G. SIVARAJAN, J. -
(1.) THE Deputy Commissioner (Law), Board of Revenue (T), Ernakulam, is the revision petitioner. THE respondent-assessee was a licensee for vending arrack during the assessment year 1991-92. During the relevant period arrack was taxable only at the point of first sale inside the State. According to the assessee, he had purchased 14,850 litres of arrack for Rs. 2,38,638. 14 from the Co-operative Sugar Mills, Chittur and Travancore Sugars, Thiruvalla after paying sales tax. THE assessee, in his return filed under the Kerala General Sales Tax Act, 1963 for the year 1991-92, disclosed a total and exempted turnover of Rs. 45,97,875. 75 and the taxable turnover was returned as nil. THEre were two inspections of the business premises of the assessee on October 25, 1991 and November 12, 1991. In the first inspection a shortage of 2 litres of arrack was found and the offence was compounded on payment of Rs. 500. In the second inspection a shortage of 0. 180 litre of arrack was found and the offence was compounded on payment of a sum of Rs. 5,000. THE inspecting authority also noted that the assessee has not maintained the books of accounts or stock register. No sale bills were also seen issued. Apart from the above, the assessing authority was of the view that the sales turnover of arrack shown at Rs. 45,97,875. 75 disclosed on a purchase turnover of Rs. 2,38,638. 14 shows that the assessee had effected unaccounted purchase and sale of arrack to the extent of the difference in the prevailing market rate of arrack and the turnover returned. THE assessing authority on these materials proposed to reject the books of accounts and to estimate the taxable turnover at Rs. 33,11,380. THE assessee filed objection to the above. However, the assessment was completed as proposed. THE assessee took up the matter in appeal before the Additional Appellate Assistant Commissioner, AIT & ST, Kozhikode, who upheld the rejection of accounts but reduced the estimated taxable turnover by adopting the sales turnover of arrack at Rs. 125 per litre. In further appeal by the assessee the Tribunal directed the assessing authority to delete the estimated taxable turnover and further directed to treat the entire turnover as per accounts as second sales of arrack.
(2.) LEARNED Government Pleader appearing for the revision petitioner submits that apart from the defects pointed out by the assessing authority, viz. , the non-maintenance of books of accounts and absence of sale bills, the turnover disclosed by the assessee would clearly show that the assessee had effected unaccounted purchase and sale of arrack as otherwise the assessee cannot disclose the turnover of Rs. 45,97,875. 75 by sale of 14,850 litres of arrack purchased for Rs. 2,38,638. 14. The Government Pleader also relied on the decision of the division Bench of this Court in K. C. Sunil Kumar v. State of Kerala (1994) 2 KTR 32 where according to him on similar facts the division Bench upheld the estimate made by the assessing authority on the basis of the price variation in the sale of arrack. The Government Pleader also submits that though another division Bench of this Court in Lovely Thomas v. State of Kerala  113 STC 505 has held that when an excess stock is found on inspection it is for the authorities to establish the source from where the unaccounted purchase was made and that no addition could be made only for the reason that the books of accounts were not found to be fully posted at the time of the inspection, it was reversed by the Full Bench of this Court in Mary Antony v. State of Kerala  120 STC 224; (2000) 8 KTR 545. The Government Pleader on the basis of these decisions submits that the Tribunal had committed a serious error in directing the assessing authority to treat the entire sales turnover of arrack returned by the assessee as second sales and to grant exemption.
Sri V. Giri, learned counsel for the respondent-assessee, submits that though two inspections were conducted by the intelligence wing of the Sales Tax Department on October 25, 1991 and on November 12, 1991 the said authorities could not find any excess quantity of arrack in the business premises. He further submitted that the stock register was available in the godown of the assessee which was produced before the assessing authority and that it was on that basis the assessing authority has found that there were shortages of arrack on both the inspections. The counsel further submitted that the fact that the assessee has returned a higher turnover by itself will not be sufficient to assume that the assessee had effected unaccounted purchase and sale of arrack from unknown source.
