Judgment
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR & THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
MONDAY, THE 20TH DAY OF FEBRUARY 2023 / 1ST PHALGUNA, 1944 OT.REV NO. 84 OF 2019 AGAINST THE ORDER OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDL.BENCH, ERNAKULAM, IN VAT 33/2015 DATED 30.11.2018 REVISION PETITIONER/RESPONDENT/REVENUE:
STATE OF KERALA REP. BY DEPUTY COMMISSIONER OF STATE TAX (LAW), STATE GST DEPARTMENT, ERNAKULAM-682 011.
BY M.M. JASMINE, GOVERNMENT PLEADER RESPONDENT/APPELLANT/ASSESSEE:
M/S. FAVAZ TIMBERS INDUSTRIES EAST MARADY (PO), MUVATTUPUZHA-686 673.
BY ADVS.
SRI.P.N.DAMODARAN NAMBOODIRI SHRI.HRITHWIK D. NAMBOOTHIRI THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 20.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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A.K.JAYASANKARAN NAMBIAR & MOHAMMED NIAS C.P., JJ ............................................................
OT. REV. No. 84 of 2019 ..................................................................
Dated this the 20th day of February, 2023.
JUDGMENT A.K.Jayasankaran Nambiar, J.
The State is in revision before us in this OT. (Revision) raising the following questions of law for our consideration:
“1. Whether the Tribunal was right in holding that while completing the assessment the assessing authority has to establish that an assessee has purchased goods from a Sundry Creditor?
2. Whether the Tribunal was right in holding that the transaction between a Sundry Creditor and debtor is only a money transaction without verifying the bank account details?
3. Since Section 9 of the Kerala Value Added Tax Act, 2003 prescribes that the burden of proving that any transaction of a dealer is not liable to tax under the Act, shall lie on such dealer, was the learned Tribunal right in holding that the burden is upon the assessing authority to prove that the transaction between the dealer and their sister concern is not a money transaction?.
4. Whether in the facts and circumstances of this case, the learned Tribunal was right in dismissing the appeal filed by the State?”
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2. The brief facts necessary for disposal of the Revision are that for the assessment year 2006-07, the assessment of the respondent under the KVAT Act was completed inter alia by adding an amount of Rs. 45,738/- towards disallowance of a claim for discount made by the respondent assessee, and an amount of Rs. 11,31,341.75/- towards alleged suppression in purchase of goods from a sister concern of the respondent assessee.
3. Aggrieved by the addition of the said amounts, the respondent assessee preferred an appeal before the 1st Appellate Authority under the Kerala Value Added Tax Act (KVAT Act). The said authority found force in the contention of the respondent that, taking note of the negligible amount of discount received by the assessee, when compared to the turnover disclosed on the sale of timber and furniture items, the version of the assessee, that the amount in question was in fact discount received from various suppliers as evidenced by credit notes/ debit notes had to be believed.
4. The Appellate Authority also found that the amount of Rs.
11,31,341/- was only a cash transaction between the assessee and the sister concern and the department had acted on mere assumptions and presumptions in treating this amount as suppressed purchase value of goods allegedly purchased from the sister concern and arrived at a
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sales turnover by adding an element of gross profit to the said amount.
The addition of the said amount towards unaccounted sales was also cancelled by the 1st Appellate Authority.
5. In a further appeal carried by the State before the Appellate Tribunal, the Tribunal confirmed the findings of the 1st Appellate Authority on the said issues. The Tribunal also found that the business result of the assessee had showed high gross profit and there was no case of selling goods at subsidized prices and therefore, the discount received by the assessee for the year in question, which was also recorded in books of accounts and the trading, profit and loss accounts, had to be treated as such for the purposes of the assessment.
6. As regards the addition of the amount of Rs. 11,31,341/-, it was found by the Tribunal that the amount represented a money transaction which was not in any way related to any purchase or sale, and further, the transaction was properly recorded in the books of account and trading and profit and loss account of the assessee as a money transaction. The department had also not produced any evidence to establish that the said amount, which was recorded as a cash transaction, represented the turnover of any purchase by the assessee. The Tribunal therefore, upheld the order of the 1st Appellate Authority on the above said two issues.
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7. Although, it is submitted by Smt. M.M. Jasmine, the learned Government Pleader appearing on behalf of the State, that the finding of the Tribunal on the aforesaid two issues is erroneous, we find nothing on record that would lead us to take a contrary view. In our view, the 1st Appellate Authority and the Tribunal have gone by the books of accounts produced by the assessee as also the trading, profit and loss account while coming to the conclusion with regard to the real nature of the transactions that were called in question by the Assessing Authority.
Resultantly, we see no reason to interfere with the order of the Tribunal. This OT.Revision is, therefore, dismissed by answering the questions of law raised against the State and in favour of the respondent assessee.
Sd/-
A.K.JAYASANKARAN NAMBIAR, JUDGE Sd/- MOHAMMED NIAS C.P., JUDGE mtk
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APPENDIX OF OT.REV 84/2019 PETITIONER ANNEXURES ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER NO 32151442735/2006-07 DATED 14.6.2010 ANNEXURE B A TRUE COPY OF THE APPELLATE ORDER KVATA NO 1004/2011 DATED 29.11.2014 ANNEXURE C CERTIFIED COPY OF THE ORDER OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL ADDITIONAL BENCH, ERNAKULAM IN TA (VAT) NO 33/2015 DATED 30.11.2018