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TMI Blog2021 (12) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... s, either does the assessment/decides the penalty himself or calls upon the Primary Authority to redo the procedure in accordance with law. In the case on hand, the table, read with the findings of the Deputy Commissioner shown in paragraph 8 supra, justify the remand to the Primary Authority. As matter of fact, there is violation of principles of natural justice and denial of reasonable opportunity to the dealer, thus warranting setting aside the penalty order in Annexure-A, and the Appellate Authority has rightly, within its powers and jurisdiction, remitted the matter to the Primary Authority for consideration and decision afresh. The power of remand is available and no exception to the findings recorded by the Tribunal and the Appellate Authority on the remand is warranted. Revision dismissed. - OT.REV NO. 212 OF 2015 - - - Dated:- 15-11-2021 - HONOURABLE MR. JUSTICE S.V. BHATTI HONOURABLE MR. JUSTICE BASANT BALAJI REVISION PETITIONER/S: BY ADVS. GOVERNMENT PLEADER SRI.K.K. RAVINDRANATH, ADDL.ADVOCATE GENERAL RESPONDENT/S: BY ADVS. SRI.P.R. AJITH KUMAR SRI. K. MANOJ CHANDRAN SRI. K. SRIKUMAR SR. OTHER PRESENT: SPL. G.P TAXES MOHAMMED RAFIQ FOR THE PET ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of principles of natural justice or requirement of law, there is no need or necessity to remit the matter to the Primary Authority. From the unequivocal expression used in Section 55(5)(a) (b) and (c), the Deputy Commissioner can pass the fresh assessment order on the material available on record. 4.1. The Revenue contends that the appeal is nothing but continuation of original proceedings and, therefore, the legislature, by choice, in its well-informed reasons and wisdom specifically did not confer the power of remand on the Deputy Commissioner (Appeals). Therefore, the remand per se is illegal and beyond the jurisdiction or the power of the Appellate Authority. The second ground is that the order in Annexure-A, does not violate or infringe the principles of natural justice and sufficient reasons are present in Annexure-A order for imposing penalty. Therefore, the remand is unjustified in the facts and circumstances of the case. The Tribunal through a common order dated 29.05.2015 rejected both the contentions. Hence, the revision at the instance of the Revenue. 5. On 22.12.2015, this Court while condoning the delay, noted the question of law mooted in the revision as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate the fundamental omission in the procedure followed by the Primary Authority, we find it useful to state the details as follows: Sl.No. Allegations in the proposal notice dated 27.02.2012 Reply/objection to the allegations dated 26.09.2012 15.10.2012 Findings of Intelligence Officer in Penalty Order dated 30.10.2012. Findings of Tribunal in common order dated 29.05.2015. 1. 1. Thomson Group is a single entity Entire sales turnover of the Group (except meager sales turnover conceded by the Rose Poultry Farm) is shown as made to ultimate customers. ie., unregistered dealers and verification has confirmed that such addresses or purchasers of live chicken shown as per Form 8 B Bills are bogus or non-existent. All 6 dealers/assessees are members of a common business group 'Thomson Group' and attempted evasion of tax in close cooperation. Form 8 B bills (bills to be issued to end consumers under rule 58 of KVAT rules. 100 notices were sent to purchasers, referred to in Form 8B bills which were returned with an endorsement of postal authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual transactions which have been revealed in the investigations conducted. There is no dealer to dealer sale of chicken and the entire turnover has been made only to unregistered dealers. Therefore it can be inferred that the Form 8 B bills are forged ones. All Form 8B bills show uniform sale value of below ₹ 5000 even though sales were effected to very faraway places. On scrutiny it is found that not even a single bill was issued by the dealers during 2008-09, 2009-10 and 2010-11 having sale value above ₹ 5000. Therefore the bills were issued to avoid scrutiny at the time of transport. (pg. 104 penalty order) On a close reading of the findings of the Intelligence Officer it can be said that the Intelligence Officer has not collected any evidence to establish that the business of all the 6 assessee dealers are carried out by a single person or all of them are doing the business as common (Para 36) At any rate none of them can be made jointly liable for any offences committed by any of them especially when the registration obtained by them for running their business under the Act stands in the name of each of them (Para 37) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he collection of advance tax. The estimated bills recovered from few institutions constitutes solid and indisputable piece of evidence suggesting illegal pattern of suppression tactics adopted by the Group for decisive evasion of tax under the KVAT Act by undervaluing the chicken rate. The prevailing market price gathered by the statics department from various markets on weekly basis for the period from 2008-09, 2009-10 and 2010-11. The allegation of