We have considered the rival submissions. The admitted facts are : The assessee is a dealer in arrack, that arrack at the relevant time was a single point commodity, that the assessee had purchased a total quantity of 14,850 litres of arrack from the Co-operative Sugar Mills, Chittur and Travancore Sugars, Thiruvalla after paying sales tax, that the assessee had returned a total and exempted turnover of Rs. 45,97,875. 75 which would show that the sale value per litre conceded by the assessee works out to Rs. 309. 62, that in the inspection conducted by the Inspecting Assistant Commissioner, Manjeri and by the Intelligence Officer, Squad No. I, Malappuram only shortage of two liters of arrack in the first inspection and 0. 180 litre of arrack in the second inspection were found and that the assessee had compounded the offence on both the occasions for Rs. 500 and Rs. 5,000 respectively. It is relevant here to note that in both the inspections the Inspecting Officers could not find any excess stock nor did they find any material like kuruppu, etc. , regarding any unaccounted transaction effected by the assessee. The Inspecting Officers have noted that the books of accounts, stock register and sale bills were not there at the time of inspections. However, the assessing authority has noted the difference in stock of arrack (shortages already mentioned) only on the basis of stock register maintained by the assessee. Thus it is clear that the only ground which was available to the assessing authority to estimate the turnover rejecting the books of accounts was the sales turnover of arrack furnished by the assessee. True, if the sales turnover is taken as correct it works out to Rs. 309 per litre which according to the assessing authority is highly excessive having regard to the prevailing sale value of arrack during the relevant period. Certainly it is a matter for an explanation from the assessee. The stand taken by the assessee is that it is for the assessee to fix the sale price taking into account the purchase cost, establishment charges, kist amount and so on and that no sale price had been fixed by the Excise Department. True, there is no proper explanation with regard to the excessive nature of the sale price returned. However, we notice that the Tribunal has considered all these matters in the appellate order and had considered the matter in the following manner. " The dealer herein is a dealer in arrack who obtained his entire supplies for sales from Co-operative Sugar Mills, Chittur and Travancore Sugars, Thiruvalla. He accordingly disclosed a purchase of 14,850 litres (valuing Rs. 2,38,638. 14) and disclosed a sale of Rs. 45,97,875. 75. The assessing authority observed that the dealer had sold the entire stock for Rs. 45,97,875. 75. The assessing authority did not believe this position presumed unaccounted purchases of arrack. Thereafter the assessing authority estimated the sale of 14,850 litres of arrack at Rs. 13,36,500 and gave exemption only for the estimated sales. The first appellate authority enhanced the estimated value to Rs. 18,56,250 (14,850 litres for Rs. 125) and thereby the exemption. The dealer submitted before us that he had not effected any purchase other than those accounted in the books of accounts and that there cannot be any estimate of taxable turnover by inference of unaccounted purchases or purchases being effected from outside the State. The contention of the Revenue is that the sale disclosed was highly exorbitant when compared against the quantum of arrack sold and the natural presumption should be that the appellant effected unaccounted purchases and accounted their sales. Therefore according to the Revenue, the portion of estimated sales referable to accounted purchases alone be given exemption and the balance be treated as taxable sales. Considering the above rival arguments, we may first of all observe that an estimation of taxable turnover cannot be merely based on presumptions and surmises alone. There should be justifying primary factors and justifying circumstances for the estimation of taxable turnover. The dealer herein is a dealer in arrack only and the determinative factor for taxable sales is the source of purchase. When the dealer effects purchases from within the State and effects sales of that goods he can only effect 'second sales' in the State and taxability is as provided under entry 45 or 50 of the First Schedule to the Kerala General Sales Tax Act. In the case on hand the accounts of the dealer disclosed purchases only from within the State. The stock shortages of arrack noticed during inspection (i. e. , 2 litres and 0. 180 litre) do not lead to an inference that the dealer effected unaccounted sales out of unaccounted purchases. It is also noteworthy that the authorities have not established a single instance of suppression of purchase of arrack from within the State. The sale and purchase of arrack are also subject to restrictions under Abkari Act and the purchase and sales are referable to excise records. However, herein, the sales tax authorities have not come across materials in those records to come to a conclusion of effecting purchases which are taxable at sale point under the Kerala General Sales Tax Act. The authorities have also not come across unaccounted 'purchases'. The assessing authority had also not observed or stated that the dealer had sold quantities of liquor more than the accounted purchases. The results of inspections, that shortages alone were found affirms the position that dealer had not failed to account purchase at least till the time of inspection. There are also no circumstances existing to presume suppressions of purchases after the date of inspections. Since the determinative factor of taxability of goods sold by the dealer is 'purchases' and the authorities have failed to establish unaccounted purchases or purchases from outside the State, there are no grounds to estimate taxable sales in any manner whatsoever. The limiting of exemption by estimating second sales at a lower figure than that accounted and treating the difference as taxable sales has no sound logic or reasons. Without establishing unaccounted purchases or purchases from outside the State an estimation of taxable turnover is redundant. Therefore we direct the assessing authority to delete the estimate of taxable turnover and further direct to treat the entire turnover as per accounts as second sales of arrack in the assessment for 1991-92. "
(3.) THE decision relied on by the Government Pleader, viz. , K. C. Sunil Kumar v. State of Kerala (1994) 2 KTR 32 (Ker) of course deals with almost a similar situation. In that case the division Bench observed that as a final fact-finding authority the Appellate Tribunal adverted to the huge and glaring difference between the quantity of arrack accounted and the sale proceeds received and accounted and in the absence of an explanation for such abnormally high sale proceeds for the quantity of arrack accounted, it inferred that unaccounted arrack should have been sold and that it is on that basis the accounts of the dealer were rejected and the taxable turnover was determined. THE division Bench further observed that this is largely a finding of fact based on appreciation of the available materials in the case and there is no error of law in the order of the Appellate Tribunal.
In the present case the discussion of the matter by the Tribunal in the portion extracted above would show that the Tribunal has considered all the relevant matters and has arrived at a finding of fact that there are no grounds to estimate the taxable turnover in any manner whatsoever. According to us, the findings of fact arrived at by the Tribunal in the appellate order are based on materials available on record. We do not find any illegality in the said order. In this view of the matter it is unnecessary for us to consider the decision in Mary Antony's case  120 STC 224 (Ker) [fb]; (2000) 8 KTR 545 (Ker) [fb] mentioned supra reversing the decision in Lovely Thomas' case  113 STC 505 mentioned above relied on by the assessee. There is no merit in this revision. It is accordingly dismissed. Petition dismissed. .;