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2004 DIGILAW 365 (KER)

M. S. E. S. Attarwala v. State of Kerala

2004-08-06

CYRIAC JOSEPH, K.K.DENESAN

body2004
Judgment :- K.K. Denesan, J. This Sales Tax Revision has been filed by the assessee raising the following questions "A) Is not the order of the Tribunal improper and unsustainable under the facts and circumstances of this case? Is not the order of the Tribunal vitiated by a perverse appreciation of the evidence on record? B) Whether the lower authorities are justified in assuming that the impugned inter state purchases were made by the assessee merely on the checkpost declarations collected by the assessing authority? Is it not the burden of the revenue to corroborate the contents of the checkpost declaration with other cogent materials to case liability on the assessee? Is there any presumption in law that an assessee had effected interstate purchases merely on the basis of the checkpost declarations found at the checkpost? C) Is not the rejection of the return and books of accounts of the assessee in order to proceed with best judgment assessment in the instant case unjust and improper? D) Is not the addition of turnover in the process of best judgment assessment unjust and arbitrary, especially when the estimation was suggested merely on surmises and conjunctures? Is not the quantum of addition in the given situation excessive and arbitrary? 2. The revision petitioner, engaged in the business of plastic bottles, is a dealer under the Kerala General Sales Tax Act, 1963, for short the 'Act'. The assessment year relevant for the purpose of this case is 1999-2000. The assessee had filed return for the assessment year claiming exemption on the second sales of goods and declaring a total and taxable turnover of Rs. 15,84,685.73 and Rs.4,72,675.18. The assessing authority issued a pre-assessment notice proposing to complete the assessment on a best judgment basis rejecting the return and books of accounts of the assessee alleging various defects. The assessee did not file any objection against the pre-assessment notice. Hence on 30.6.2002 the assessment was completed on a best judgment basis estimating a total and taxable turnover of Rs.24,34,385.19 and Rs.16,91,010. This was done by making and addition of unaccounted purchases to the tune of Rs.2,19,411.06. The return and the books of accounts of the assessee were rejected stating that on verification of the accounts with reference to the check post declarations it was revealed that certain interstate purchases were not accounted in the books of accounts of the assessee. This was done by making and addition of unaccounted purchases to the tune of Rs.2,19,411.06. The return and the books of accounts of the assessee were rejected stating that on verification of the accounts with reference to the check post declarations it was revealed that certain interstate purchases were not accounted in the books of accounts of the assessee. The details of such transactions are as follows: - In addition to the above, the assessing authority limited the exemption claimed by the assessee on the ground that the assessee had disclosed high closing stock of taxable goods. 3. The assessee filed appeal before the Appellate Assistant Commissioner, Kozhikode. The Appellate Authority by order dated 9.10.2001 in STA 646/2001 practically confirmed the order of assessment except making a slight modification in respect of interstate purchases from M/s. Oriental Aromatic, Mumbai worth Rs. 12,382/-. Not satisfied, the assessee filed Second Appeal, T.A.307/2001 before the Sales Tax Appellate Tribunal, Additional Bench, Kozhikode. Before the Appellate Tribunal the assessee produced certain documents to substantiate the contention that In the following two transactions interstate purchases effected by the assessee by issuing Form C declarations were also not seen accounted in the books of accounts:- the alleged unaccounted interstate purchases were not real and that the assessee had nothing to do with those purchases. The Appellate Tribunal did not believe the version of the assessee. Accordingly the Tribunal confirmed the findings of the authorities below and dismissed the appeal as per order dated 30.4.2003. It is in the above circumstances that the assessee has filed the above revision. 4. We have heard the learned counsel for the revision petitioner. 