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Augusthy Thomas Vs. State of Kerala - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case Number T.R.C. No. 4 of 1984
Judge
Reported in[1984]57STC320(Ker)
AppellantAugusthy Thomas
RespondentState of Kerala
Appellant Advocate M. Ramanatha Pillai, Adv.
Respondent AdvocateThe Government Pleader
DispositionPetition dismissed
Cases ReferredState of Kerala v. C. Velukutty
Excerpt:
.....tax officer [1967] 19 stc 210. that was a case in which estimation of turnover by multiplying two transactions found to be suppressed with the number of days under the assumption that similar transactions might have been suppressed for all these days was held to be arbitrary and bad in law. the head office maintained accounts disclosing goods transferred by the branch office as well as goods purchased by it locally. similarly, for the assessment year 1956-57 the sales tax officer added to the turnover of the head office 200 per cent, in regard to the general goods and 600 per cent, in regard to sugar on the basis of secret books discovered there and though, no secret books were discovered in respect of the branch office, made a similar addition in respect of the turnover of the..........the respondent had two offices, both in kozhikode, the head office doing retail business, and a branch office doing wholesale business, each maintaining separate accounts. the head office maintained accounts disclosing goods transferred by the branch office as well as goods purchased by it locally. the branch office had also transactions with its customers. the respondent was assessed to sales tax for the assessment year 1955-56 on the turnover disclosed by its regular books. thereafter, on a surprise inspection of the head office some secret books of account and records were discovered disclosing additional transactions to the extent of 135 per cent of the turnover recorded in the books. the sales tax officer made a reassessment by adding 135 per cent of the turnover of the head.....
Judgment:

K. Bhaskaran, Ag. C.J.

1. This revision is directed against the decision of the Kerala Sales Tax Appellate Tribunal dated 22nd January, 1983, in Tribunal Appeal No. 487 of 1980. The short facts could be stated as follows: The petitioner was an assessee to sales tax on the file of the Sales Tax Officer, Vaikom. He is stated to be a dealer in rubber. For the year 1977-78, he returned a turnover of Rs. 21,57,121.56; and with reference to this entire amount he claimed exemption. Thereafter, the assessing authority detected that there was a suppression to the tune of Rs. 1,79,614.00; and therefore, he added an amount of Rs. 3,59,230.00 to the returned turnover. It is the correctness of this that is under challenge in this revision. According to the counsel for the petitioner, there was no basis, legal or factual, for the addition of twice the suppressed turnover detected to the turnover returned.

2. In support of his arguments, the counsel for the petitioner relied on three decisions. The first decision cited is one of this Court reported in Chandunny Nair Son v. State of Kerala ILR (1962) Ker 307. That was a case in which the assessee's shop was inspected by the officers of the sales tax department on 2nd March, 1956, when it was discovered that the assessee had secreted a book containing a record of clandestine transactions. The inspection of the stock of goods showed suppression of turnover by the assessee. By comparison with the stock on 13th February, 1956, the Sales Tax Officer also found that there was suppression of commission sales on that day. The assessee's explanation that there was no suppression was not accepted. This Court went into the material that was purported to have been relied on by the Sales Tax Officer and found that there was really no material to support the conclusion reached by the Sales Tax Officer. Particularly, it was observed that it was difficult to understand how a secret book not produced would justify the conclusion of the turnover being suppressed to that extent to which the taxing authorities have held in that case. Clearly on the facts of the case, the case on hand could be distinguished.

3. The other decision cited is the one reported in Yousoof Sahib v. Additional Commercial Tax Officer [1967] 19 STC 210. That was a case in which estimation of turnover by multiplying two transactions found to be suppressed with the number of days under the assumption that similar transactions might have been suppressed for all these days was held to be arbitrary and bad in law. The suppression in that case was in' respect of two transactions; and the assessing authority multiplied it by 82 under the presumption that similar transactions were suppressed for all the 82 days and arrived at the turnover. Such a multiplication is not involved in the-case on hand; and that decision is not applicable here.

4. The last decision cited is the one by the Supreme Court in State of Kerala v. C. Velukutty [1966] 17 STC 465 (SC). That was a case in which the respondent had two offices, both in Kozhikode, the head office doing retail business, and a branch office doing wholesale business, each maintaining separate accounts. The head office maintained accounts disclosing goods transferred by the branch office as well as goods purchased by it locally. The branch office had also transactions with its customers. The respondent was assessed to sales tax for the assessment year 1955-56 on the turnover disclosed by its regular books. Thereafter, on a surprise inspection of the head office some secret books of account and records were discovered disclosing additional transactions to the extent of 135 per cent of the turnover recorded in the books. The Sales Tax Officer made a reassessment by adding 135 per cent of the turnover of the head office disclosed in the regular books of the office. He then applied the same percentage in regard to the assessment of the turnover of the branch. Similarly, for the assessment year 1956-57 the Sales Tax Officer added to the turnover of the head office 200 per cent, in regard to the general goods and 600 per cent, in regard to sugar on the basis of secret books discovered there and though, no secret books were discovered in respect of the branch office, made a similar addition in respect of the turnover of the branch office as well. This decision also is no application to this case.

5. Once suppression has been proved or admitted, it is the legitimate right of the taxing authority to add to the disclosed turnover such reasonable amounts as is warranted by the facts and circumstances of the case. In a case where suppression detected itself comes to Rs. 1,79,614.00, the total addition of Rs. 3,59,230 which represents just twice the actual value of the suppressed turnover detected, could not by any reasonable standard be stated to be excessive, unreasonable or arbitrary.

6. For the foregoing reasons, we dismiss the tax revision case. However, in the circumstances of the case, there will be no order as to costs.

Immediately after the judgment was pronounced, the counsel for the petitioner made an oral request for leave to appeal to the Supreme Court. We do not find any substantial question of law of general importance, which requires to be decided by the Supreme Court. Hence leave declined.

Issue carbon copy of this judgment to the counsel for the petitioner, on usual terms, if applied for in that behalf.


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