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Issues: (i) Whether the Tribunal was justified in declining to consider the assessee's contention that the estimated turnover under the Kerala Value Added Tax Act, 2003 was unsustainable because no local sales were detected and the transactions were only inter-State movements. (ii) Whether the best judgment assessment under section 24 of the Kerala Value Added Tax Act, 2003 could extend to the whole year on the basis of detected instances of suppression and the statutory scheme in rule 39(5) of the Kerala Value Added Tax Rules, 2005.
Issue (i): Whether the Tribunal was justified in declining to consider the assessee's contention that the estimated turnover under the Kerala Value Added Tax Act, 2003 was unsustainable because no local sales were detected and the transactions were only inter-State movements.
Analysis: A pure question of law arising from the materials already on record can be examined even if it was not elaborately urged before the lower authorities. The Tribunal, being a fact-finding body, could verify whether the factual basis existed for the contention that the disputed turnover related only to inter-State movement and not to taxable local sales. Rejection of the contention merely on the ground of want of prior raising was therefore not proper.
Conclusion: The Tribunal's refusal to consider this contention was not justified.
Issue (ii): Whether the best judgment assessment under section 24 of the Kerala Value Added Tax Act, 2003 could extend to the whole year on the basis of detected instances of suppression and the statutory scheme in rule 39(5) of the Kerala Value Added Tax Rules, 2005.
Analysis: Rule 39(5)(i) restricts the assessment to the relevant return period only where the irregularity is confined to one period and no pattern of suppression is shown. Rule 39(5)(iii), however, permits assessment for all return periods where a pattern of suppression is made out. On the facts recorded, the authorities proceeded on the basis of repeated excess transport, under-valuation, and a continuing modus operandi, which supported the inference of a pattern of suppression. In that situation, limitation of the assessment to only the two detected months was not warranted.
Conclusion: The best judgment assessment for the whole period was not illegal on this ground.
Final Conclusion: The revision succeeded because the Tribunal failed to examine a material legal contention on the available record, and the matter was sent back for fresh consideration in accordance with law.
Ratio Decidendi: A pure question of law founded on the existing record may be considered even if not fully urged below, and where a pattern of suppression is established, rule 39(5)(iii) permits best judgment assessment for all applicable return periods.
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