(1.) THE assessee is the revision petitioner and State is the respondent. THE assessment year concerned is 1992-93. THE assessee is a dealer in foreign liquor. Foreign liquor, at the relevant time, was liable to tax only at the point of first sale in the State. Assessee had purchased foreign liquor from the Kerala State Beverages Corporation after paying tax. According to the assessee, its sales being second sales of single point tax commodity, it is not liable to pay tax under the Act. However, under section 5(2A) of the Act there was liability to pay turnover tax. THEre were two inspections of the business premises of the assessee on August 24, 1992 and September 3, 1992. On both the occasions, stock variation was found in certain items of foreign liquor. Except in one case the differences were shortages only. THEre was no compounding proceedings, nor any penalty was imposed for not maintaining true and correct accounts in respect X of the business. However, the assessing authority rejected the books of account and estimated the sales turnover by taking the purchase cost, freight, coolie charges, kist, retail licence fee, etc., and added 22 per cent towards the gross profit to the amount so arrived at. THE total of such amounts arrived at were Rs. 81,10,928.39. THE assessing authority again added five times of the actual suppression detected, which came to Rs. 1,14,110. THE sales turnover of soda estimated at Rs. 70,077 was also added. Accordingly, the total turnover was fixed at Rs. 82,96,020 as against the returned turnover of Rs. 70,97,747. THE assessing authority thereafter levied tax. A turnover of Rs. 95,110 was taxed at 75 per cent which was the rate applicable for foreign liquor, except beer, and a turnover of Rs. 19,000 was taxed at the rate of 50 per cent applicable to beer. A turnover of Rs. 70,980 representing sale of soda was taxed at 10 per cent and the balance Rs. 82, 25, 040 was assessed to turnover tax at 3 per cent.
(2.) IN appeal by the assessee before the Additional Appellate Assistant Commissioner, Agricultural INcome-tax and Sales Tax, Ernakulam, the estimate was modified by directing addition of actual suppression found in respect of foreign liquor. IN further appeal filed by the Department against the said order, the Tribunal set aside the order of the first appellate authority. The Tribunal noted that the assessing authority has not made any addition towards suppressions taking into account the kist amount. The suppression has been fixed at five times the actual suppression detected, which has no relation with the kist amount. The Tribunal further noted that kist amount is seen added to the turnover to arrive at the total sales turnover, and observed that this court in T. R. C. No. 440 of 2000 (Polakulath Wines v. State of Kerala)  138 STC 573 relied on by the assessee has not decided that kist amount cannot be taken as part of sales turnover to arrive at the taxable turnover, or total turnover. It was also observed that the First appellate authority had gone wrong in finding that kist amount and licence fee are not direct expenses in the business and therefore the arrival of the cost of goods sold reckoning the kist amount and licence fee is not justifiable. The Tribunal, thereafter accepted the contention of the Revenue and set aside the order of the first appellate authority, who found that kist amount and licence fee are not direct expenses in the business and therefore the arrival of the cost of goods sold reckoning the kist amount and licence fee is not justifiable. It is also seen that the Tribunal disposed of the appeal sustaining the assessment to the extent indicated in paragraph 3. It would appear from paragraph 3 of the order of the Tribunal that they have sustained the addition to the extent of five times the actual suppression detected, which has no relation with the kist amount. IN this case, the first appellate authority, with reference to the actual suppression found, held that the addition of five times the actual suppression is excessive and it was limited to two times the suppression detected on inspection.
Counsel for the petitioner submitted that the Department did not question the addition so sustained by the first appellate authority. Counsel took us to paragraph 2 of the Tribunal's order, wherein it is stated that the only contention raised by the revenue before the Tribunal is that the first appellate authority erred in deleting kist amount and licence fee from total turnover of purchases to arrive at the total sales turnover. Counsel also relied on the decision of a Division Bench of this Court in T. R. C. No. 440 of 2000 (Polakulath Wines v. State of Kerala  138 STC 573), which has been referred to by the Tribunal also.
We have also heard the learned Government pleader appearing for the revenue. He submits that for the purpose of arriving at the total turnover for the purpose of levying turnover tax, kist, freight and other charges incurred by the assessee are to be reckoned.
(3.) WE have considered the rival submissions. The facts are not in dispute. The assessee is a dealer in foreign liquor. As a result of the two inspections, the total stock variation found is worth Rs. 22,822 the assessing authority has estimated the turnover by taking into account the purchase cost, freight, coolie charges, kist and retail licence fee, besides gross profit. To that amount the assessing authority has also added five times the actual suppression, which came to Rs. 1,14,10. The question for consideration is as to whether the assessing authority was justified in arriving at the sales turnover by taking into account kist, freight, coolie charges, etc. The very same question came up for consideration before a Division Bench of this Court in T. R. C. No. 440 of 2000, which was disposed by judgment dated 5th March, 2001 (Polakulath Wines v. State of Kerala)  138 STC 573. But in that case the assessing authority estimated the turnover by taking into account profit, kist amount, etc., which action of the assessing authority was upheld by the Tribunal. The Division Bench, while sustaining the rejection of the books, has held that kist amount cannot be taken into account for the purpose of estimation of sales turnover. However, we find that the Tribunal has stated in the order that the Division Bench has not said so in clear terms. WE had also occasion to consider the very same question as to whether the sales turnover can be arrived at by taking into account the purchase cost, freight, kist amount, etc., in the judgment dated February 11, 2003 in T. R. C. No. 83 of 2000, which, in turn, followed the judgment dated November 15, 2002 in T. R. C. No. 363 of 2002. In those judgments we have held that kist amount cannot be reckoned for the purpose of arriving at the sales turnover.
For all these reasons we cannot approve the course adopted by the assessing authority for arriving at the sales turnover either for the purpose of levying tax under section 5(1) or for the purpose of section 5(2A) of the Act. To that extent the decision of the Tribunal, which takes a contrary view, cannot be sustained. However, we find that what the Tribunal has done is to sustain the addition of 5 times the actual suppression found. Having regard to the fact that only shortages were found in both the inspections, except in one item, viz., 23 bottles of brandy in the inspection conducted on August 24, 1992, there is no case of excess stock. Apart from that, there was no compounding proceedings, nor any penalty imposed under section 45A also. In these circumstances, we are in agreement with the first appellate authority that the addition of five times actual suppression is not warranted. Accordingly, we set aside the order of the Sales Tax Appellate Tribunal and restore the order of the first appellate authority. The T. R. C. is allowed as above. Petition allowed.;