ABRAHAM MATHAI Vs. STATE OF KERALA

JUDGEMENT

(1.) THE assessee was a dealer in arrack. THE assessment concerned is for the year 1991-1992. THEre was an inspection at the business premises of the assessee by the Sales Tax Intelligence Squad, Ernakulam on May 27, 1991. On verification of the books of accounts of the assessee with reference to the shop inspection report prepared by the intelligence squad, it was found that there was shortage of arrack (Government sealed) to the extent of 620. 950 liters and excess of arrack (unsealed) to the extent of 620. 950 litres. It was also noted that at the time of inspection, the assessee had not maintained any books of accounts and further, no sale bills were issued for sales. THE assessing authority, in the assessment for the year 1992-93, on the basis of the stock variation and other defects mentioned above, proposed to reject the books of accounts of the assessee and to estimate the turnover by adding six times the suppression detected at the time of inspection amounting to Rs. 12,19,123. 50. THE assessee filed objections stating that the difference in stock is on account of the fact that the sealed bottles were opened and arrack was filled in unsealed small bottles for the purpose of convenience of supply to the customers, which is evident from the fact that both the shortage and the excess are of equal quantity. THE assessing authority rejected the said contention and completed the assessment as proposed. THE first appellate authority, taking into account the circumstances that apart from the stock variation found in the inspection, no actual case of suppression of unaccounted arrack was found out by the assessing authority, modified the assessment by limiting the addition by three times the addition on the sales value of excess stock found at the time of inspection. In further appeal filed by the assessee, the Tribunal has confirmed the order of the first appellate authority.

(2.) DR. K. B. Muhamed Kutty, learned Counsel for the petitioner submits that the assesses had purchased the entire arrack from the Kerala State Beverages Corporation Ltd. , which was the sole agency in the State at the relevant time for supply of arrack to the authorised licensees. He further submitted that the shortage and excess found in the inspection was of equal quantity and that the assessee had clearly explained in his reply to the notice that there was no difference in the actual quantity of arrack, but the difference is only due to the fact that the sealed bottles were opened and it was filled in small unsealed bottles for the convenience of supplying it to the customers. The counsel also submitted that the first appellate authority has clearly found that the assessing authority has not considered the objections filed by the assessee objectively and that the assessing authority has disposed of the objections taken by the assessee in one sentence to the effect that there is no merit in the objections. The counsel also relied on the decision of this Court in Lovely Thomas v. State of Kerala [1999] 113 STC 505; (1999) 7 KTR 292, as affirmed by the honourable Supreme Court in Civil Appeal Nos. 3558 and 3559 of 1998 (Reported as State of Kerala v. Lovely Thomas [2003] 131 STC 8 ). The counsel further submits that at any rate, in the absence of any other materials, the additions sustained by the first appellate authority is also on the higher side.