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TMI Blog2022 (2) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction through artificial and unacceptable apportionment of sale price between taxable item and exempt item. We have difficulty in appreciating or accepting that, in the circumstances of the case on hand and particularly having regard to the business module implemented by the dealer, the working of details by the Intelligence Officer could be termed as an estimate or guess work. A principle is followed in determining the suppressed turnover - the conclusions recorded by the Tribunal are correct and available in the circumstances of the case. The only ground raised by referring to estimation of suppressed turnover is equally untenable and accordingly rejected. Revision dismissed. - OT. Rev. No. 40 of 2018 and OT. Rev. No. 41 of 2018 - - - Dated:- 7-2-2022 - S. V. Bhatti And Basant Balaji , JJ. For the Appellant : Harisankar V. Menon, K. Krishna and Meera V. Menon, Advs. For the Respondents : Government Pleader and V.K. Shamsudheeen, Sr. GP ORDER S.V. Bhatti, J. Heard learned Counsel Mr. Harisankar V Menon and Senior Government Pleader V.K. Shamsudheen for parties. 2. M/s. P.I. Marketing (P) Ltd/a dealer registered under the Kerala Value Added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 alleged suppression of ₹ 3,45,94,350/- with a tax effected ₹ 43,67,537/- is alleged. iii) With respect to the period prior to registration 26-06-09 to 30-11-09 - alleged unaccounted sales of ₹ 5,54,99,600/- with a tax liability ₹ 70,06,825/- is alleged. 3.1. The commissions and omissions can be abridged by terming them as misclassification, undisclosed sales turnover, and suppression of sales by the dealer. The Intelligence Officer issued show-cause notice, received reply of the dealer, and in the exhaustive and detailed order dated 26.07.2010 considered primarily multi-level marketing module of business which was carried on by the dealer, and in the process, according to the Revenue, how there has been tax evasion in the guise of classification of goods, undisclosed turnover, and suppression of turnover. The issues, in fact, on the very material relied on by the Revenue and the reply given by the dealer had received detailed attention at the hands of the Intelligence Officer, the Deputy Commissioner (Appeals), and the Tribunal, In the statutory remedies provided under the Act against the levy of penalty, the issues are confirmed against the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metlife Insurance [Only Nationalised Bank DD] 25000 7 Wipro Laptop [1 No.] + Suit Length [1 No.] 36990 xxx xxx xxx The real magnet for luring in people is the elaborate matrix of rewards that can only be corned by roping in new members to grow the pyramid. This sole attraction of manifold doubling of their investment is the attraction on which people are depositing with the Company. This type of scheme is a non-sustainable business model and would be getting ready to collapse at any time. The Company themselves are aware of the sky-high prices of items and for the very reason and to avoid further litigation in the matter at the time of collapse of the pyramid or matrix, the company obtains the following declaration, affirmation duly signed by the customers at the time of their new entrance to the scheme. Under any circumstances, I fully understand that the value of packages offered to me will be at higher side than the amount paid by me higher side than the amount paid by me Going through the product package comb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivery of goods and hence the time gap between advance and sales. iv. It is proposed to arrive the alleged suppression by treating the entire turnover as assessable @ 12.5% whereas the Company is also dealing in items taxable@4% The explanations i to iv made by the Company have been considered at length with due attention to the returns filed, seized records, registration particulars, books of accounts produced and is decided accordingly on the merits as under xxx xxx xxx It has been explicitly proved that the Company is having parallel transactions involving substantial amounts which are not documented in any of the accounts produced. For the reasons stated above, the accounts subsequently produced on 25-05-2010 which does not represents true record of business transactions pursued by the Company. In the circumstances the explanation of the Company in this regards is not at all maintainable and hence liable to be rejected. xxx xxx xxx For the reasons stated as i. to iv. above, the explanations put forth by the company in this regards fails and it is fully established beyond any iota of doubt that the turnover of ₹ 5,54,99,600/- unearthed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The conclusions now confirmed by the Tribunal are findings of fact. By prioritizing his arguments, Adv. Harisankar V. Menon, at the outset, argued on non-disclosed turnover between 26.06.2009 to 30.11.2009 and suppression of turnover during the period 01.01.2010 to 31.03.2010. 