U K MONU Vs. STATE OF KERALA

JUDGEMENT

(1.) Interesting questions regarding the scope and ambit of circulars issued with the purpose of plugging evasion, in deciding the question of tax liability and the invocation of powers of estimation of turnover and the resultant quantification of tax evaded for the purposes of determining penalty are raised in the above revision.

(2.) The facts are not in dispute and suffice it to say that the dealer, engaged in the business of purchase and sale of timber, imports the same into the State of Kerala and sells it within the State. At the entry check post, as is prescribed by Circular No. 28/2008 dated 19/06/2008 of the Commissioner of Commercial Taxes, each consignment is required to be cleared after payment of advance tax at the floor rate prescribed therein for each variety of timber. The assessee having paid the same, brought it to the business premises / yards from where subsequent sales were effected within the State of Kerala, attracting tax under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as "the KVAT Act").

(3.) The controversy in the instance case arose from an inspection conducted by the Intelligence Wing of the Commercial Taxes Department in the business premises of the assessee. The books of accounts having been verified, the Department alleged that the sale of timber being at rates lesser than that prescribed in the aforesaid circular; leads to undervaluation and consequent evasion of tax, warranting an imposition of penalty under S.67 of the KVAT Act. That the advance tax was paid as per the circular and sales were effected at rates below the floor rate prescribed under the circular are admitted.