undervaluation is not supported by any evidence. The rate fixed by the Commissioner of Commercial Taxes is purely for the purpose of collecting advance tax and not for the purpose of assessment or for imposing penalty. Tax liability of the dealer under the statute is on the amount received or receivable as sale consideration. It cannot be on the estimated sale value or on the basis of the floor rate fixed for the purpose of collection of advance tax. The allegations based on certain recoveries and depositions collected from witnesses are wrong. The witnesses have deposed that they had purchased poultry meat from market. They do not have any direct transactions with the assessee. It is also pertine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (para 80) But a duty is cast on the Revenue to prove that the assessee has factually collected more than the ostensible consideration shown in the account. Such a finding is essential even for an assessment in case of undervaluation. But in the instant case, on a close reading of the impugned orders of the Intelligence officer we hod that though the Revenue had a case that the sales of chicken effected by the assessee dealers shown in their accounts are at a low prices. with a view to evade the payment of tax compared to the market price of such goods that too with a view to. Evade payment of tax, but there is no such a finding to the effect that any of the assessee dealers have factually collected or obtained more than the amount shown in their accounts or in the 8B bills, or in the purchase order as claimed by the intelligence officer when considering the facts and circumstance of the case such a finding is essential to warrant an action u/s 67 of the Act in the cases on hand. In the absence of such a finding, the penalty imposed on estimation appears to be highly an erroneous and illegal one Especially when it is born out from the records that the data collected by the investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... krishnan of Ambilikkala Hostel have deposed that they regularly purchased chicken from open market at Sakthan Thampuram Market at Thrissur. In such circumstances it was fair and proper to conduct a proper enquiry regarding the transactions. No suppression or irregularity is found in the case of the appellant as in the case of M/s. Rose poultry Farm and M/s. Best Poultry Farm. But the Intelligence Officer has imposed penalty by estimating turnover. More over the Intelligence Officer has relied on the materials unearthed in respect of the suppression of turnover by the other two dealers and came to an inference that all the dealers including the appellant uniformly follows the same pattern of suppression. The findings of the Intelligence officer that The estimate bills constitute solid and indisputable piece of evidence suggesting illegal pattern of suppression tactics adopted by the groups. Viz. Sri. P.T. Jose, Sri. P.T. Davis, Sri. P.T. Benny, Smt. Gracy Thomas, Sri. P.T. Johnson and Sri. P.T. Varghese for decisive evasion of tax under the KVAT Act 2003, by undervaluing chicken rates , shows that the nominal and trifle lapses detected by the Intelligence Officer in the case of a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances, it was just and proper to evidence by examining the said person by the appellants. The denial of such an opportunity was incorrect. On page 81 of the notice the Intelligence has stated that Sri. Aniljith, Manager, M/s. Harvest Caters (Pvt.) Ltd had deposed that from 2008, they effect purchase of chicken from Rose Poultry Farm. Consequent to purchase order given over phone to Rose Poultry Farm, chicken is supplied at Thrissur unit and for which purchase estimate slips superscribed as John Chicken is given and at the end of each week, Rose Poultry Farm will issue 8 B bills for said total amounts and payments are made accordingly. In the cross examination made by the appellant on 23.08.2012, Sri. Aniljith, Manager of M/s Harvest Caters (P) Ltd has deposed that whenever they required chicken, they place orders over phone for the quantity and size of the needed chicken to office of the John chicken at Ollur, at Pillai Nada by the production Manager of the Company. Sri. John, Proprietor of the John Chicken is the corporation councilor of Thrissur corporation. Sri. John who accepts orders clean the chicken, cut them to the required sizes and supplies them at the specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee to rebut the case of the Department . The above observation of the Hon'ble High Court with regard to the assessing authority is equally applicable to the Intelligence officer. On going through the Order and reasons stated herein, for rejecting the opportunity of examination and cross Examination of witnesses, I am of the opinion that the denial was improper and an opportunity for examination and cross examination of witnesses should have been granted, particularly when the amount of penalty imposed was a substantial one. xxx xxx xxx (162) In V. S. Narayan Nair V. Sales Tax officer 1971 KLT (1972) 29 STC 37 the Hon'ble High Court held that an assessment cannot be based on the entires found in the books of accounts of a third party without giving to the assesse an opportunity to cross examining that party with reference to those books