TaxTMI 
TaxTMI 
2021 (12) TMI 952
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....n of tax. 3. The Revenue has found out similar systematic undervaluation of chicken for the purpose of books and paying or evading payment of tax under the Act by five dealers. The five dealers are alleged to be the close relatives of P.T Johnson/dealer herein. The Revenue initiated proceedings under Section 67 of the Act for the assessment year 2008-09. The Revenue finally imposed penalty of Rs. 3,11,39,550/through the order dated 30.10.2012, marked as Annexure-A. Broadly stated, the penalty proceedings are initiated on the basis of undervaluation, resulted in estimation of turnover and details in the income tax returns filed by the dealer are contradictory. The circumstances relied on by the Revenue for imposing penalty under Section 67 of the Act are not adverted to in our judgment, for, the views/conclusions taken by the Appellate Authority and the Tribunal on the question of violation of principles of natural justice are mainly reviewed. The dealer aggrieved by the order in Annexure-A, filed appeal before the Deputy Commissioner (Appeals) and the Deputy Commissioner, through the order dated 29.10.2013 set aside the order in Annexure-A dated 30.10.2012 and remanded the case to....
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....nnected matters are filed. The learned Senior Government Pleader seeks an adjournment to address arguments further." 6. We have heard Mr. Mohammed Rafiq, Special Government Pleader, and Mr. K.Srikumar, the learned Senior counsel for parties. 7. Mr. Mohammed Rafiq, keeping in perspective the order dated 22.12.2015 and also the scope of revision under Section 63 of the Act, argued with sufficient emphasis two grounds viz. remand by the Deputy Commissioner as illegal and violation of principles of natural justice that were unsuccessfully raised by the Revenue before the Tribunal. Stated, it is argued that the notice issued under Section 67 of the Act, dealt with all commissions and omissions of the dealer noticed by the Revenue, warranting initiation of action under Section 55 of the Act. The dealer is not exonerated by denying each one of the accusations made against the dealer. The dealer is, therefore, under obligation to satisfactorily place before the Primary Authority that the business carried on by the dealer is compliant with the requirements of the Act and there is no commission or omission in sale price, turnover. Therefore, the findings that denial of reasonable opportu....
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....hibited by law or an offence under the Act. Statute expressly allow sale to end customers by prescribing Form 8 B sale bill for that purpose. Statute does not insist for postal address of the buyer in the sale bill when sale is made to end customers. Address of the purchaser is given in Form 8 B bill only as reported by the buyer himself. The requirement is only to furnish Name and address of purchaser. There is no requirement to furnish residential address, building number, post office, pin code or the full address etc. in Form 8B bill. Nowhere in the statute it is provided that bills should contain postal address of the buyer or that if buyer could not be served notice in the address given by them, it shall be ground to impose penalty. The observation that the buyers are bogus or non-existent persons is contrary to facts and is made without any supporting or corroborating materials. All parties (alleged as group) are separately registered as dealers under the KVAT Act. Thomas Group is a single entity. All 6 dealers/assessee are members of a common business group 'Thomson Group' and attempted evasion of tax in close cooperation. (Page 274 of the penalty order) F....
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....n in the intelligence officer from the endorsement made by the postal authority on the postal article as not known does not mean that the address is bogus or such persons did not exist in such a circumstance the inference drawn by the intelligence officer appear to be unrealistic and bad in law". Over and above, we also concur with the finding of the Deputy Commissioner (Appeals) that no honest or a pain staking enquiry was done by the Intelligence Officer to ascertain whether the addressees shown in the 8B bills does exist or not and without considering these aspect, the Intelligence Officer has proceeded with the penalty proceeding. It is evident that no attempt was made by the Intelligence Officer to conduct a proper enquiry in this regard. The fact being so, we are fully constrained to uphold the findings arrived at by the Deputy Commissioner (Appeals) on this aspect. We find no impropriety or any illegality in the said findings. As such, we find no merit in the contention of the Revenue. (Para 57). 2 Undervaluation The Group has deliberately adopted a novel pattern of tax evasion tactics by conceding only an undervalued minimum price thereby suppressing approximately half o....