5. The only contention urged before us by the learned counsel for the revision petitioner was that the checkpost declarations made by a third party in respect of interstate purchases showing the dealers within the State of Kerala as purchasers ought not to have been accepted as true and acted upon without corroborating materials. Learned counsel contended that on the sole ground that the person involved in an interstate purchase files a declaration showing the assessee as the purchaser there is no presumption in law that the assessee had made interstate purchases. According to the learned counsel the possibility of the declarants delivering goods to other dealers or consumers after showing somebody else' name in the checkpost cannot be ruled out. According to the learned counsel the possibility of the declarants delivering goods to other dealers or consumers after showing somebody else' name in the checkpost cannot be ruled out. Though we do not rule out the possibility of such false declarations being made while transporting goods involved in interstate sales and purchases, we cannot agree with the contention of the assessee that the authorities under the Act should discard the check post declarations. Checkpost declaration is a piece of evidence and the authorities are entitled to place reliance on that material in appropriate cases. A Division Bench of this Court in Metro Trading Company, Readymade Garments & Steel Dealers, Palakkad v. State of Kerala (1998) 6 KTR 549, had occasion to consider the relevance of check post declarations vis-a-vis the liability of the dealer named therein. The Court answered the issue in the following words: "Cardinal principle of law is that apparent state is the real state of affair unless proved otherwise and, therefore, we are of the considered view that the onus was on the dealer to prove that the aforesaid purchases were not made by it, but by someone else using its name. To discharge the onus, the dealer requested the assessing officer to issue summons to the consignee. The summons was issued, but it was returned with an endorsement that the consignee had left the premises for good. Nothing further could be done by the Department. Then the onus which was on the dealer could have been discharged by other evidence. But no such evidence was adduced by the dealer". 6. Of course, it may be argued that considering the limited sphere or resources within which a dealer who is a private party can successfully produce or cause the production of the alleged seller of goods or his agents situated beyond the territorial limits of the State and confront him with the check post declarations, the authorities under the Act should render all effective help within their powers to the assessee to make use of the opportunity to adduce evidence in rebuttal including the cross-examination of the declarant or other persons connected with the declaration or invoice and shall not adopt any indifferent or lethargic attitude by sitting with folded hands. We need not go into those aspects in this case because there is nothing on record to show that the assessee had made any attempt to make use of such opportunities to adduce evidence in rebuttal so as to demolish the probative value of the check post declaration. We do not agree with the contention of the learned counsel for the petitioner that the check .post declaration should be discarded as an irrelevant scrap of paper, though there is reason in saying that the declarations made at the check post cannot be blindly accepted as if they are true statements made by honest men. The declaration should be subjected to strict scrutiny. If the assessee challenges the genuineness of the declaration and takes steps to establish his plea, he should be permitted to challenge the correctness of the entries made in the check post declaration. Of course, the onus of establishing that the entries made therein are incorrect or false is on the assessee. In the case on hand, the revision petitioner did not make any attempt to prove that the purchases were not made by it but by someone else using its name. The assessee did not even make a formal request to the authorities to issue notice or summons to the consignee or the declarant. The assessee had no objection against the provisional findings contained in the pre-assessment notice. He simply ignored them. Thereafter when the assessment was completed, he took up the stand that without corroborative materials the check post declarations ought not to have been relied on. In the above circumstances no fault can be found with the authorities below in rejecting the contentions of the assessee. It follows that the question of law raised as No.B does not deserve consideration. 7. It is settled law that this Courtin the exercise of its re visional power under S.41 of the Act is not expected to disturb the findings of fact arrived at by the Appellate Tribunal unless they are shown to be perverse or based on wrong principles of law. We find that the Tribunal has placed reliance on relevant materials and has given cogent and convincing reasons to reject the objections raised by the assessee. Those findings are sustainable in law and do not call for interference. 8. For the reasons stated above, S.T.Revision is liable to be dismissed. We find that the Tribunal has placed reliance on relevant materials and has given cogent and convincing reasons to reject the objections raised by the assessee. Those findings are sustainable in law and do not call for interference. 8. For the reasons stated above, S.T.Revision is liable to be dismissed. We confirm the order of the Appellate Tribunal and dismiss the revision.