2001 (8) TMI 1354 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order issued under section 35 of the Kerala General Sales Tax Act.

Analysis:
The judgment delivered by the High Court of Kerala pertained to the assessment year 1992-93 involving an assessee-firm engaged in the gold business. The initial assessment was completed based on the detection of stock differences during an inspection by the Intelligence Squad. The assessing authority inferred suppression of purchase and sales, leading to the fixation of taxable turnover at a higher amount than conceded by the assessee. Subsequently, the assessee appealed the assessment order before the Deputy Commissioner (Appeals) challenging the addition made to the taxable turnover. The Deputy Commissioner modified the assessment, limiting the addition to Rs. 1,50,000. The assessing authority then passed a revised order giving effect to this modification. The issue at hand was the validity of the order issued under section 35 of the Kerala General Sales Tax Act.

The Deputy Commissioner issued a notice under section 35, alleging additional income of Rs. 1,50,000 from unaccounted business for the year 1993-94. The notice referenced an application made by the assessee before the Income-tax settlement commission, admitting suppression of income for the same period. The assessee objected to this, but the objections were rejected, leading to the cancellation of the assessment and remand to the assessing authority. The Tribunal dismissed the petitioner's appeal, prompting further legal recourse.

In the judgment, the Court considered the argument presented by the assessee's counsel regarding the disclosure of additional income during the income-tax assessment year 1993-94, based on the inspection conducted in 1992. Reference was made to a previous decision highlighting that the mere loss of revenue should not be the sole consideration for invoking revision powers. The Court emphasized that an order to be prejudicial to revenue must be both erroneous and detrimental to revenue administration, not solely focused on revenue loss. It was concluded that the power exercised by the Deputy Commissioner under section 35(2A) was deemed illegal in this case, as the suppression issue had already been addressed by the assessing and appellate authorities. The Court held that the Deputy Commissioner's intervention was unwarranted, setting aside the impugned orders and allowing the Tax Revision Case (T.R.C.), with the related petition dismissed.

In essence, the judgment underscored the importance of a comprehensive assessment process, highlighting the need for legal orders to be both legally sound and in the best interest of revenue administration, beyond mere revenue considerations.