ESKEYEF LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS is a tax revision case filed by the petitioner under section 41 of the Kerala General Sales Tax Act, 1963. The assessee is the petitioner. The State of Kerala is the respondent. The assessment year concerned is 1989-90.

(2.) THE petitioner is a public limited company engaged in the manufacture and sale of medicines. THE company has a branch at Ernakulam. THE stocks required for sale at the Ernakulam branch are received by transfer from the head office at Bangalore. It is an assessee on the files of the Assistant Commissioner (Assessment), Sales Tax Office, Special Circle-I, Ernakulam. For the assessment year 1989-90 the petitioner filed a return declaring a total and taxable turnover of Rs. 2,40,36,961. 02 and Rs. 2,37,64,324. 60 respectively. THE assessing authority rejected the return and accounts and completed the assessment on best judgment basis estimating the taxable turnover at Rs. 2,37,64,324. 60. THE accounts were rejected on the ground that the officials of the Inter-State Investigation Cell intercepted lorry No. KRC 2973 at Kanakary in Kottayam District and found that medicines worth Rs. 3,05,576. 14 consigned form Bangalore to Ernakulam as evidenced by the documents covering the goods under transport were being transported beyond Kottayam towards Trivandrum and that the officers suspected the bona fides of the transport and collected an amount of Rs. 45,837 from the driver of the vehicle under section 29a (2) of the Act. Subsequently, the Sales Tax Officer (Enquiry) imposed a penalty equal to the amount of security as the petitioner-company failed to respond to the notice issued. It is on the basis of the penalty imposed under section 29a of the Act that the assessing authority estimated the taxable turnover by adding five times of the alleged purchase suppression of Rs. 3,05,576. 14.

(3.) LEARNED Special Government Pleader appearing for the respondent strenuously contended that the petitioner had diverted the goods consigned to Ernakulam to a different destination with the deliberate intention of evading the tax due on the said consignment. According to him, but for the interception of lorry No. KRC 2073 by the Inter-State Investigation Cell at Kanakary in Kottayam the said consignment would have escaped the levy of tax under the Act since the said transaction would not have found a place in the accounts of the petitioner. LEARNED Special Government Pleader further submitted that the Sales Tax Officer (Enquiry), conducted further investigation as contemplated under section 29a of the Act with notice and opportunity to the petitioner and imposed a penalty of Rs. 45,837, which was paid by the petitioner without demur. He therefore submitted that the addition sustained by the Tribunal was perfectly justifiable.