STATE OF KERALA Vs. FEROKE TIMBER TRADERS

JUDGEMENT

(1.) The question raised in the three revisions filed by the State is whether the Tribunal was justified in holding that the Assessing Officer of the selling dealer is bound to accept Form 18 issued by purchasers who are also registered dealers. We have heard Special Government Pleader appearing for the State and counsel for the respondents.

(2.) The assessments under appeal are the monthly assessments of December, 2003 and January and February, 2004. We are told that the regular assessment for the whole year is not completed and on account of detailed investigation carried on with regard to transactions in timber by several dealers, assessment is getting delayed. Since regular assessment for the whole year is not completed, we feel the provisional assessments concluded by Tribunal's order can be set aside and remanded for making regular assessment for the whole year after which monthly assessments will not survive. However, the State has raised serious objection against the findings of the Tribunal that entries contained in Form 18 issued by the purchasers are binding on the departmental authorities. Form 18 is a statutory form prescribed for purchasing dealers to claim concessional rate of tax for purchase of articles for use as industrial raw materials, packing materials etc. No doubt, Form 18 is prescribed under Rule 28 of the KGST Rules and if the purchaser issues misdeclaration, there is provision for penalty on the purchaser. In fact, the Tribunal has referred to the decision of this Court in Dy. Commissioner of Sales Tax, Board of Revenue, Ernakulam v. Bharath Refineries Ltd., Madras reported in 1978 (42) STC 225 . We do not think the principle laid down by this Court stands in the way of the Assessing Officer examining whether sales against which Form 18 is issued, are genuine. If the transactions are bogus to defraud Revenue, then neither the bogus sale bills nor Form 18 issued containing bogus entries will bind the officer. The position laid down by this Court applies only to a genuine sale between two registered dealers wherein the selling dealer collects tax based on the representation and undertaking given by the purchasing dealer in the declaration issued. The decision goes to lay down nothing beyond this position. In other words, if transactions shown in the Form 18 are found to be bogus, it is open to the officer to conduct investigation, find out actual transactions, identify sellers and buyers liable for tax and proceed to levy tax or penalty in accordance with law. We, therefore, allow the revision cases vacating the findings of the Tribunal and that of the First Appellate Authority to the extent indicated above and by remanding the matter to the Assessing Officer for completion of regular assessments for the relevant year and other years, if pending.