4.1. The contentions urged challenging the levy of penalty on account of alleged suppression of sale and unaccounted sales are either extension or refinement of reply given by the dealer. We would have taken the trouble of referring to the refined contentions now made, had it been a case where the contentions would lead us to examine, whether, while recording conclusions against the dealer, there has been illegality or infirmity warranting interference by this Court. In other words, the contentions now canvassed by the dealer are not pointing out a legal infirmity warranting examination by us. The conclusions now staring at the dealer are rendered by the authorities after examining the very same contentions. Under these circumstances, more particularly, after perusing the record and taking note of each one of the findings recorded by the Intelligence Officer, we deem it unnecessary to advert to these as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the power to impose, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded, where it practicable to quantify the evasion or in any other case, ₹ 10,000/-. It is pertinent that in imposing penalty at twice the tax evaded or sought to be evaded, it should be practically possible to determine and quantify the amount evaded or sought to be evaded. This does not contemplate any estimation, however reasonable it may be, since the same would be in the realm of best judgment , of, an individual-authority. 9. The multi-point levy as contemplated under the KVAT Act provides for assessment under Chapter V. Section 21 provides for self assessment by filing of a return under Section 20 in the prescribed manner and accompanied by the prescribed documents. This is in consonance with the scheme of multi-point levy providing set off of the tax paid at any prior point of sale; which is to be claimed by the assessee in its returns. However, the authorities under the KVAT Act have been conferred with powers of assessment in the event of any failure on the part the dealer/assessee. The KVAT Act thus provides for such assessment b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed in the Statute, is within the realm of the assessment proceedings. He prays for setting aside the penalty imposed on the basis of estimation. 6. Mr. Shamsudheen contends that the dealer was doing business in multilevel marketing. From the order of the Intelligence Officer, it is clear that the dealer was selling combo packages, one taxable item with a tax exempted item. The Intelligence Officer has not decided the turnover under this head either on estimation or conjunctures. By inviting our attention to the sale of Wipro Laptop and a Suit Length, noted above, he argues that the suppression of turnover is in the apportionment by the dealer while generating the invoice. It is not the MRP that is the deciding factor, it is the fudging of amount in a non-taxable item. In the case on hand, the turnover details, apportionment, calculation of profit, everything has been derived from the very data, either recovered or not contested by the dealer. Estimation is something different which has been found to be an unavailable tool for determining the escaped turnover, suppressed turnover, so on and so forth, while exercising the jurisdiction under Section 67 of the Act. Illustrativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding for being in the form of an estimate and headed estimate.' OR 8.1. To judge and form an opinion of the value, from imperfect data, (to fix the worth of) roughly or in a general way, to form an opinion of, as to amount, number etc from imperfect data, comparison or experience; to make an estimate of; to rate; to calculate roughly; to assess. A synonym used in general parlance is 'guess', meaning estimate without calculation or measurement, form hypothesis about. A word including both the meanings is 'Guestimate', a colloquial term meaning an estimate that is based largely on intention or guess work [see P.R. AIYAR's Advanced Law Lexicon] 9. The question, in the case on hand, is whether in a narrow conspectus or in a broad perspective, the Intelligence Officer had estimated or guessed what could be or what might be the suppressed turnover through apportionment of total sale price between taxable goods and exempt goods. By generally terming 'an estimate' a ground is not made out. The complaint against determination must satisfy anyone of the meanings attributed to the word to vitiate the penalty proceedings. To answer the above poser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Intelligence Officer has arrived at the tax sought to be evaded amounting to ₹ 14,58,345/- as follows: The tax liability of the Company for the year 2009-10 as arrayed in para 10 -C, D and F is consolidated as under:- Sl.No P ar t i cu l ar s Taxable @ 4% Taxable @ 12.5% Total Turnover Total Output Tax Liability Turnover Tax Turnover Tax I Suppressed Taxable Turnover April 2010 By misclassification 236789 9472 6986145 873268 7222934 882740 II Taxable Turnover during the Month of April (conceded + suppressed) 663490 26540 7517720 939715 8181210 966255 III Taxable Turnover on account of stock variation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt contended that the Intelligence Officer does not take into consideration, the purchase and sales quantity of Home UPS, Inverter and Water purifier, even though, the purchase bills and sale bills for the month of April 2010 were in his possession. It is seen that the assessing authority stated NII purchase against the items. Considering this aspect, I feel some force in the contentions of the appellant in this point. Hence, I direct the assessing authority to conduct analysis once again by considering the purchases and sale bill and re-compute the tax effect on this point. It is also directed to the assessing authority to refix the quantum of penalty on the basis of the discussions and directions given in the above paragraphs. 27. From the above, it can be seen that Deputy Commissioner (Appeals) has stated cogent reasons for directing the Intelligence Officer to make a fresh analysis after considering the purchase and sales bills. We do not find any infirmity in the above stand taken by the first appellate authority. There is no merit in the appeal filed by the Revenue. 28. Apart from the irregularities found at the time of inspection of the business place which we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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