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....l department officers would prove that the details of poultry meat are procured by them from market, the price governing the retail market would always be higher when compared to farm rate, the details collected from the Statistical department under RTI Act by the assesses substantially differs from the rate adopted for proposing the penalty.. Undervaluation (page 120-267) "The estimate bills to Ambilikkala hostel constitute solid and indisputable piece of evidence suggesting well thought and orchestrated pattern of suppression tactics adopted by group viz. Sri PT Jose, Sri PT Benny, Sri PT Davis, Smt. Gracy Thomas, Sri. PT Varghese and Sri PT Johnson - for purposeful evasion of tax under the KVAT Act. (page 194). Several materials discovered including estimation slips reveal that dealers had supplied chicken to Hotal Joys Palace, Ambilikkala, Hostel Hotal Ashoka Inn, M/s. Harvest caterers etc. at market rate while accounting at lesser rate evading tax. Statement of Economic and Statistics Department showing the price in retail market of poultry meat on weekly basis is adopted to calculate the suppresses turnover. There is nothing on record to make it appear that the Intellige....
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....he clear and categorical findings recorded by the Deputy Commissioner (Appeals) on how the order of imposing penalty is vitiated in all fours. The relevant portion is excerpted hereunder: "(154) Regarding denial of opportunity for examination and cross Examination of witnesses. The appellant has raised a specific contention of denial of opportunity for examination of witnesses and thereby violation of principles of natural justice. The Intelligence Officer has discovered materials during the enquiry which will throw light into the transactions of appellants and other dealers. The Intelligence Officer has no case that any materials has been detected connecting clandestine sale done by the appellant in this case. Though certain estimate slips were recovered in respect of M/s. Rose Poultry Farm and M/s. Best Poultry Farm no such materials could be found in respect of the other dealers. The department witnesses in their deposition have stated that they have no business transaction with the appellant in this case. It is pertinent to note that all the Department witnesses have deposed that they had purchased chicken from shops in the market and the specific case of the appellant is t....
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.... and cross examine and whether examination of the persons cited as witnesses are relevant for a adjudication in the matter. The Hon'ble Supreme Court has held in State of Kerala Vs. Shaduli Yusuf [39 STC 478] and Hon'ble High Court of Kerala in Jose Vs. Addl. STO have held that the assessee has a right to cross examine witnesses. The intelligence Officer has evaluated the facts and circumstances and also materials on record and found that there is no need for cross Examination of any of the witnesses. The appellants have contented that the examination of the witnesses cited are highly necessary to bring out the truth behind the presence of estimated slips as those persons had conducted the transactions in dispute. It is to be noted in this context, as pointed out by the learned counsel for the appellant, names of certain persons have come out in evidence during the cross examination of the departmental witnesses . It was also came out in evidence that those persons are very much related to the transactions involved and the Departmental witnesses have deposed that they have purchased live chicken from different persons in the market. More over some of the slips show the name....
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....ucing evidence by examining witnesses. The Hon'ble High Court in W.P. (C) No. 21795/2012 observed that "First of all, adjudication is only pending and final orders are yet to be passed. If as contented by the petitioners, evidence of seven witnesses is essential and the matter is finalized without affording them opportunity to cross examine those witnesses that will give rise to a case of violation of principles of natural justice. However such a plea can be raised by the petitioners only after final order is passed by the 2nd respondent, on conclusion of the adjudication which he is now seized of In this connection it is also relevant to note the observation of the Hon'ble High Court in C.O. Devassy Vs. State of Kerala [1991] 81 STC 2." we are aware of the legal positions that the sales tax officer when he hold an enquiry and effects the best judgment assessment is not functioning as a court. The proceedings before him are not judicial but only quasi judicial. But he should proceed to decide the matter before him in a fair and reasonable manner upon properly ascertained facts and circumstances. In exercising the quasi judicial function, the assessing authority should confo....
