2020 (6) TMI 274

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.... manufacturing of gold ornaments carried on behalf of third party jeweller's on job work basis. The assessee's place of business was subjected to inspection on 26.09.2013 wherein huge stock of gold and ornaments were detected. The Intelligence Wing detected actual suppression of sales of Rs. 3,33,69,622/-. The assessee compounded the offences alleged; which also included failure to take registration under the Kerala Value Added Tax Act, 2003 (hereinafter "the KVAT Act") and paid an amount of Rs. 8 lakhs as compounding fee. On assessment proceedings being carried out, the turnover suppression detected by the Intelligence Officer was adopted and the Assessing Officer added 90% of the said turnover as liable to tax on purchases made, under....

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....the assessee confined their work to job works for jeweller's. Invoices issued by JOSCO Jewellery was produced before all the authorities which were not taken into account. The learned Counsel relies on Velimparambil Hardwares v. State of Kerala [92 STC 98] to contend that, having proved the factum of the assessee having not indulged in any purchase or sale of gold or gold jewellery, necessarily there could not have been a best judgment assessment made, despite the assessee having compounded the offence detected on inspection. On the contentions raised by the State in its revision, it is argued that the assessee had subsequently taken registration and in such circumstances, the special rebate ought to be granted to the assessee. At the time ....

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....n the State's appeals the only question arising is as to; Whether the Tribunal erred in allowing the Special rebate under Section 12, in the context of the specific prohibition under sub-section (2) of Section 12? 8. We are unable to accept the submission of the assessee that they were only carrying on job works especially finding purchase and sales having been carried out. The purchases made are of more than Rs. 19 lakhs which itself is above the limit prescribed under Section 15 of the KVAT Act for the purpose of compulsory registration. We also accept the contention of the State that the invoices and receipts of a particular jeweller produced before the lower authorities were not sufficient to prove that the stock found in the pre....

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.... the assesse's hands as per the permissible mode and with supporting prescribed documents, under the KVAT Act. In such circumstances, we do not find any reason to interfere with the assessment made adopting the sales turnover as detected by the Intelligence Officer. 11. With respect to the purchase turnover, it is very clear from the records that the assessee had not been maintaining proper books of accounts and there were purchases made of gold and sale of ornaments. The mere fact that the sale effected was minimal would not detract from the fact that the assessee would have probably suppressed other transactions also for which there would be no material available. The purchases found on inspection, to have been made, were above the ....

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....on. 14. On the above reasoning question No.1 and 2 with respect to the adoption of suppression of sales turnover and the estimation made of the purchase turnover at 90% of the sales turnover is found to be perfectly in order and in accordance with the provisions of the Act. The said questions are answered against the assessee and in favour of the Revenue. 15. We are quite conscious of the fact that there would be no question of law arising from the assessment made insofar as the equal addition as made by the Assessing Officer and affirmed by the Tribunal with respect to both the liability under Section 6 and Section 6(2). However considering the contention of the assessee that the assessee had been carrying on job-works as also the fa....