if so required and that this is a requirement of natural justice . The Intelligence officer and the team have conducted intensive enquiry in the matter and collected voluminous documents and records relating to the transactions of the appellant. Hence it will be improper to cancel the order for the reason of improper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is inherent in a litigant to file appeal. The Act provides the right of appeal, the forum of appeal, and the procedure to be followed by the Appellate Authority. According to him, the Deputy Commissioner (Appeals), while making the order in AnnexureB, did not conform to the jurisdiction conferred on Deputy Commissioner (Appeals) by subsection (5) of Section 55 of the Act, which reads thus: [55. Appeals to the Deputy Commissioner (Appeals) and Assistant Commissioner (Appeals).- (1) Any person aggrieved by any order issued or proceedings recorded other than those under Section 16, section 19, sub-sections (8) and (9) of section 44, section 49, section 67, section 68, section 69 and section 70 passed by an authority empowered to do so under this Act not being an authority above the rank of an Assistant Commissioner may, within a period of thirty days from the date on which the order was served on him, appeal against such order, xxx xxx xxx (5) In disposing of an appeal, the Deputy Commissioner (Appeals) and Assistant Commissioner (Appeals) may, after giving the appellant a reasonable opportunity of being heard,- (a) in the case of an order of assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals, viz., 'Whether a single Member Bench can overrule a decision of the larger Bench on the same issue.' There is no question of overruling the judgment of the larger Bench. As stated earlier, the learned single Member has held that the judgment of the larger Bench of the appeal per incuriam in view of the judgment of the Hon'ble Supreme Court and he is bound by the Hon'ble Supreme Court judgment and not by the judgment of the larger Bench of the Tribunal. Once, we accept the judgment of the single Member of the Tribunal taking view against the Department, then the Commr. (A) continues to have the power of remand even after the amendment of Section 35A(3) of the Central Excise Act, 1944 by Finance Act, 2001, then the first question does not remain to be decided as substantial question of law. 9. We must also state that even after amendment, which has come into force w.e.f. 11th May, 2001, powers of remand by allowing the appeal of the Commr.(A) have not been taken away specifically. In that view of the matter, we are of the considered opinion that the Appellate Authority, viz., Commr. (A) was vested with the power while deciding the appeal as he deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity. Were authority needed for the proposition, we have it in the Full Bench decision of this Court in Dharmadas v. State Transport Appellate Tribunal (1962 KLT 505). In view of the said principle, the appellant can have no grievance against the order of the Revenue Divisional Officer and his writ petition had only to be dismissed. The learned Judge was wrong in quashing the whole proceedings to settle record of rights. 12. The Revenue argues that the First Appellate Authority/Deputy Commissioner (Appeals) upon recording the finding that the order of the primary authority in Annexure-A is vitiated on account of denial of reasonable opportunity, such as cross-examination of witness whose statements are relied on; violation of principles of natural justice in any form; ought to have completed the assessment in accordance with subsection (5)(a) which provides for confirming, reducing, enhancing or annulling the assessment or the penalty or both as the case may be. Therefore, there is no explicit power or inherent power of remand conferred on the Appellate Authority by Section 55 of the Act while dealing with penalty orders. The argument is unsustainable for the following reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deputy Commissioner, on a case-to-case basis, either does the assessment/decides the penalty himself or calls upon the Primary Authority to redo the procedure in accordance with law. In the case on hand, the table, read with the findings of the Deputy Commissioner shown in paragraph 8 supra, justify the remand to the Primary Authority. A conjoint reading of clauses (a) and (c) of subsection (5) of Section 55 would necessarily give wide discretion and power to the First Appellate Authority to consider ordering remand in terms of the language of Section. Annulment of an assessment/penalty proceedings could be on merits, likewise annulment of assessment/penalty proceedings could be for deviation of principles of natural justice, denial of reasonable opportunity etc, to the dealer or any other ground justifiable in the circumstances of the case. The latter exigency needs something more to make the adjudication complete at the hands of the Appellate Authority, and remand certainly is the option. The Appellate Authority notices, in deciding the appeal, the procedural safeguards in the manner noted above, are not followed, even thereafter, examining the merits of the issue decided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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