Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH MONDAY, THE 24TH DAY OF JULY 2023 / 2ND SRAVANA, 1945 WP(C) NO. 6073 OF 2018 PETITIONER:
M/S. VENKATESHWARA HATCHERIES LTD.
DOOR NO.1/2016, KALLEKULANGARA.P.O.DHONI ROAD, PALAKKAD- 678 009 REPRESENTED BY ITS DY.
GENERAL MANAGER(FINANCE & ACCOUNTS),M.G.
VENUGOPALAN BY ADVS.
SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON RESPONDENTS:
1 THE ASST. COMMISSIONER OF STATE TAX STATE GST DEPARTMENT,SPECIAL CIRCLE PALAKKAD- 678 001 2 THE COMMISSIONER OF STATE GST TAX TOWERS, KILLIPPALAMKARAMANA, THIRUVANANTHAPURAM- 695 005 RESHMITHA RAMACHANDRAN- GOVERNMENT PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24.07.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WPC No.6073 of 2018 2 JUDGMENT Dated this the 24th day of July, 2023 1.
Heard Sri.Harisankar V.Menon, learned counsel for the petitioner as well as Ms.Reshmitha Ramachandran, learned Government Pleader appearing for the respondents.
2.
The petitioner has filed this writ petition impugning two assessment orders dated 01.12.2017 passed by the Assistant Commissioner of State Tax, State GST Department, Kerala, Special Circle, Palakkad for the assessment year 2014-15 and 2015-16 respectively, whereby demand of Rs.7,58,113/- as deficit tax paid by the petitioner had been levied.
3.
The ground taken by the department that the petitioner had sold the Day Old Chicken at the rate of Rs.20.68/-, whereas as per KEPCO, a Government of Kerala undertaking, the average
WPC No.6073 of 2018 3 selling price of Day Old Chicken was Rs.27.83 during the assessment year 2014-15 and in the assessment year 2015-16, the petitioner had sold the Day Old Chicken at the average rate of Rs.22.23/- per Chick, whereas the KEPCO, the Government of Kerala undertaking, the average rate of Day Old Chicken was Rs.22.62/- per chick.
The assessment authority, therefore, found that the petitioner had undervalued the item, which was sold by it in the market.
4.
The sole basis for arriving the said conclusion of under valuing the Day Old Chicks sold by the petitioner was the price difference of the petitioner with KEPCO. Learned counsel for the petitioner, submits that such an assessment of the revenue has been repelled by a Division Bench of this Court in the case of U.Manikandan v. the Assistant Commissioner of State Tax and others,[2020 ICO 854], decided on 26.06.2020,
WPC No.6073 of 2018 4 wherein it has been held that the reason of the assessing officer for rejecting the book of accounts merely on the ground that a PSU sells Day-Old Chicks at a price higher than that of the assessee, was not justified and the basis adopted, being the sale price of another dealer, that too a PSU, has no reasonable nexus with the estimation made.
5.
Ms.Reshmitha Ramachandran, learned Government Pleader does not dispute that the case of the petitioner is squarely covered by the said judgment of the Division Bench of this Court.
6.
Paragraph 16 of the judgment in the case of U.Manikandan (supra) reads as under:
“16. In this context, we have to pertinently observe that when best judgment is resorted to as has been held in (1973) 2 SCC 137 [The Commissioner of Sales Tax, Madhya Pradesh V. M/S H.M.Esufali,] the Courts will have to first see whether the accounts maintained by the assessee was rightly rejected as unreliable and then as to whether the basis adopted in estimating the turnover has a reasonable nexus with the estimate made. We are quite conscious of the fact that H.M Esufali was a
WPC No.6073 of 2018 5 case in which the statutory remedies were exhausted and what was impugned before the Supreme Court, was the judgment of the High Court in a statutory revision. We are in Article 226 and if there were any adjudication of facts required we would have definitely restrained ourselves from interfering with the assessment. We also agree with the learned Senior Government Pleader that there is no question urged of the provision of law, under which the assessment was made, being ultra vires. Nor is there any allegation of violation of principles of natural justice. We garner support from Gujarat Ambuja Cements Ltd to find that the proceedings itself is an abuse of process of law for reason of the Assessing officer having rejected the books of accounts merely on the ground that a PSU sells day-old chicks at a price higher than that of the assessee. The estimation made is on the basis of the books of accounts of the PSU and there was no defect, omission or suppression detected from the books of accounts maintained by the assessee. We find that the rejection of books of accounts of the assessee was not justified and the basis adopted, being the sale price of another dealer, that too a PSU, has no reasonable nexus with the estimation made. We hence set aside the assessment only to the extent the additions were made based on the sale price of day- old chicks of KEPCO, on the particular facts of this case.”
WPC No.6073 of 2018 6 Having considered the facts and submissions as well as the judgment of the Division Bench in U.Manikandan (supra), this writ petition is allowed and the impugned assessment orders dated 01.12.2017 are hereby set aside. Consequences to follow.
Sd/- DINESH KUMAR SINGH JUDGE AP
WPC No.6073 of 2018 7 APPENDIX OF WP(C) 6073/2018 RESPONDENT EXHIBITS EXHIBIT R1 (a) TRUE COPY OF AUDIT OBJECTION No. RSA (HQ)II/CT-IV/16-20/17-18/966 DATED 08.09.2017 PETITIONER EXHIBITS EXHIBIT P1 COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2014-15 DATED 1.12.2017 EXHIBIT P1(A) COPY OF ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR THE YEAR 2015-16 DATED 1.12.2017 EXHIBIT P2 COPY OF ORDER IN WPC NO 5044/2018 OF THIS HON'BLE COURT DATED 15.2.2018