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M/s. Ceyenar Chemicals Private Limited Versus State of Kerala

2016 (7) TMI 787 - KERALA HIGH COURT

Levy of penalty - offences of failure to maintain proper accounts and failure to keep true and correct accounts - Inability to produce their books of accounts for verification during inspection - Subsequently the regular books of accounts were called for and on inspection of the books of accounts that were produced, variation in stock was found - Held that:- when the responsibility of maintaining true and accurate accounts disclosing the stock is entirely on the assessee, the First Revisional Au .....

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6-2016 - Antony Dominic And Dama Seshadri Naidu, JJ. For the Petitioner : Sri. V. V. Asokan, Sri Sunil Shanker For the Respondent : Smt Shoba Annamma Eapen ORDER Antony Dominic, J. The assessee has filed this appeal aggrieved by Annexure-C order passed by the Commissioner of Commercial Taxes, in exercise of his powers under Section 37 of the KGST Act. 2. The facts of the case are that the assessee is a dealer in chemicals. The Intelligence Officer, Squad No.3, Commercial Taxes, Kottayam inspecte .....

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3. Subsequently the regular books of accounts were called for and on inspection of the books of accounts that were produced, variation in stock was found. On the basis of the above finding, the intelligence officer concluded that as the assessee had failed to produce any documentary evidence regarding the opening stock of the goods, items of which are mentioned in the order, and the assessee being a running firm allowed 50% of the variation and the resultant variation was quantified. On that bas .....

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d by the assessee, Annexure-A order was passed imposing a penalty of ₹ 80,036/- for the offences of failure to maintain proper accounts and failure to keep true and correct accounts for the assessment year 1999-2000. 4. The assessee filed revision before the Deputy Commissioner who passed Annexure-B order. In Anneuxre-B order also, the finding of the intelligence officer regarding the commission of offence was confirmed. Thereafter, it was held that penalty was levied on the basis of wild .....

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. Accordingly, the assessee was heard and Annexure-C order was passed setting aside Annexure-B order and directing the intelligence officer to pass fresh orders after affording the assessee a reasonable opportunity of hearing. In this order, the Commissioner held thus: "I have considered the grounds raised by the dealer and examined the records of the case. At the time of inspection, the dealer could produce only the purchase bills and sales invoices. Their explanation is that though accoun .....

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etails of opening stock furnished to the Intelligence Officer at the time of verification of accounts were not supported with any evidence. Therefore, the order of the first revisional authority is erroneous and prejudicial to revenue. The order is therefore set aside." 6. It is aggrieved by Annexure-C order, the assessee has filed this application. 7. We heard the learned counsel appearing for the assessee and the learned Government Pleader appearing for the revenue. 8. The first contentio .....

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, the learned Government Pleader contended that when it is the responsibility of the dealer to maintain proper and accurate books of accounts and in a case where such books of accounts are not available, an offence is made out attracting the penalty under Section 45A. Therefore, according to the learned Government Pleader, the Commissioner of Commercial Taxes was fully justified in setting aside Annexure-B order. She has also submitted that in pursuance to Annexure-C order passed by the Commissi .....

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, in his opinion is, prejudicial to the revenue and may make such enquiry or such enquiry to be made and subject to the provisions of the Act may pass such an order thereon as he thinks fit. Therefore, in a case where an order passed by any subordinate authority, other than an Appellate Assistant Commissioner, is found to be prejudicial to the revenue, the commissioner is entitled to invoke his power under Section 37 of the KGST Act and suo motu call for and examine the order passed and pass suc .....

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even in Annexure-B order the fact that an offence of failure to maintain true and correct accounts has been accepted by the authorities. The entire responsibility of maintaining such records is that of the dealer and that cannot be disputed. It was despite that, the First Appellate Authority has set aside the order passed by the intelligence officer and the reason thereof is that the intelligence officer has levied penalty on the basis of a wild estimation. According to us, this reasoning of the .....

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