2009 (11) TMI 838 - HC - VAT and Sales Tax

Whether there is any justifiable evidence to assess first sale of liquor on the respondent? Held that - In this case the actual accounts maintained by the respondent and seized by the income-tax authorities were transmitted to sales tax authorities for the purpose of assessment of escaped turnover. In fact the assessing officer verified purchase details of liquor by assessee from authorised channel that is the Beverages Corporation and found that the excess quantity sold is liquor purchased clandestinely from illicit sources. We are of the view that the assessee cannot object against Department relying on their accounts maintained in the seized computer. In fact the first appellate authority took a reasonable stand by giving opportunity to the assessee to prove before the assessing officer that the turnover found in the computer statements covers even the disclosed turnover for the purpose of avoiding duplicity. Thus there was no justification for the Tribunal to interfere with the first appellate authority s order. We therefore allow the revision cases filed by the State by reversing the majority order of the Tribunal for both the years and by restoring the appellate authority s order remanding the matter.

Issues involved:
Sales tax revision cases against majority decision of Sales Tax Appellate Tribunal regarding sales tax assessments for years 1999-2000 and 2000-01, assessment of first sale of liquor by respondent, reliance on computer statements seized by Income-tax Department, disagreement between Tribunal members on source of liquor sales, reliance on previous court decisions, assessment based on positive evidence, legality of assessing first sale of liquor, justification for relying on seized accounts, remand by first appellate authority, interference by Tribunal with first appellate authority's order.

Comprehensive Analysis:

The High Court of Kerala heard sales tax revision cases filed by the State against the Sales Tax Appellate Tribunal's decision favoring the respondent-assessee in sales tax assessments for the years 1999-2000 and 2000-01. The respondent operated a bar hotel where liquor was sold, and discrepancies were found between the sales recorded in the books and the computer statements seized by the Income-tax Department during a search. The assessing officer estimated the turnover based on the seized computer statements, leading to the rejection of accounts and assessment of excess liquor sales as first sales procured through illicit channels by the respondent. The first appellate authority upheld the rejection of books but remanded the cases to the assessing officer to address the issue of turnover duplicity. The Tribunal majority held that only Kerala State Beverages Corporation could make the first sale of liquor in Kerala, while the dissenting member disagreed, citing previous court judgments.

The Court analyzed the evidence and arguments presented. The respondent did not dispute the seizure of the computer with data showing discrepancies in sales figures. The assessing officer found that the sales recorded in the computer were significantly higher than the purchases from authorized channels, indicating potential clandestine sales. The Court noted the prevalence of illicit liquor trade in Kerala and emphasized that assessments should rely on positive evidence rather than presumptions. The Tribunal's conclusion that all first liquor sales in Kerala must be by the State Beverages Corporation was deemed unreasonable. The Court supported the dissenting member's order, stating that reliance on the seized computer accounts for assessment was justified.

The Court addressed the respondent's objection to using seized accounts for sales tax assessments, distinguishing the case from previous judgments. It emphasized that the seized accounts were directly transmitted for assessment purposes and that the assessing officer verified the liquor purchases from authorized sources. The Court found no grounds for the Tribunal to overturn the first appellate authority's order and allowed the State's revision cases, reversing the Tribunal's majority decision and reinstating the appellate authority's remand order for further consideration.

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