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TMI Blog2021 (6) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- The assumption that coffee husk is generated as coffee seed are sold, coffee husk could also be sold and that the dealer is liable to pay tax thereon, is illegal and unsustainable. The orders in annexures A to C do not consider the issue on the lines discussed above and certainly are based on assumption of sale of coffee husk by the dealer. The liability under the Act arises only in the manner and mode the dealer comes under obligation to pay tax, but not otherwise. The generation of residue such as coffee husk and sale or transfer of goods in any manner contemplated by the Act, certainly attract the incidence of tax, but not as noted above, i. e., generation and self-consumption. Being an indirect tax, the dealer, for self- consumption of coffee husk, is not obligated to include in turnover or pay VAT. The Department certainly failed in establishing that in the case on hand, the coffee husk is not consumed for self, but was sold by the dealer. The Tribunal, while examining this aspect, calls upon the dealer to prove that the dealer has not sold the coffee husk. The fact that concurrent findings are recorded is not reason to list the legal contention with fundamental princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a issued pre-assessment notice under section 25(1) of the Act dated September 24, 2013 to the petitioner. The show-cause notice called upon the dealer to show cause why the consignment of dried cherry and hulled coffee transferred to the head office of the dealer situated at Bangalore and sold in Coffee Board Auction Centre, Bangalore, be subjected to separate assessment under the CST Act. It is convenient to note at this juncture that the separate orders made by the assessing officer against the transfer of goods and the sale of dried cherry and hulled coffee at Bangalore are not the subject-matter of the present revision cases. 4.1 The pre-assessment notice states that similarly it is ascertained that though the dealer dealt the sale of the commodity as hulled cherry, the sales turnover of husk has not been taken in consideration. Hence this turn over is arrived to 35 per cent. of the overall quantity and the value is taken as ₹ 2 per kg. Since the dealer had not filed the quantitative statement, the sales value is estimated at (four per cent. of total turnover, ₹ 1,74,51,875 + ₹ 33,35,400), i. e., ₹ 8,31,500 . The notice records that the dealer is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the procedural safeguard provided to the dealer by section 25(1) of the Act and that the order since is made without conducting enquiry into the disputed fact scenario, viz., whether the husk generated by the hulling of coffee by the dealer is used as captive consumption as compost manure or as assumed by the assessing officer sold and warrants inclusion in the total turnover. To emphasize that order in annexure A is a mechanical or pre-determined order, he draws our attention to the date of reply as October 8, 2013 and received by the assessing officer on October 9, 2013, and order of assessment is made on October 9, 2013. Therefore, according to him, no enquiry of any sort was conducted and inclusion of sale of coffee husk in the turnover of the dealer is illegal, arbitrary, violative of principles of natural justice, and liable to be set aside. He relies on the judgments reported in Suzion Infrastructure Service Ltd. v. Commercial Tax Officer [2010] 35 VST 451 (Ker) ; [2010] (3) KHC 299, Johnson Johnson Ltd. v. Assistant Commissioner (Assessment) [2011] 2 KHC 506, and also in Shamon K. S. v. State of Kerala [2016] 88 VST 186 (Ker) (judgment dated October 9, 2015 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r tax is demanded. The inclusion of 20 per cent. for these omissions and suppressions is consequent to the assumption drawn by the assessing officer in respect of the alleged sale of coffee husk and therefore the assessee is not legally under obligation to pay any amount by way of tax for the alleged sale of husk and that the inclusion of 20 per cent. in the turnover is illegal, arbitrary, and liable to be set aside. 6. Special Government Pleader C. E. Unnikrishnan argues that the findings recorded by the assessing officer are self-explanatory, sufficient reasoning is present and there cannot be an objection for inclusion of sale of coffee husk in the turnover of the dealer. It is next contended that the appellate authority and the Tribunal have independently considered the grounds raised by the dealer and have found that the inclusion of sale of coffee husk in the turnover of the dealer is warranted for the subject assessment years. Therefore, the demand of tax is based upon finding of facts recorded by all the three authorities and no ground is made out warranting interference of this court under section 63 of Act. In reply to the argument of violation of principles of natural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not. Otherwise, the very purpose of the 'proviso' as to the right to be heard is rather otiose/ meaningless. 11. If the assessee chooses to appear before the concerned respondent on the last day or on the penultimate day specified for filing objections, the party is still having the right to be heard. Similarly, the date and time chosen by the assessee may not be suitable or convenient to the dealing authority ; who may not be available or otherwise engaged in connection with other priority works. Equally important is to note that the assessee can't be made to wait right from the morning till evening ; which may lead to quite adverse and arbitrary consequences. Clarity shall loom large, over obscurity/vagueness. 12. In view of the above observations, this court finds that the stipulation in exhibit P1 notice, that the party was at liberty to have hearing on any date, within the time stipulated for submitting the statement of objections, is not enough to meet the requirement under the 'first proviso' to section 25(1). It is made clear that, after receipt of the objection/reply to the show-cause notice, the respondent is duty bound to give an effective opp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of dealer, what is to be examined is whether the notice contains any other information than the assumed assertion of the assessment officer that the coffee husk is not only generated in the hulling activity of the dealer, but also coffee husk has been transferred or sold to a third party thereby warranting the necessity to include such sales in the turnover of the dealer. The pre-assessment notice assumes that as sale of hulled and cured coffee has taken place, the dealer generated coffee husk and the coffee husk was sold by the dealer. The dealer is not disputing its obligation to pay tax, if coffee husk has been sold by the dealer. On the other hand, the reply of the dealer is that the coffee husk generated from hulling activity is used as compost manure by the dealer at the dealer's estate. There is no prohibition in law on a dealer for using a residuary item coming out of primary activity for captive consumption or self-utilization like compost manure in this case. The captive consumption or self-utilization cannot be brought within the fold of a legal liability of the dealer under the Act. We are constrained to observe as above, for, the assessment order does not decide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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