2018 (8) TMI 348 - HC - VAT and Sales Tax

Validity of Rules 42 and 43 of the Rules for the purpose of assessment under the provisions of the Karnataka Value Added Tax Act, 2003 - deduction of only 15% while estimating the suppressed turnover - KVAT Act. Held that - The estimate of suppressed turnover by the authorities under the KVAT Act are findings of fact in the realm of best judgment assessment by the authorities and unless there is a perversity in the same, no question of law arises requiring consideration by this Court under Section 65 of the KVAT Act - Secondly, the contention raised by the learned counsel that the information or the documents maintained under Rules 42 and 43 of the Rules could not have been relied upon by the assessing authority under the provisions of the KVAT Act is misconceived. As a matter of fact, the actual removal of goods, minerals (granite in present case), the information and documents maintained by the Mining Department is indeed the best evidence which could be relied upon by the assessing authorities under the provisions of the KVAT Act. Assessment of suppressed turnover - Held that - It is a matter of fact finding and best judgment assessment by the authorities under the Act. The assessee cannot claim as a right that deduction from gross turnover to the extent of more than 15% ought to have been given in the hands of the assessee based upon a communication by the Mysore Minerals Limited dated 8.10.2009 as extracted by the Joint Commissioner (Appeals) in Annexure-D dated 10.3.2011 - The deduction given by the assessing authority and as upheld by the two Appellate Authorities to the extent of 15% on the basis of which the suppressed turnover in the present case has been finally estimated to the extent of ₹ 28,64,220/ - appears to be reasonable and justified and therefore it cannot be held that such orders are perverse requiring our interference under Section 65 of the KVAT Act. Revision petition dismissed.

Summary

Issues:
Estimation of suppressed turnover based on discrepancies in measurements and sales invoices. Relevance of Rules 42 and 43 of the Karnataka Minor Mineral Concession Rules for assessment under the Karnataka Value Added Tax Act, 2003. Justifiability of allowing only a 15% deduction while estimating suppressed turnover.

Estimation of Suppressed Turnover:
The case involved M/s Shanthakoti Enterprises, a granite dealer, challenging the estimate of suppressed turnover by the authorities based on discrepancies in measurements and sales invoices. The Karnataka Appellate Tribunal upheld the estimate of suppressed turnover, relying on information from the Mining Department under Rules 42 and 43 of the Karnataka Minor Mineral Concession Rules. The assessing authority estimated a suppressed turnover of ?28,64,220 for the period from April 2005 to March 2006. The Tribunal found the estimation fair and justifiable, dismissing the petitioner's contention regarding the deduction for wastage in the production process.

Relevance of Rules 42 and 43:
The petitioner argued that Rules 42 and 43 of the Rules were not relevant for assessment under the Karnataka Value Added Tax Act, 2003 (KVAT Act). However, the Court disagreed, stating that the information and documents maintained by the Mining Department under these rules are crucial evidence for assessing authorities under the KVAT Act. The Court emphasized that the best judgment assessment by authorities based on such information is valid unless there is a perversity in the findings.

Deduction in Suppressed Turnover Estimation:
The petitioner also contested the justification of allowing only a 15% deduction while estimating the suppressed turnover. The Court held that the deduction of 15% was reasonable and justified, even though the percentage difference between permit quantity and sales invoices ranged from 13.93% to 33%. The Court found the orders of the assessing authority and the two Appellate Authorities to be reasonable and not perverse, dismissing the Revision Petitions as no question of law arose. The Court upheld the estimate of suppressed turnover at ?28,64,220 and dismissed the petitions without costs.

This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the Court's reasoning and conclusions regarding the estimation of suppressed turnover, the relevance of specific rules for assessment, and the justifiability of the deduction percentage in the estimation process.