STATE OF KERALA Vs. M.M. ENTERPRISES

JUDGEMENT

(1.) The revision petitioner is the State and the respondent is a dealer in Cement and Steel. State challenges the order of the Tribunal which reversed the order of assessment under section 25 of the Kerala Value Added Tax Act, 2003 (hereinafter referred to as "the Act") modified by the first appellate authority. Though the assessee/respondent was issued notice and was served, there is no appearance and we proceed to dispose of the revision after hearing the Government Pleader. The dealer filed the annual returns in form 10 showing the total sales turnover above Rs. 40,00,000 for the year 2008-09. On verification of the returns and books of accounts, it was found that certain purchases have not passed through the regular books of accounts maintained by the dealer and that certain excess invoices were noticed for the year. It was proposed to reject the claim of Rs. 11,542.78 and Rs. 17,436.22 as input-tax credit respectively for the months of February and March 2009. The proceedings were taken under section 25 of the Act, which deals with "assessment of escaped turnover". Best judgment assessment was made by adding unaccounted purchases as also 11/2 time of such unaccounted purchase for probable omission and suppression. Gross profit at 25 percent was added to arrive at the total sales turnover. Annexure A order passed under section 25 of the Act was challenged in first appeal which ended in annexure B, wherein the aspect of duplication of bills raised in assessment was directed to be reconsidered by assessing officer. Rejection of input-tax credit was confirmed and addition was reduced to equal amount of the suppression with similar deduction of gross profit to 10 percent.

(2.) Assessee not satisfied with the modification approached the Value Added Tax Tribunal by way of second appeal as provided under the statute. The Tribunal by annexure C order remanded the matter, however, making certain observations regarding the action of the assessing officer in resorting to best judgment assessment under section 25 of the Act.

(3.) The Tribunal held that the appellant/assessee is entitled to file revised return as contemplated under section 42(2) of the Act, and having filed the audited statement of accounts and revised return as per audited report along with tax due, interest and settlement fee, the purchases should be held to be accounted for and consequent credit of input tax granted. The Tribunal found that explanation tendered by the assessee being valid, there cannot be any assessment for escaped turnover under section 25 of the Act and that eligibility to file revised return under section 42(2) cannot be taken away. Mandate of rule 22(4) of the Value Added Tax Rules, 2005, it was held, could not override the provisions of section 42(2). Rejection of input-tax credit was also remanded to the assessing authority with the observation that the same is allowable on submission of purchase bills subject to the stipulation in the Act and Rules and also on there being evidence to the effect that consignors have reported the sales to the assessing authority and accounted the transaction. The assessee then was held to be entitled to the benefit of input-tax credit. In such circumstances, the issues were remanded for consideration by assessing officer. The question of law raised by the State regarding input-tax credit does not arise from the order of the Tribunal, since it is an open remand. We have already held in Mohammed Haji (M) v. State of Kerala, 2013 63 VST 317 (C. No. 19) that a dealer who has suppressed purchases is disentitled from claiming input tax despite the suppressed purchases having suffered tax. With respect to the assessment under section 25 of the Act, the remand is futile in so far as the Tribunals findings on sub-section (2) of section 42 obliges the assessing officer to accept the books of accounts.