9911796707
TMI Blog1996 (10) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... 87,708 for the period from April 1, 1987 to March 31, 1988 under section 12(3) of the Act and further directed them to pay the penalty of Rs. 88,58,000 which is about equal to taxes evaded. Not satisfied with the assessment made, the petitioner herein preferred an appeal before the Deputy Commissioner of Commercial Taxes, who vide his order dated March 25, 1991 (annexure-D) set aside the assessment order and also the penalties imposed upon the petitioner and remitted the case to the assessing authority for redoing the same in the light of the findings and discussions made in his order. Not even satisfied with the order of the appellate authority, the petitioner herein preferred a further appeal before the Karnataka Sales Tax Appellate Tribunal. The State also submitted their cross-objections. The Tribunal disposed of the appeal and the cross-objections vide a detailed order dated May 20, 1992 (annexure-F). The appeal was partly allowed. The cross-objections of the State were also allowed. The order of the appellate authority remanding the case to the assessing authority was set aside. The assessment order with modifications to the turnover was restored. Penalty under section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alid and sustainable in law? 3.. The impugned appellate order is stated to be contrary to the facts of the case and well-settled principles of law. It is submitted by the learned counsel for the petitioner that the Tribunal committed an error of law in passing the impugned appellate order by wrongly holding that while passing the assessment order, the assessing authority had supplied the entire extract of seized exhibits to the petitioner despite the fact that the assessing authority had failed to provide the entire extract of all the seized exhibits. The assessing authority was not justified to take into consideration several materials which were allegedly not made available to the petitioner before passing the order. It is contended that the Tribunal was not justified in holding that exhibit III(b) constituted a material of absolute evidential value so as to be relied upon for the purposes of assessment and to quantify the turnovers on the basis of the said exhibit. Even according to exhibit III(b), it was not established that the petitioner had been guilty of suppression of the rectified spirit for the month of March, 1988. It is contended that the factory was found to have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Pleader has submitted that the assessing authority and the Tribunal have rightly come to the conclusion that the production of spirit had not been stopped for the aforesaid four days, but the factory had stopped the manufacture for only about 12 hours during the aforesaid period of four days. 6.. After referring to the order of assessment, the order of the appellate authority, documents produced in the case, and after critical analysis, the Tribunal formulated the following questions for their determination: "(a) Whether the inspection dated July 12, 1989 is relevant for purposes of assessment year under appeal and whether exhibit III(b) is relevant document to be considered for assessment purposes; (b) Whether the best judgment assessment concluded by the assessing authority is justified; (c) Whether the first appellate authority is justified in passing the order as he did remanding the case to assessing authority to redo the assessment by adopting recovery at 225-230 litres/M.T. of molasses; (d) Whether the turnovers as determined by the assessing authority are correct and reasonable; and (e) Whether penalty under section 12(4) of the Act is justified or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant to the Government is at 6,91,726.400 litres. The difference between the two, viz., 2,95,636.900 litres is considered as suppressed rectified spirit production has not been reconciled and satisfactorily explained by the appellant, except stating that the production details as per exhibit III(b) did not reflect the correct state of affairs since exhibit III(b) itself was not a regular account book, but a rough book maintained by the Chemical Engineer of the firm for his own personal consumption. We have already stated that the contention of the appellant that exhibit III(b) is not a relevant document, is not acceptable to us. There is substantial difference between the production of rectified spirit as per exhibit III(b) for the month of March, 1988 and as declared by the appellant for March, 1988, the difference being 2,95,636.900 litres. Since this much of production of rectified spirit has not been accounted for by the appellant for assessment, the corresponding sales turnover of rectified spirit must also have been suppressed for assessment purposes. Further, this much quantity of rectified spirit which has been suppressed from regular books of accounts must have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the petitioner was not in a position to persuade us to come to a different conclusion. It was not correct that the principles of natural justice had not been complied with because it is very clear from the record that the assessing authority had supplied copies of the exhibits to the learned counsel for petitioner who had acknowledged for having received the same. 9.. The learned counsel appearing for the petitioner submitted that the Appellate Tribunal had not rightly concluded regarding the production with the result that the estimation made was excessive. The Tribunal dealt with this argument of the learned counsel also and rightly concluded as follows: "The plant capacity is to be understood as the capacity of plant for production of rectified spirit. If the plant is able to use molasses distilled to the extent of 10,34,33,376 litres for the year as a whole, and when it is able to bring out rectified spirit at the recovery rate of 12.25 which means 84,43,540 litres of rectified spirit, this has to be understood as plant capacity. This only shows the extent to which the appellant has worked the plant during the assessment year. The capacity as certified by Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year under appeal the quantity of wash distilled used in the manufacture of rectified spirit is at 10,34,33,374 litres. This divided by 12.25 will give us the production of rectified spirit for the assessment year at 84,43,540 litres. As against this, the assessing authority has adopted rectified spirit production during the assessment year at 98,37,287 litres which in our view is excessive. Further, this figure does not reconcile with the quantity of wash distilled used in the manufacture of rectified spirit and recovery rate at 12.25 as per exhibit III(b). Therefore the turnover as estimated by assessing authority on the basis of exhibit III(b) for the subsequent assessment year does not give the correct result. It should be 84,43,540 litres." 11.. In regard to the rate, the Tribunal took a lenient view and held that the same, be assessed at Rs. 4 per litre instead of Rs. 14 per litre as was assessed by the assessing authority. Regarding utilisation of molasses, the Tribunal came to the conclusion that appellant should be proved to have utilised the same to the extent of 33,374.160 M.Ts., whereas the appellant had declared to have used only 29,476.369 M.Ts. of molasses which ..... 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