NITHIN JOSE Vs. STATE OF KERALA

JUDGEMENT

(1.) These Sales Tax Revision cases are filed against order of Tribunal sustaining sales tax assessments for the years 2001-02, 2002-03 and 2003-04. The petitioner's case is that though he was doing business in packing materials from 1996-97 onwards, he closed the business in 2000 and joined for higher studies in Management. However since his accountant was to close the business and cancel the registration, he had signed some blank papers which were used by the accountant for bogus transactions including issue of Form 18 for purchase of raw materials in collusion with dealers of timber. The Government Pleader on the other hand contended that the timber dealer in Chalakudy namely JJ Timbers, produced Form 18 declarations issued by the petitioner for purchases made and based on the details contained in the declarations issued by the petitioner and produced by the dealer, petitioner's turnover was estimated and assessment was made. In fact in parallel proceedings for penalty, the petitioner conceded the omissions and remitted compounding fee at the rate of Rs.2,00,000/- each for the first two years and Rs.1,35,000/- for the last year. On going through the orders of the Tribunal we notice that the assessment is sustained basically relying on the admission made by the petitioner in compounding.

(2.) After hearing both sides and after going through the records we feel some foul play may have taken place and petitioner would have been induced to compound the offences to finally settle the matter. Senior counsel appearing for the petitioner contended that he has instituted proceedings against JJ Timbers for the fraud committed on him. In any case we do not want to express our opinion about the transactions between the petitioner and JJ Timbers or the fraud that may have committed by JJ Timbers against the petitioner. However we are not inclined to accept the argument of the learned counsel appearing for the petitioner that compounding should not have been relied on for the purpose of sustaining assessment. We notice that the compounding fee paid for the three years is Rs.5,35,000/-. We are of the view that no one would pay such a huge compounding fee without any involvement in the transaction. However there is nothing to indicate in the assessment orders that the department has made any enquiry about the availability of goods with the supplier and the genuineness of the transaction in as much as even the documents used for transport was not called for from the seller. We therefore feel addition made to the actual turnover disclosed in Form 18 is not justified in this case. We therefore allow the revision in part by deleting the addition made to the turnover but by sustaining the assessment on the actual turnover collected from Form 18 and along with 10% towards G.P. The orders of the first appellate authority as well as the Tribunal will stand reversed to this extent. The Assessing Officer is directed to modify the assessment as above. We feel some clarification as interest is required in this case because in our view interest under S.23(3A) is not payable because petitioner has not filed any return and department has not called for the same. In fact the very transaction itself is denied by the petitioner and according to him business was closed and Form 18 declaration produced by the supplier was bogus. Even though S.23(3A) authorises levy of interest on the unpaid tax which is the difference between assessed tax and tax paid along with returns, we feel in this case this Section has no application because there is no evidence that petitioner was carrying on business on a regular basis and admittedly he has not filed any monthly or annual return for any of the three years. In the circumstances we direct the officer to limit the levy of interest under S.23(3) of the KGST Act for the delay in payment of actual tax fixed as directed above after service of notice on the petitioner along with assessment orders issued. We also make it clear that the petitioner is free to continue his proceedings initiated by him against the JJ Timbers or any other party and our findings in the revision case should not stand in the way of authority including Court giving to any independent finding in the case between the parties.