VAT paid on Underrated Goods: Kerala High Court custodies matter back to Authority, no prospect of hearing approved to dealer

VAT paid on Underrated Goods: Kerala High Court custodies matter back to Authority, no prospect of hearing approved to dealer

The Kerala High court remanded the matter of payment of VAT on underrated goods back to the Authority as no opportunity of hearing was granted to the dealer

The dealer, P.T. Johnson is engaged in rearing of Broiler Chicken Birds business and its sale. The inspection of dealer's books, by the Revenue disclosed that the dealer had undervalued the chicken for the account books and paid VAT thereon. In another words, conquest of actual sale value of chicken was resorted to resultant in evasion of tax.

Under the Act by five dealers, the Revenue has found out similar systematic undervaluation of chicken for the books and paying or avoiding payment of tax. The five dealers are alleged to be the close relatives of P.T Johnson/dealer herein.

The Revenue argues that the First Appellate Authority/Deputy Commissioner (Appeals) upon recording the finding that the order of the primary authority is vitiated on account of denial of reasonable opportunity, like cross-examination of spectator whose statements are trusted; violation of principles of natural justice in any form; ought to have completed the assessment in agreement with subsection (5)(a) which provides for settling, decreasing, increasing or cancelling the assessment or the penalty or both as the case may be.

The division bench of Justice S.V. Bhatti and Justice Basant Balaji held that there is violation of principles of natural justice and denial of reasonable opportunity to the dealer. Hence warranting setting aside the penalty order in Annexure-A and as a corollary to the above finding, the Appellate Authority has rightly, within its powers and jurisdiction, remitted the matter to the Primary Authority for consideration and resolution once again. The power of custody is available and no exclusion to the findings recorded by the Tribunal and the Appellate Authority on the remand is justified.