G. RAJENDRA BABU Vs. STATE OF KERALA

JUDGEMENT

(1.) The revisionpetitioner is an assessee under the Kerala General Sales Tax Act. It is conducting the business of a foreign liquor bar attached to a hotel. The respondent is the Revenue. We arc concerned with the assessment year 198586. In this revision, the common order passed by the Sales Tax Appellate Tribunal dated 3rd February 1992 in T. A. Nos. 289 and 396 of 1989 is assailed. The assessee is doing business in cooked food and liquor, it reported a total turnover of Rs. 39,41,403 for the year 198586. The entire turnover was claimed as exemption. For the defects pointed out in the preassessment notice, namely, stock variations and sales suppressions detected on the inspection on 7th February 1986, the assessing authority rejected the returns and die book results. In the best judgment made, he added a sum of Rs. 9,81,750 towards the sales suppression and estimated the addition on the turnover of liquor, empty bottles, gunnies, etc., and determined the taxable turnover at Rs. 11,24,500. In appeal, the appellate Assistant Commissioner sustained the rejection of accounts. He ordered a modification by reducing the addition of liquor to 3.5 per cent of the conceded turnover and also deleted the estimated addition made on soda and soft drinks. Modification was also ordered in the case of ice and pepper. Dissatisfied with the order passed by the Appellate Assistant Commissioner, the assessee filed T.A. No. 289 of 1989 before the Sales Tax Appellate Tribunal; Against the modification granted by the Appellate Assistant Commissioner, the Revenue filed T.A. No. 396 of 1989 before the Tribunal. Both, the appeals were considered together and a common order was passed by the Tribunal, dated 3rd February 1992. Both the appeals were dismissed. The assessee has come up in revision against the common order passed by the Tribunal, where by the assessee's appeal was dismissed and the modification in the quantum of estimate fixed by the Appellate Assistant Commissioner was sustained by the Sales Tax Appellate Tribunal. It is evident from Para.2 of the order of the Tribunal, that the assessee objected solely to the addition sustained on liquor. Before us also, the grievance was confined to the addition made on liquor.

(2.) We heard counsel for the revision-petitioner Mr. S.A. Nagendran. The plea was that liquor is taxable only at the first sale point and since the sales by the revision-petitioner are second sales within the State addition sustained on liquor due to shortage found on inspection is not sustainable. There is no case that there was any unaccounted purchase of liquor. Reliance was placed on a Bench decision of this Court in Chacko v. State of Kerala 1991 KLJ (Tax Cases) 665.

(3.) We are of the view that the plea of the revision-petitioner is without substance. Admittedly, there was an inspection of the business premises of the assessee on 7th February 1986. Shortage was found in a substantial measure in the stock of Brandy, Whisky, Rum, Gin and Beer. Besides the above, verification of the records recovered at the time of inspection, revealed a sales suppression of Rs. 1129/50 on 2nd February 1986. The above suppression and variations in stock and failure to maintain correct and complete accounts, were admitted by the assessee and the offence was compounded on payment of Rs. 6,732. No satisfactory explanation was offered for the defects pointed out in the pre-assessment notice. This resulted in the assessing authority implementing the proposals made in the pre-assessment notice. The addition was reduced by the Appellate Assistant Commissioner to 3.50 per cent of the conceded turnover, which worked out Rs. 1,19,450 only as against Rs. 9,81,750 added by the assessing authority. Before the Sales Tax Appellate Tribunal the pica of the assessee was that the suppressions detected is by way of shortages on tax suffered liquor purchased within the State and the addition of taxable turnover on that basis is illegal. The Tribunal adverted to the above plea and also the decision of this Court in Chacko's case 1991 KLJ (Tax Cases) 665 and held thus: