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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 ..... hallenges the inclusion/ addition of coffee husk in the total turnover of the petitioner in the respective assessment years ; levy of 35 per cent. of outturn as husk quantity ; Rs. 2 per kilogram of coffee husk on the determined and further inclusion of 10 per cent. for the omissions or suppressions by the dealer in maintenance of record or production of records, registers, etc., before the authorities. The petitioner is finally called upon to pay Rs. 1,98,830 towards balance of tax payable for the assessment year 2011-12 and Rs. 2,27,903 for the assessment year 2012-13. 4. The dates and events in O. T. Rev. No. 66 of 2016 are considered for disposing of both O. T. Rev. cases and stated thus : The Commercial Tax Officer, Kalpetta 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 order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmarily dismissed. The dealer filed tax appeal before the Kerala Value Added Tax/Agrl. Income-tax and Sales Tax Appellate Tribunal, Additional Bench, Kozhikode and the Tribunal through the order in annexure C has confirmed the inclusion of sale of husk in the turnover, the quantitative inclusion, and the rate at which the husk has to be valued and levy and demand of tax on the said addition but modified the 20 per cent. included towards omission and suppression to 10 per cent. Hence, the O. T. revision cases by the dealer. 5. Advocate R. Ramadas challenges the order in annexure A primarily on two grounds, namely, that the order in annexure A is in complete violation of principles of natural justice ; is 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 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, it is captive consumption of a residue coming out of drying the cherry and getting hulled coffee. The assessing officer is well within his jurisdiction, if the assessing officer has reason or record to believe or some evidence to support that the sale of coffee husk is demonstrated by any of the methods provided, viz., seizure, audit, vigilance report, etc. 5.1 Lastly it is argued that consumption of coffee husk by the dealer has been accepted by the Department for the preceding years, as well as subsequent years to the subject assessment years. Singularly, for the first time sale of coffee husk is assumed as sale without material and included in the total turnover of the assessee and thereafter 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to determine the tax to the best of its judgment. On receipt of the notice, the assessee is at liberty to explain the position and if the explanation is satisfactory, the assess ing authority may not proceed further and the matter may be closed. If the explanation is not satisfactory, then the question comes, as to the necessity to pass an assessment under sub-section (1) of section 25. It is at this juncture, the statute mandates that the dealer shall be given a reasonable opportunity of being heard before making an assessment under the above sub-section. This being the position, the primary question to be considered is whether the explanation offered in response to the notice is satisfactory or 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction and the sale of coffee husk is not included in the turnover. The reply of dealer is that the coffee husk generated from the hulled coffee is used by the dealer as compost manure at the estate of the dealer. Therefore, the value cannot be included in the turnover and that the value of coffee husk should not be treated as sale by the Department. It is specifically stated in the reply of dealer dated October 8, 2013 that the Department in the absence of data or evidence to conclude that the sale of coffee husk has taken place, cannot propose to add the said consumption in the turnover of the dealer. In the background of the definite allegation in pre-assessment notice and the reply 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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