LAWS(KER)-2011-7-5

ARJUNA RAJA B Vs. STATE OF KERALA

Decided On July 05, 2011
ARJUNA RAJA Appellant
V/S
STATE OF KERALA Respondents

JUDGEMENT

(1.) The connected revision cases are filed by the assessee under S.63 of the Kerala Value Added Tax Act, 2003, challenging order of the VAT Appellate Tribunal confirming his assessment for 2006-2007. Two cases happened to be filed in the same matter because Tribunal dismissed the assessee's appeal and allowed the cross objection filed by the Revenue against the order of the first appellate authority granting partial relief to the assessee. We have heard counsel appearing for the petitioner and Government Pleader for the respondents and have perused the orders and records of the case.

(2.) The petitioner is a dealer in timber having main office in Tamil Nadu and Branch in Kerala. Timber fully imported from Malasia were first stocked in the godowns of the petitioner in Tamil Nadu, wherefrom it was stock transferred to the Branch in Trivandrum and sold there. Timber is an item on which tax is payable in advance at the Boarder Check Post when it is brought from outside for sale in Kerala. The payment of advance tax is based on the value fixed by the Commissioner through a Circular for various varieties of timber like teak, Purpleheart, Pincoda etc. The petitioner without any contest remitted tax at the Check Post on the entire loads of timber brought to Kerala during 2006-2007. However, after remittance of tax at the Check Post, the petitioner claimed refund of substantial amount of Rs.3,33,531/- in the returns filed stating that goods brought were sold at 3% above the purchase value. The Assessing Officer conducted enquiry and noticed that similar dealers selling imported timber have declared gross profit of 12.9% to 14% and, therefore, he rejected the return and made an addition of the minimum margin of 12% to the purchase value accounted by the petitioner and made assessment which led to rejection of petitioner's claim for refund and a demand for further tax. When petitioner filed appeal against the assessment, the appellate authority found that rejection of books of accounts is well - founded, but he made estimation of turnover by making a bulk addition of Rs.10 lakhs as against estimation of turnover made by the Assessing Officer by adding 12% gross profit to purchase turnover. The assessee filed appeal before the Tribunal challenging the order of the first appellate authority and Department filed Cross Objection against the same order. The Tribunal after elaborately considering the nature of business, gross profit declared by similar dealers and the value adopted by the Commissioner in the Circular based on which petitioner remitted the tax in advance at the Check Post without any contest, concluded that the assessment after rejection of accounts and by estimation of turnover by the officer was well - founded. Accordingly the Tribunal cancelled the first appellate authority's order and restored the assessment. It is against the very same order issued by the Tribunal the petitioner has filed these two revision cases.

(3.) Counsel for the petitioner contended that rejection of books of accounts is without any justification and the Tribunal went wrong in sustaining the estimation of turnover made by the Assessing Officer by making 12% addition towards gross profit to the purchase value declared by the petitioner. Government Pleader on the other hand submitted that the assessment is quite reasonable and in fact favourable to the petitioner because purchase value declared by him is accepted by the department even though petitioner was not engaged in any purchase of goods in India and purchases are only made from abroad, the value of which is not accounted in Kerala. The further contention made by Government Pleader is that without any contest petitioner paid tax at the Check Post based on the value of the commodity declared by the Commissioner vide Circular relied on in the Tribunal's order and after bringing and selling the goods in Kerala and after disabling the department to verify the type or quality of timber, the petitioner cannot go against admission of value made in the Check Post and payment of tax made thereon. Counsel for the petitioner has relied on various decisions of the High Court, particularly in C.O. Devassy v. State of Kerala, 1991 (81) STC 3 , Suzion Infrastructure Service Ltd. v. Commercial Tax Officer, 2010 35 VST 451, KMP Timbers v. Commercial Tax Inspector, 2010 (27) VST 536 and Decisions of The Supreme Court in Master Cables Pvt. Ltd. v. State of Kerala, 2007 (7) VST 355 and Steel Authority of India Ltd. v. Sales Tax Officer, Rourkea - i Circle and Others, 2010 (18) KTR 143 and The Decision In State of Rajasthan v. Rajasthan Chemists Assn., 2006 (147) STC 542 and contended that the department is bound to accept the sales turnover conceded by the assessee and the assessment should have been based on books of accounts.