The Government Pleader Raised Twocontentions Against The Challenge. Reliance Wasplaced On The Decision In The Bhopal Sugarindustries Ltd v. The Income-Tax Officer,Bhopal [Air 1961 Sc 182], To Submit That Once Theappellate Authority Had Remanded The Matter For

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE T.R.RAVI TUESDAY, THE 28 DAY OF FEBRUARY 2023 / 9TH PHALGUNA, 1944 WP(C) NO. 38443 OF 2022 PETITIONER: 1NATIONAL RADIO ELECTRONICS CORPORATION,MAIN ROAD, TALIPARAMBA KANNUR, PIN – 670141REPRESENTED BY ITS JOINT MANAGING PARTNER P.SHAJI, BY ADV RAJESH NAMBIAR RESPONDENTS: 1DEPUTY COMMISSIONER OF STATE TAX,STATE GOODS AND SERVICE TAX DEPARTMENT SPECIAL CIRCLE, GROUND FLOOR, ADDITIONAL CIVIL STATION, KANNUR, PIN - 6700022JOINT COMMISSIONER(APPEALS) ISTATE GOODS AND SERVICE TAX DEPARTMENT KOZHIKODE, PIN - 6730063THE COMMISSIONERSTATE GOODS AND SERVICE TAX DEPARTMENT, 9TH FLOOR, TAX TOWER, KILLPPALAM, KARAMANA P.O, THIRUVANANTHAPURAM, PIN - 695001BY ADV.DR. THUSHARA JAMES, SR.GOVERNMENT PLEADERTHIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON28.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: T.R. RAVI, J. ------------------------------------ W.P.(C.) No.38443 of 2022------------------------------------Dated this the 28[th] day of February, 2023JUDGMENT Admit. Government Pleader takes notice forrespondents. 2. The prayer in the writ petition is to quashExt.P3 modified assessment order to the extent itsustains defect No.II noted in the pre-assessmentorder, pertaining to purchase suppression, and, todeclare that the rejection of the documents producedby the petitioner on the reason that the petitioner hasnot produced the credit notes, is against thedirections in Ext.P1 appellate order. 3. The Appellate Authority had by Ext.P1 order dated 22.02.2021 directed modification of assessmentand also directed the appellant to produce completebooks of accounts and supporting documents before the assessing authority. Thereafter, by Ext.P3 orderthe assessing authority has answered defects I, III,IV, V and VI noticed earlier, in favour of the assessee. 4. As far as defect No.II is concerned, theassessing authority noted that KVATIS data revealedthat the assessee effected purchases from certainregistered dealers and that the verification revealedgross mismatch in the invoice particulars reported bythe assessee and the corresponding seller dealers.The assessing authority has taken it as evidence toshow unaccounted purchase. It is also stated thatthere are differences in the invoice numbers, invoicedate and value of goods/tax collected. After listing outthe details of the invoices it is stated that theassessee was directed to produce the above invoicesin original for verification failing which it wasproposed to make additions. 5. The assessee submitted detailed reply. Theassessing authority noted that the assessee has produced the entire 959 Nos. of purchase invoices inoriginal and that except for 53 purchase invoices, therest were found to be accounted. The list of the 53invoices is shown as a table in the order. 6. The contention of the assessee is that invoicesare raised without any purchase orders and the saidinvoices had been returned to the supplier, as therewere no corresponding purchase or supply of goods.However, the same has been shown as sales return inthe returns filed by the suppliers. The assessingauthority has rejected the contention stating that it isa prevailing tax evasion practise, where the suppliersand the buyer dealer collude together and form anillicit agreement and supply of goods are effected onproperly issued sales invoices and after completingthe sales transaction and transportation, the suppliershows the same as sales return in the returns filedand the buyer shows it as goods not received. Exceptfor stating that there is such a practise, there is 6. The contention of the assessee is that invoicesare raised without any purchase orders and the saidinvoices had been returned to the supplier, as therewere no corresponding purchase or supply of goods.However, the same has been shown as sales return inthe returns filed by the suppliers. The assessingauthority has rejected the contention stating that it isa prevailing tax evasion practise, where the suppliersand the buyer dealer collude together and form anillicit agreement and supply of goods are effected onproperly issued sales invoices and after completingthe sales transaction and transportation, the suppliershows the same as sales return in the returns filedand the buyer shows it as goods not received. Exceptfor stating that there is such a practise, there is nothing to show that the goods were actually receivedby the petitioner or the invoices were issued on thebasis of purchase orders. The officer has stated thatthe burden of proof is on the assessee under Section9 of the Act and the assessee failed to produce validdocumentary evidence to prove the claim. The saidfinding cannot be justified, since the assessee cannotbe asked to prove a negative. The assessee cannot beexpected to prove that he had not purchased orreceived goods. The reasoning ultimately is that thepetitioner has failed to produce proof of sales return.According to the petitioner, there cannot be a salesreturn if there has been no sale at all. 7. The Government Pleader raised twocontentions against the challenge. Reliance wasplaced on the decision in The Bhopal SugarIndustries Ltd. v. The Income-Tax Officer,Bhopal , to submit that once theAppellate Authority had remanded the matter for WPC No.38443 of 2022 consideration of the assessing officer, it is for theassessing officer to independently consider and passorders. It is also submitted that under Section 9 ofthe Act it is for the petitioner to prove the transactionif he is called upon by the assessing officer to do so.There can be no quarrel with the above saidpropositions. The Bhopal Sugar (Supra) specificallysays that if a Subordinate Tribunal refuses to carryout directions given to it by a Superior Tribunal inexercises of its appellate powers, the result will bechaos in the administration of justice. 8. This is not a case where there is a refusal bythe respondent to carry out the directions of theSuperior Tribunal. As a matter of fact, all otherdefects noticed earlier were answered in favour of theassessee, pursuant to the directions issued by theAppellate Tribunal. As far as the defect No.II isconcerned, as already observed, the reasoning of theassessing officer cannot be sustained. Even though WPC No.38443 of 2022 the burden of proof is on the assessee, the assesseecan only be expected to prove what is possible ofproving and he cannot be expected to prove anegative. He cannot prove a transaction which doesnot exist according to him. There is no logic orreason to direct the assessee to prove a sales return,when the contention is, there is no sale. The saiddirection can be justified only if there is a proof ofsale. In the above view of the matter, this writ petitionis allowed and the finding regarding defect No.II inExt.P3 order is set aside. Needless to say, therecannot be any recovery proceedings based on thefindings in Ext.P3 with regard to defect No.II. Sd/- T.R.RAVIJUDGE APPENDIX OF WP(C) 38443/2022 PETITIONER’S EXHIBITS:EXHIBIT P1TRUE COPY OF THE APPELLATE ORDER DATED 22.02.2021EXHIBIT P2TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURTIN W.P.(C) 33103/2022 DATED 19.10.2022EXHIBIT P3TRUE COPY OF THE MODIFIED ASSESSMENT ORDER DATED 9.11.2022 FOR THE YEAR 2013-14 RESPONDENTS' EXHIBITS:NIL TRUE COPY P.A. TO JUDGE