1993 (6) TMI 225 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of taxable turnover for the year 1989-90 based on irregularities found during inspection.
2. Discrepancies in stock and unaccounted purchases and sales leading to rejection of accounts.
3. Justification of estimating taxable turnover at 3½ times the average running stock value.

Analysis:

1. The petitioner, an assessee under the Kerala General Sales Tax Act, 1963, was involved in the business of gold ornaments in Thrissur. The assessing authority rejected the returns for the assessment year 1989-90 due to irregularities discovered during an inspection. The total and taxable turnover was initially fixed at Rs. 1,11,12,390 by the assessing authority, which was later modified by the Deputy Commissioner (Appeals) to Rs. 98,77,680. The Appellate Tribunal, in a common order, determined the turnover at Rs. 86,42,970, based on 3½ times the average running stock value. The petitioner filed a revision against this order, which was deemed incompetent due to conflicting decisions and the finality of the Tribunal's decision in another appeal.

2. During the inspection, discrepancies in stock and unaccounted purchases and sales were identified, leading to the recovery of 14 slips indicating unaccounted sales of new ornaments and suppression of both purchases and sales of gold ornaments by the assessee. The Appellate Tribunal justified the rejection of the books of account due to these discrepancies and upheld the decision that no reliance could be placed on the book results. The Tribunal's decision was considered justified in law based on the findings of unaccounted transactions.

3. The estimation of taxable turnover at 3½ times the average running stock value was deemed fair and reasonable by the Court. Despite the discrepancies and suppressions in purchases and sales, the Tribunal's decision to fix the taxable turnover at Rs. 86,42,970 was upheld. The Court found the method of determining taxable turnover based on the average running stock value to be a recognized method, supported by cogent reasons provided by the Appellate Tribunal. The Court concluded that there was no error of law in the Tribunal's order, and the tax revision case was dismissed for lacking merit.