UNITED EMTERPERSES HOTEL RACHANA Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THE matter arises under the K.G.S.T. Act, 1963 (hereinafter referred to as 'the Act'). The petitioner is a partnership-firm doing business of running a bar attached hotel by name "Hotel Rachana" at Chalakkudy. It is an assessee on the files of the Sales tax Officer, Chalakkudy. For the assessment year 1989-90 the petitioner filed a return showing a total and taxable turnover of Rs. 12,70,323 and Rs.2,34,369 respectively. The assessing authority completed the assessment by its order dated 21st March, 1992 fixing the total and taxable turnover at Rs. 13,25,156.94 and Rs. 2,81,060 respectively. The taxable turnover under restaurant section declared was Rs. 2,34,369. The turnover under S.5A fixed included purchase turnover of cooking gas worth Rs. 7,267 without bills.

(2.) THE assessing authority later issued a notice dated 12th January, 1995 (Ext. P2) under S.19 of the Act in respect of three assessment years 1989-90, 1990-91 and 1991-92, inter alia, stating that during the assessment year 1989-90 the petitioner had purchased goods for Rs. 3,35,125.80, that the petitioner had conceded only a sales turnover of Rs. 2,34,200, that generally in bar attached hotels the sales turnover under restaurant section must be atleast 1 1/2 times of the purchase value of goods used for the preparation of cooked food which is an acceptable norm in the line of business and the turnover disclosed is nearly 70 per cent of the cost of goods only which is not acceptable. It is therefore stated in the notice that the turnover should have been fixed at Rs. 5,02,689 as against the conceded turnover of Rs. 2,34,200 and therefore it is clear that there is an escapement of turnover to the extent of Rs. 2,68,220 which has resulted in a short levy of sales tax, additional sales tax and surcharge Rs. 35,688. The petitioner filed his reply dated 21st March 1985 (Ext. P-3). The petitioner had also raised an additional objection in respect of the assessment year 1989-90 that the reassessment is barred by limitation. According to the petitioner, the proposal for reassessment under S.19 of the Act in respect of the assessment year 1989-90 was dropped being barred by limitation. The second respondent, the Deputy Commissioner of Agricultural Income Tax and Sales Tax, Thrissur thereafter issued a notice dated 7th March, 1993, (Ext. P-5) under S.35 of the Act in respect of the assessment year 1989-90 pointing out the fact that as against the purchase turnover of Rs. 3,35,125.80 used for preparation of cooked food for sale the turnover conceded is only Rs.2,34,369, i.e. only about 70 per cent of the cost of goods consumed and that generally the sales turnover under food items will be at least 1 1/2 items of purchase value of goods used for preparation of food and there is escape in the taxable turnover of food items under restaurant section and short levy of tax. It is also stated that the turnover under S.5A of the Act fixed includes purchase turnover of cooking gas worth Rs.7,269 without bills which is taxable at 15 per cent as against 5 per cent levied in the order, which also resulted in short levy of tax. It was further stated that the second respondent proposed to set aside the assessment in exercise of its powers conferred under S.35 of the Act and to remand the case to the assessing authority to dispose of according to law. The petitioner was directed to file objections, if any, to the said proposal. The petitioner has challenged this notice in this Original Petition.

(3.) SRI . N.N. Divakaran Pillai, learned Counsel appearing for the petitioner submits that the assessing authority had completed the assessment of the petitioner for the year 1989-90 after due consideration of all the aspects and that the assessing authority sought to reopen the assessment for the year under S.19 of the Act and dropped further proceedings in view of the bar of limitation. The counsel on the basis of the aforesaid factual situation submitted that the second respondent Deputy Commissioner has no power to invoke S.35 of the Act for the purpose of getting at escaped turnover for which the only remedy provided is S.19 of the Act. He also submits that in exercising the power under S.35 it would not be permissible to the Deputy Commissioner to trench upon the power of the assessing authority under S.19 of the Act. He also submits that even if such a power is to be invoked, it can only be subject to the other provisions of the Act, in this case within the time provided for making re-assessment under S.19 of the Act. The Counsel in support of the said contention has relied on the decision of the Supreme Court in State of Kerala v. Cheria Abdulla and Co. (1965 (16) STC 875) and the decision of the Karnataka High Court in Bidar Sahakar Sakkare Karkhane Ltd. v. State of Karnataka (1985 (58) STC 65) besides other decisions.