2012 (7) TMI 1078

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....sing authority not having independently considered the issue while making estimation of gross profit. In the two subsequent years, the assessee applied and was granted facility to pay tax at compounded rates as per Section 7 of the Kerala General Sales Tax Act, 1963. The challenge in the said revisions are against the determination of the tax payable under the compounding scheme on the basis of the best judgment assessment made for the year 2008-09. Since the issues are connected and related, we heard the matter together. 3. The first issue to be considered is with respect to the best judgment assessment made for the year 2008-09. The assessee having filed its returns and the books of accounts, the same were rejected for various reasons,....

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....t proceedings, the same cannot at all be conclusive, as held by a Division bench of this Court in Velimparambil Hardwares V. State of Kerala 1994(92) SCC 98. The materials recovered on inspection and relied on by the Intelligence Officer necessarily can be and has to be considered in assessment proceedings. However, what is required is an independent application of mind to such materials and an occasional sale for a high gross profit, especially of a particular brand cannot lead to an estimation of the gross profit on the entire purchase turnover at the said rate. It is to be noticed that in the relevant year provision for compounding provided for 140% of the purchase value of liquor evidencing that the Government itself considered 40% to b....

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....ssessment made in the year 2008-09. The learned counsel for the assessee would contend that this is palpably wrong. In so far as the section speaks about the highest turnover tax payable by an assessee as conceded in the return or accounts; it does not contemplate assessed tax is the contention raised by the assessee. The learned counsel for the assessee also relied on a judgment of a Division bench of this Court in State of Kerala v. Malabar Ornaments(P) Ltd., (2011) 19 KTR 413(Ker). 6. For the purpose of considering the issue it would be useful to extract the relevant provisions which is the subject matter of the above revision as also the provision interpreted by the Division bench in Malabar Ornaments case (Supra). The provision r....

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.... during any of the three consecutive years preceding that to which such option relates." 7. What we notice is that the provision interpreted in Malabar Ornaments case (supra) more specifically Section 8(f) (i) of the Kerala Value Added Tax Act, 2003 uses the words "higher tax payable by him as conceded in the return or accounts". Section 7 relevant to this revision has in addition the words "or the turnover tax paid". The words "turnover tax paid" for any of the previous consecutive three years would definitely take in the assessed tax. The legislature could not have assumed that the assessment of the previous years would not be completed before grant of the facility in the subsequent year; to pay tax at compounded rates. This would defi....