Suppressed turnover and unregistered status can justify best judgment assessment and bar special rebate under Kerala VAT law.

Suppressed sales turnover detected during inspection may support best judgment estimation of purchase turnover where the dealer fails to prove lawful possession of stock or compliance with prescribed delivery-note requirements for job work movements, and prior compounding proceedings remain only relevant material rather than conclusive proof. The text also states that purchases exceeding the compulsory registration threshold can justify the assessment approach adopted under Section 6(2) of the Kerala Value Added Tax Act, 2003. Special rebate under Section 12 is unavailable to a dealer who was unregistered when the suppression was detected, particularly where the relevant turnover period preceded registration and the statute bars rebate to unregistered dealers.

---

---

Issues: (i) Whether the suppression of sales turnover detected by the Intelligence Officer and the consequent estimation of purchase turnover under Section 6(2) of the Kerala Value Added Tax Act, 2003 could be sustained; (ii) Whether special rebate under Section 12 of the Kerala Value Added Tax Act, 2003 was admissible to a dealer who was unregistered when the suppression was detected.

Issue (i): Whether the suppression of sales turnover detected by the Intelligence Officer and the consequent estimation of purchase turnover under Section 6(2) of the Kerala Value Added Tax Act, 2003 could be sustained.

Analysis: The assessee failed to establish that the stock found in the premises belonged to a registered dealer or that the movement of goods for job work was supported by the prescribed delivery notes. The purchases found on inspection exceeded the statutory threshold for compulsory registration under Section 15. The earlier compounding proceedings were only relevant material and not conclusive, and the assessee did not displace the facts by cogent evidence. On the materials, the best judgment adoption of the detected suppression and the estimation of purchases at 90% of the suppressed sales turnover was justified.

Conclusion: The assessment on the basis of detected suppression and the estimation under Section 6(2) were upheld against the assessee.

Issue (ii): Whether special rebate under Section 12 of the Kerala Value Added Tax Act, 2003 was admissible to a dealer who was unregistered when the suppression was detected.

Analysis: The registration was obtained only after detection of the offence. The turnover adopted for assessment and the related estimation under Section 6(2) both related to a period prior to registration. Section 12(2) specifically barred grant of special rebate to an unregistered dealer, so the rebate could not be allowed consistently with the statute.

Conclusion: Special rebate under Section 12 was not admissible and the assessee's claim failed on this issue.

Final Conclusion: The assessment was substantially sustained, but the further addition for probable omissions and suppression was scaled down, while the claim for special rebate was rejected.

Ratio Decidendi: Compounding proceedings are only relevant, not conclusive, in assessment; where the assessee fails to prove lawful possession and prescribed documentation for stock and purchases, best judgment estimation of suppressed turnover may be sustained, and a statutory rebate barred to unregistered dealers cannot be granted.

---