IMPORTANT POINTS
Section 22(10) does not prohibit an assessment of escaped turnover under Section 25 even in cases where the proceedings under Section 74 have culminated by the assessee paying the compounding fee and tax on the suppressed turnover and filed a revised return within the time prescribed by the statute. The deeming provision is subject to Sections 24 and 25 and the proviso mandates that when a pattern of suppression is detected, the assessing authority shall proceed with best judgment assessment under Section 24 and 25 as the case may be.

ORDER :

1. The petitioner was a dealer engaged in the business of trading in electronic goods and allied articles. For the assessment year 2011-12, the petitioner had filed monthly returns only for the months of April and May, declaring a taxable turnover of Rs. 1,47,945/-. A shop inspection conducted by the Intelligence Officer, Squad No. II, Tirur on 18.11.2011, revealed that another person named Basheer was running a business in aluminium fabrication work in the business premises of the petitioner. It was found that there was no physical stock of goods. As per Annexure-C proceedings, the Intelligence Officer found that there ought to have been stock worth Rs. 47,62,925/-. He assessed the value of unaccounted sales to be Rs. 48,82,048/- and found that an amount of Rs. 4,46,673/- would be the tax due on the estimated unaccounted sale. On the basis of the above findings, he issued orders in exercise of the powers conferred under Section 74(1)(a) of the KVAT Act and compounded the offence on payment of compounding fee of Rs. 4,55,000/-. The Intelligence Officer confirmed the payment and directed the petitioner to remit the tax dues with interest through e-payment.

2. Even though Annexure-C order was issued on 29.11.2012, the petitioner approached the Assessing Officer only on 04.06.2014 by filing Form 21H seeking to pay the tax, cess and interest amounting to Rs. 5,62,810/- in instalments. By Annexure-D order dated 05.06.2014, the petitioner was permitted to pay the above said amount in five equal instalments. Thereafter, the Assessing Officer issued notice to the petitioner proposing to assess the petitioner under Section 25(1) of the KVAT Act, 2003 by adding an amount equal to the suppression noted by the Intelligence Wing. The above proceedings culminated in Annexure-E order dated 30.09.2014, by which the petitioner was assessed for an amount of Rs. 8,84,502/- and corresponding cess. An appeal filed against Annexure-E order was dismissed by the Assistant Commissioner (Appeals) by Annexure-F order. Annexure-F order was confirmed in appeal by the Appellate Tribunal, Palakkad as per Annexure-G order dated 24.08.2015. The petitioner has approached this Court challenging Annexure E, F and G orders.

3. The petitioner has raised the following questions of law in the revision petition:

(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in confirming the addition made by the assessing authority when the said authority has no case that the petitioner has made any unaccounted sales and did not establish with any evidence, the escaped turnover?

(ii) Whether on the facts and in the circumstances of the case, the addition sustained by the Appellate Authority is correct and has any nexus with the actual sales?

(iii) Since the assessing authority permitted the payment of tax and interest in five equal installments as per Annexure D order, whether in the facts and circumstances of the case the assessing authority has power to complete the assessment U/s. 25(1) of the Kerala Value Added Tax Act, 2003?

4. Heard the counsel for the petitioner and the Senior Government Pleader. The contention of the petitioner is that once an order under Section 74 has been issued and tax paid in accordance with the order, the authorities could not have proceeded to assess the petitioner to tax again, by making any additions to the turnover. According to the petitioner, Section 22, sub-section (10) prohibits such an assessment. It is further contended that an assessment under Section 25 can be made only if the conditions set forth in the said Section is available on the facts of the case and in the case of the petitioner there could not have been assessment under Section 25, since the entire suppressed turnover, prior to the closure of the business, has already been reckoned while computing the tax payable as per Annexure-D order. At the time of assessment, by virtue of the revised return, there is no escaped turnover