JUDGMENT
1. The matter arises under the Kerala General Sales Tax Act, 1963 for short “the Act”. The assessee is the revision-petitioner. State is the respondent. The assessment year is 1994-95. For the said assessment year the assessee filed return disclosing a taxable turnover of Rs. 2,99,031.63. There was no inspection of the business premises. However, the assessing authority got certain check-post declarations. It is on the basis of the said check-post declarations, the assessing authority proposed to reject the books of account and to estimate the turnover on best judgment basis. In reply to the pre-assessment notice, the assessee gave explanation with regard to the purchase bills obtained from the check-post. The assessing authority had accepted the explanation with regard to three bills. He, however, did not accept the explanation with regard to two bills, the total of which came to Rs. 9,610.21. This is with regard to bills 633 dated July 20, 1994 and 53 dated July 13, 1994. The assessing authority had estimated the turnover by making an addition of six times the suppression so found. This was confirmed in appeal, both by the Additional Appellate Assistant Commissioner of Sales Tax as well as by the Sales Tax Appellate Tribunal.
2. Dr. K.B. Mohammed Kutty, learned Counsel appearing for the petitioner, submits that the only reason for the rejection of the books of account and the estimation is the alleged check-post declarations. The learned Counsel submitted that out of the five purchase invoices, three have been explained to the satisfaction of the assessing authority, but the assessing authority did not accept the explanation with regard to two bills mentioned above. The counsel also relied on the decision of this Court in the judgment dated February 11, 2003 Reported at [2008] 11 VST 149 (Ker) C.O. Varghese v. State of Kerala in T.R.C. No. 65 of 2003 wherein this Court in similar circumstances directed the Assessing Authority to add only the actual suppression found out from the check-post declarations.
3. We have heard the learned Government pleader also. He submitted that in the instant case the assessee could not satisfactorily explain the two purchase invoices, the total value of which comes to Rs. 9,610.21 and the assessing authority on the basis of such suppression had made only a reasonable addition of six times of such suppression. He has also submitted that both the appellate authorities has considered this question and affirmed the addition made by the assessing authority. He further submitted that the Tribunal as the final fact-finding authority found that the addition of six times the actual suppression made by the assessing authority is only reasonable and therefore there is no case for interference by this Court in this case.
4. We have considered the rival submissions. Admittedly, the only reason for rejecting the books of account and estimating the turnover is the check-post declarations. As already noted five purchase bills were obtained from the check-post and the assessee had satisfactorily explained three of the said bills. The assessing authority did not accept the explanation with regard to two bills, totalling to Rs. 9,610,21.
5. This Court considered an identical question in the judgment dated February 11, 2003 Reported at [2008] 11 VST 149 (Ker) C.O. Varghese v. State of Kerala in T.R.C. No. 65 of 2003. The relevant portion reads as follows:
But so far as the addition made on the basis of the check-post declarations are concerned, according to us, there was no justification for making any addition apart from the actual amount covered by the check-post declaration on the assumption that assessee might have practiced similar unaccounted transactions also. The check-post declarations, it must be noted, came to the notice not on the basis of any inspection by the assessing authority but only after the assessment year was over, if the assessee had transported goods through the check-post for the other periods also, it could have been brought to light. Certainly, the assessing authority could have called for those declarations from the same check-post or from other check-posts. The assessing authority has no case that the assessee had in fact, transported goods either through the very same check-post or through other check-posts in the State for the other periods. In these circumstances, unlike in the case of additions to be made on the basis of inspection conducted in the business premises during the assessment year both towards actual suppression and towards probable omissions and suppressions of the similar nature, additions towards probable omissions and suppressions, cannot be made with reference to check-post declarations. The Tribunal, in fact, has found that the addition made is arbitrary and calls for interference. The Tribunal has only reduced the addition from six times the value determined on the basis of check-post declarations to three times. According to us, the Tribunal should have sustained addition of only the sale value of the purchases covered by the five check-post declarations. In the above circumstances in modification of the order of the Tribunal, we direct the assessing authority to modify the assessment for the year 1992-93 by adding only the sale value of the purchases covered by the five check-post declarations.
6. The above decision squarely applies to the facts of the present case. In the circumstances, in modification of the orders passed by the authorities below, we direct the assessing authority to modify the assessment by taking the actual purchase suppression of Rs. 9,610.21 and make an addition of a reasonable gross profit for arriving at the sale value. The rate of tax that should be applied is the rate of tax on the goods covered by the purchase bill. S.T. Revision is disposed of as above.
