ARGUS INTERNATIONAL Vs. ASSISTANT COMMISSIONER ASSESSMENT

JUDGEMENT

(1.) Petitioner is challenging exhibits P15 and P16 orders of assessment issued by the first respondent under Section 19B of the Kerala General Sales Tax Act, 1963. The petitioner is a manufacturer of "Cuticura" brand of talcum powder for the brand name holder M/s. Mullar & Phipps (India) Limited, the third respondent herein. The petitioner's factory is located at Madras wherefrom the product is stock transferred to Kerala and sold to the brand name holder for marketing in the State. The first respondent found that as against the normal margin of 15 per cent in the nature of wholesale trade of the product, the brand name holder resold the item after purchase from petitioner at a gross profit of 55.05 per cent. The first respondent, therefore, rejected petitioner's sales consideration and made assessment under Section 19B of the KGST Act. The turnover adopted for first sale by petitioner is 85 per cent of the sales turnover of the brand name holder, i.e., by providing a margin of 15 per cent towards gross profit. In fact, the original assessment orders were subjected to appeals and the impugned orders are issued after remand by the appellate authority once.

(2.) I heard learned Counsel for the petitioner and learned Government Pleader. In order to appreciate the contentions, the relevant section under which assessments are made has to be looked into. Therefore, Section 19B of the KGST Act is extracted hereunder:

(3.) The contention of the petitioner is that Section 19B provides for assessment of actual sale proceeds received, and there is no justification to add another dealer's margin to the turnover of the petitioner. The learned Counsel for the petitioner relied on two Division Bench decisions of this Court, one of which is in Deputy Commissioner of Sales Tax (Law) v. Kerala Distilleries & Allied Products (P.) Ltd.,1993 9 STC 58 and another in C.O. Devassy v. State of Kerala, 1991 81 STC 2. The learned Government Pleader has relied on the judgment in S. T. Rev. No. 227 of 2003 dated January 5, 2004 wherein a Division Bench of this Court has held that in the case of tax evasion, the assessing officer will be entitled to make assessment under Section 19B, and submits that the petitioner's case is clearly covered by the said decision. The first case, above referred, relied on by the petitioner pertains to manufacture and sale of product by a dealer in Kerala to the brand name holder, which is also within Kerala. So far as the second decision of this Court is concerned, it has nothing to do with the product with a brand name.