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....dance with law. Common order shall be incorporated in each file." 9. The Revenue except raising general grounds on the circumstances considered and concluded against the Revenue by the Appellate Authority and the Tribunal, failed to demonstrate, either perversity or that presumptuous conclusions are drawn by the Authorities and/or extraneous material or views led to recording conclusions in favour of the dealer. Since we are in agreement with the view expressed by the Deputy Commissioner (Appeals) on the procedure followed by the Primary Authority and denial of reasonable opportunity to the dealer, vitiates the order in Annexure-A, we sustain the findings recorded both by the Appellate Authority and the Tribunal on the violation of principles of natural justice and/or denial of reasonable opportunity to the dealer, including the right to cross-examine the persons whose statements the Revenue is relying on in support of its case against the dealer, for initiating and concluding penalty proceedings. The above conclusions take us to the next argument of Mr. Mohammed Rafiq. 10. The Special Government Pleader contends that Section 55 is part of Chapter VII of the Act. Chapter VII deal....
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....t the objection raised on the power of the Deputy Commissioner (Appeals) to remand the case to the Primary Authority is an objection without substance. According to him, subsection (5) (c) provides, viz. pass such other orders as he (the Appellate Authority) may think fit is. Read along with clause (a) which reads; in the case of an order of assessment or penalty, the Appellate Authority either confirm, reduce, enhance or annul the assessment or the penalty or both. The power of remand follows from one or the other exigencies contemplated by subsection (5)(a). The proviso introduced through Act 29 of 2014 is not applicable to the case on hand. He relies on a few precedents to bring home his argument that the power of remand is inherent in the power of adjudication by the Appellate Authority. The phraseology of subsection (5) is wide enough to expressly confer the power of remand in the Appellate Authority. We are not preferring to advert to all the decisions relied on by him, however, except the following: Union of India Vs. Umosh Dhaimode LAWS (SC) 19972 35 "8. In view of the above, we are of the considered opinion that, without properly understanding the judgment of the Tribu....
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....examination. But we do not pursue this line of enquiry, as we are satisfied that even dealing with the appellant's writ petition on the merits, there are no grounds to allow it and it has only to be dismissed. 3. The only grievance that the appellant had in his writ petition was that the Revenue Divisional Officer had no power of remand in dealing with the appeal from the order of the Tahsildar allowing an application for preparation of record of rights. Counsel drew our attention to R.28, sub-r.(3) of the Kerala Land Reforms Tenancy Rules, which deals with the procedure for disposing of an appeal, against an application to settle the record of rights. We think it unnecessary to extract the rule. It was argued that the rule contemplates only a dismissal of the appeal or a direction to the Tahsildar to make such additions, alterations, deletions or modifications as are deemed necessary by the Revenue Divisional Officer. We find it a little difficult to understand how this latter power of direction to the Tahsildar can be exercised except by or through an order of remand. But that apart, there is enough authority to hold, and we have no hesitation to hold, that a power of reman....
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.... In the case on hand, we would like not to confer or deny the power of the Appellate Authority on general principles of law viz., the Appellate Authority has inherent power of remand etc. The appeal being a statutory remedy under the Act, we may endeavour to trace whether such power is available to the Appellate Authority or not under the scheme of subsection (5) of Section 55. We would like to read subsection (5) of Section 55, as follows: "In disposal of the appeals (filed questioning the order of penalty) the Deputy Commissioner (Appeals) may, after giving the dealer a reasonable opportunity of being heard; in the case of order of penalty, annual the penalty and pass such other orders as he may think fit". In case on hand, the Appellate Authority once is convinced that the penalty order imposed needs to be annulled on the ground of violation of principles of natural justice, then instead of deciding the case on merits the Deputy Commissioner can certainly invoke the power under Clause (c), viz. pass such other orders he may think fit, and complete the adjudication of appeal filed before him. The argument of Revenue denies this functional proprietary conferred by clause (a) o....