United Timber Corporation vs State of Kerala

H.L. Dattu, C.J.—This revision petition is filed against the orders passed by the Sales Tax Appellate Tribunal in T.A. No. 290/06 dated

May 28, 2007. By the impugned order, the Tribunal has directed the assessing authority to pass a fresh order in accordance with law, after

verifying the correctness or otherwise of the form 18 declaration produced by the assessee for the purpose of claiming certain exemption in the

conceded total and taxable turnover.

The brief facts are:

The petitioner is a dealer registered under the provisions of the Kerala General Sales Tax Act, 1963 (for short, ""the KGST Act""). It is engaged in

the import and sale of timber logs. For the assessment year 2003-04, the petitioner had filed its annual returns under the provisions of the KGST

Act.

When the assessing authority had taken up the assessment proceedings, the assessee had produced books of account. The assessing authority

after rejecting the books of account had issued a notice, proposing to reject the books of account and to determine the total and taxable turnover

according to best judgment. The main defect pointed out by the assessing authority was that the petitioner could not produce the relevant form 18

declarations for the entire claim of concessional rate of tax.

After going through the objection that was filed, and since the petitioner could not produce form 18 declaration for the entire claim of

concessional rate, the assessing authority proceeded to quantify the tax liability after rejecting the concessional rate of tax sought for by the

assessee in the annual returns filed for the assessment year 2003-04.

Aggrieved by the rejection of the request for grant of concessional rate, the assessee had filed an appeal before the first appellate authority.

Before the said authority, the assessee had produced form 18 declaration to the tune of Rs. 86,96,340. The first appellate authority while disposing

of the appeal, had directed the assessing authority to accept the form 18 declaration produced in the appeal and modify the assessment

accordingly.

Aggrieved by the orders so passed, the State had preferred a second appeal before the Tribunal. The only exception that was taken by the

State Government in the appeal filed is that the first appellate authority ought not to have directed the assessing authority to accept the form 18

declaration produced by the assessee and instead should have directed the assessing authority to verify the form 18 declarations and grant relief to

the assessee if he is entitled to. The Tribunal after noticing the form 18 declaration produced by the assessee had made certain comments and

thereafter has directed the assessing authority to verify the genuineness of form 18 declarations and pass fresh orders in accordance with law.

Aggrieved by the said order, the assessee is before us in this revision petition.

Shri P.S. Raman, learned Senior Counsel appearing for the assessee, would submit, that, the Tribunal while directing the assessing authority to

pass fresh orders in accordance with law, ought not to have commented upon form 18 declaration filed by the assessee and therefore submits that

a direction may be issued to the assessing authority to pass fresh orders in accordance with law without being influenced by any one of the

observations made by the Tribunal.

The admitted facts are,--the assessee for the assessment year in question had claimed concessional rate of tax in the annual returns filed for the

assessment year 2003-04, without producing form 18 declarations. The assessing authority had rejected the claim for concessional rate of tax.

Such declaration forms were produced before the first appellate authority in the appeal filed against the assessment order. The first appellate

authority while directing the assessing authority to consider the form 18 declaration before him, could have only directed the assessing authority to

consider the form 18 declaration for claiming concessional rate of tax and pass appropriate orders in accordance with law.

In our opinion, the State has rightly agitated the matter before the Tribunal. The Tribunal while disposing of the appeal and further remanding the

matter to the assessing authority had made observations about the form 18 declaration which, in our opinion, were unnecessary for the disposal of

the appeal. We say so, for the reason, that, when the assessing authority while reconsidering the claim of the assessee will be bound by the

observations made by the Tribunal and he will not be in a position to apply his mind independently while reconsidering the matter.

Therefore, we pass the following:

(i) The revision petition is disposed of.

(ii) The assessing authority will take form 18 declaration filed by the petitioner on record and pass fresh orders in accordance with law without

being influenced by the observations made by the Tribunal insofar as the claim of the assessee for concessional rate of tax is concerned. Ordered

accordingly.