENT OF COMMERCIAL TAXES,\n                 KOYILANDY.ANNEXURE B1      TRUE COPY OF REVISED NOTICE\n                 DATED 10-04-2012 ISSUED BY\n                 THE COMMERCIAL TAX OFFICER, KOYILANDY.ANNEXURE C       TRUE COPY OF THE ORDER OF THE ASSISTANT\n                 COMMISSIONER (APPEALS), COMMERCIAL TAXES,KOZHIKODE IN VATA NO.665/12DATED 23-6-2014.ANNEXURE D       TRUE COPY OF ORDER OF THE KVAT\n                 APPELLATE TRIBUNAL, ADDITIONAL BENCH,\n                 KOZHIKODE DATED 9-9-2015 IN\n                 TA (VAT) NO.729/2014.ANNEXURE E       TRUE COPY OF INVOICE NO. 501 DATED 29/07/2006.ANNEXURE E1      TRUE COPY OF INVOICE NO. 502 DATED 29/07/2006.ANNEXURE E2      TRUE COPY OF INVOICE NO. 503 DATED 29/07/2006.ANNEXURE E3      TRUE COPY OF INVOICE NO. 504 DATED 02/08/2006.ANNEXURE E4      TRUE COPY OF INVOICE NO. 505 DATED 05/08/2006.ANNEXURE E5      TRUE COPY OF INVOICE NO. 506DATED 05/08/2006.ANNEXURE E6      TRUE COPY OF INVOICE NO. 507 DATED 09/08/2006.ANNEXURE E7      TRUE COPY OF INVOICE NO. 508 DATED 09/08/2006.ANNEXURE E8      TRUE COPY OF INVOICE NO. 509 DATED 07/10/2006.ANNEXURE E9      TRUE COPY OF INVOICE NO. 510 DATED 14/10/2006.ANNEXURE E10     TRUE COPY OF INVOICE NO. 511 DATED 21/10/2006.O.T.Rev.No.5 of 2016        - 7 -ANNEXURE F       TRUE COPY OF THE RELEVANT PAGES OF THE LEDGER\n                 ACCOUNT SHOWING THE PURCHASES AND SALES\n                 DURING 2006-07.ANNEXURE G       TRUE COPY OF THE STATEMENT OF ACCOUNT ALONG\n                 WITH COPY OF THE INCOME TAX RETURN AND\n                 ASST. ORDER AND AUDIT REPORT FOR THE\n                 FINANCIAL YEAR 2006-07.[TRUE COPY]