S VALSALA Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS revision is filed by an assessee under the Kerala General Sales Tax Act. In this revision, she assails the order passed by the Sales Tax Appellate Tribunal, Additional Bench, Kottayam, dated March 27, 1992 in T. A. No. 266 of 1991. The respondent is the State. The assessee is a dealer in arrack. We are concerned with the assessment year 1987-88. During the year, the officials of the Sales Tax Department inspected the business place of the assessee on September 24, 1987 and January 16, 1988. During the first inspection on September 24, 1987, there was an excess of 32 bags of empty bottles. During the second inspection on January 16, 1988, apart from stock discrepancy, the officials recovered a diary showing daily cash transactions, day book in loose sheets from January 1, 1988 to January 15, 1988, arrack issued statement from April 3, 1987 to October 9, 1987 and purchase bills for 1987-88. On verification of the said records with the accounts maintained by the assessee, various irregularities and stock variations were revealed. One important aspect noticed was that there was variation in the stock of arrack, shortage of 6,530. 72 litres. There was no satisfactory explanation for the amounts shown under the caption "receipt and payment" in the diary. The variations and irregularities were admitted and the assessee herself compounded the offence and paid a sum of Rs. 1,00,000 as compounding fee. The assessing authority noticed that apart from the variations and irregularities found on inspections, the bid amount for Group I was Rs. 23,22,222 and Group III was Rs. 19,91,000 and the total sales returned was only Rs. 30,23,800, which showed that as per the trading account, it was a gross loss and there was no explanation therefor. Considering these aspects, the books of account and returns were rejected. The Sales Tax Officer fixed the total and taxable turnover at Rs. 77,40,550 and Rs. 47,06,750 respectively. He made an addition of Rs. 45,50,700 as against the total suppression detected by the assessing authority (Rs. 8,19,437 ). In appeal, the Appellate Assistant Commissioner affirmed the rejection of accounts and held that in estimating the total taxable turnover, the addition should be confined to 1 1/2 times of the sales of arrack as per accounts. He limited it to 60 per cent of the conceded total turnover. In second appeal, the Appellate Tribunal noticed that the first appellate authority sustained the suppression at 60 per cent of the conceded total turnover and even that was much. So, the Appellate Tribunal substituted the addition to 1 1/2 times of the actual suppression detected. The suppression actually detected was Rs. 8,19,437. The addition was a sum of Rs. 4,09,719. The Appellate Tribunal held that the assessing authority had not established any instance of purchase from outside the State and no exemption was allowed for the shortages found and, therefore, ordered 80 per cent of the addition as exempted turnover and gave exemption to it. In other words, even limiting the addition to 1 1/2 times the suppressed turnover found out, 80 per cent of the sale was given exemption as not exigible to tax. The appeal filed by the State (T. A. No. 324 of 1991) was dismissed. It is against the common order passed by the Appellate Tribunal dated March 27, 1992, modifying the quantum in the best judgment assessment the assessee has come up in revision.

(2.) WE heard counsel for the revision petitioner-assessee, Mr. N. Muraleedharan Nair, and also counsel for the respondent-State, Senior Government Pleader Mr. V. C. James.