IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM FRIDAY, THE 30TH JANUARY 2009 / 10TH MAGHA 1930 ST.Rev..No. 288 of 2007() ------------------------- AGAINST THE ORDER DATED 30/05/2007 IN TA.113/2006 & CO.13/2006 of S.T.A.TRIBUNAL,ADDL.BENCH,KZD. .................... REVISION PETITIONER/(RESPONDENT/ASSESSEE) ------------------------------------------------------------- M/S.GOLD PALACE, MELADY, PAYYOLI, KOZHIKODE DISTRICT. BY ADV. SRI.M.K.SUBHAKARAN SRI.P.P.VARUGHESE RESPONDENT(S): (REVENUE/APPELLANT) ---------------------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, THIRUVANANTHAPURAM. BY G.P. SRI.V.K.SHAMSUDEEN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 30/01/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & C.K.ABDUL REHIM, JJ. .................................................................... S.T. Rev. No.288 of 2007 .................................................................... Dated this the 30th day of January, 2009. ORDER Ramachandran Nair, J. Heard counsel for the revision petitioner and the Government Pleader for the respondent. Counsel for the petitioner contended that suppression noticed is insignificant and therefore, estimation of turnover at one and a half times running stock is arbitrary and untenable. The Government Pleader on the other hand contended that petitioner compounded the offence of non-maintenance of accounts and therefore, accounts are rightly rejected. He further submitted that turnover declared at 10% of the running stock is intrinsically unacceptable. Even though we agree with the argument of the Government Pleader that the turnover declared is unacceptable and unrealistic, we feel the addition at one and a half times running stock may not be justified for this year because petitioner is in the second year of business. Estimation based on running stock is a well recognised method of estimation of turnover approved by this court in 2 large number of judgments. Running stock is nothing but investment and investment is made normally based on sales and therefore, running stock method is quite reasonable for estimation of turnover. However, the unique feature of this case is that the petitioner is in the second year of business and inspection was within two months from the beginning of the year. A new dealer will always start with a good stock to earn goodwill in the market. Considering this peculiar feature of the case, we feel addition to the turnover at one time running stock for omission and suppression will serve the ends of justice. We, therefore, modify the Tribunal's order by sustaining the addition to one time running stock. However, we do not find any justification for the Tribunal to change the valuation from market value during the relevant year adopted by the officer to gross profit returned by the assessee. We, therefore, direct revision of assessment by making estimation as above, 3 but by applying the same value adopted by the officer. The revision case is allowed in part as above. C.N.RAMACHANDRAN NAIR Judge C.K.ABDUL REHIM Judge pms