SULTAN GOLD INTERNATIONAL Vs. STATE OF KERALA

JUDGEMENT

(1.) Question raised is whether the Tribunal was justified in declining rebate of tax under S.12(1)(a) of the KVAT Act read with R.38(5) of the KVAT Rules on the purchase turnover of old gold ornaments from the tax determined on estimated turnover based on inspection done during the return period, August 2006. We have heard counsel for the petitioner and also Government Pleader appearing for respondents. The petitioner is a gold dealer in Kasaragod whose place of business was inspected on 9.8.2006. Massive suppression of sales of ' 45 lakhs was found out which was for the four hours business carried on the date of inspection. Based on the inspection, turnover for the return period August 2006 was estimated by making addition of three times to the actual suppression besides treating the suppression itself as turnover. To make up for the suppressed purchases, 80% of the addition on sales turnover was treated as purchase suppression and tax was demanded under S.6(2) of the Act. Even though petitioner claimed rebate of tax on purchase under S.12(1)(a) read with R.38(5), the Assessing Officer who made best judgment assessment under Section 24 declined it. In first appeal quantum relief as well as rebate was allowed. However, on second appeal by the State, Tribunal reversed it restoring the assessment. It is against this order of the Tribunal petitioner has filed the appeal.

(2.) Since the controversy is only on the eligibility for rebate of purchase tax assessed on estimated turnover, we have to necessarily refer to the relevant Section and the Rule which are extracted hereunder: