IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 30TH JANUARY 2008 / 10TH MAGHA 1929 ST.Rev.No.11 of 2008 -------------------------------------------- TA.No.822/2004 OF THE SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM (ORDER DATED 7-4-2005) .................... REVISION PETITIONER/ASSESSEE/APPELLANT:- ------------------------------------------------------------------- M.V.GANESH, HOTEL KEDARAM, MUVATTUPUZHA. BY ADV. SMT.S.K.DEVI SRI.M.RAJ MOHAN SMT.DEEPSUR D.JAYAN SRI.SANTHOSH P.ABRAHAM RESPONDENT: REVENUE/RESPONDENT:- ---------------------------------------------------------- STATE OF KERALA, REPRESENTED BY ITS FINANCE SECRETARY, SECRETARIAT, TRIVANDRUM. BY SPECIAL GOVERNMENT PLEADER SRI.VINOD CHANDRAN. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 30/01/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & K.M.JOSEPH, J. ------------------------------------------------------ S.T.Rev.No.11 of 2008 ------------------------------------------------------- Dated, this the 30th day of January, 2008 ORDER H.L.Dattu, C.J. This revision petition is filed by a dealer registered under the provisions of Kerala General Sales Tax Act (“Act” for short), inter alia questioning the legality or otherwise of the orders passed by the Sales Tax Appellate Tribunal, Ernakulam in T.A.No.822/2004 dated 7th April, 2005. (2). The appellant before us is running a Bar Hotel. He is a dealer registered under the provisions of the Act. He had filed annual returns for the assessment year 2001-2002 and had conceded a particular total and taxable turnover, and, while conceding the taxable turnover, he had made an addition of only 18.84% as gross profit earned by him in doing the Bar Hotel business, for the relevant assessment year. The assessing authority, after going through all the sale bills produced by the assessee and also keeping in view the nature of the business of the assessee, has come to the conclusion that the gross profit declared by the assessee is too low when compared to the nature of business carried on by the assessee. Having come to that conclusion after rejecting the returns filed by the assessee, has proceeded to pass best judgment assessment by making an addition of 26% gross profit margin earned by the assessee. Aggrieved by the orders of assessment so passed by the assessing authority , the assessee had filed an appeal before the first appellate authority, who, in turn, has modified the assessment order S.T.Rev.No.11/2008 -2- and has directed the assessing authority to accept the gross profit declared by the assessee. (3). The State had carried the matter in appeal before the Tribunal in T.A.No.822/2004. The Tribunal, by its well considered order, is of the opinion that, the assessing authority while rejecting the returns filed by the assessee, had examined the sale bills produced by the assessee and also again taking into consideration the nature of business that is carried on by the assessee has come to the conclusion that the assessing authority was justified in making an addition of 26% profit margin to the declared turnover and also in fixing at 26% gross profit margin to the declared turnover. (4). Being aggrieved by the findings and conclusions reached by the Tribunal, the assessee is before us in this revision petition. (5). The assessee has framed the following questions of law for our consideration and decision. They are as under: i). Whether the Tribunal was right in interfering with the Annexure II order of the first appellate authority wherein it was held that the assessing authority has not established that the appellant had sold goods for more than what is shown in the bills? ii). The first appellate authority having found that the sale bills represent sales of items giving different gross profit, was the tribunal right in restoring the Annexure I order on the S.T.Rev.No.11/2008 -3- same reasoning as that of the assessing authority which is contrary to the records kept by the petitioner as evidenced by Annexure IV, V and VI? iii). Has not the tribunal erred in restoring the turnover of liquor in Annexure I order wherein the gross profit adopted by the assessing authority is applied not on the cost of goods sold (liquor) but on the conceded gross profit of the petitioner? iv). The tribunal being the final fact finding authority, the finding of the assessing authority being contrary to that of the first appellate authority and the evidence on record has not the tribunal erred in following the same reasoning of the assessing authority without considering the records kept by the petitioner? (6). It is an admitted fact that the assesee is doing business in Bar Hotel. He is dealing in liquor. The assessing authority, taking into consideration the nature of business carried on by the assessee and also going through the sale bills that was produced by the assessee at the time of verification of the books of accounts, has found that the declared profit margin of the assessee is too low when compared to the nature of business carried on by the assessee and also the sale bills that is produced at the time of assessment. (7). The finding of the assessing authority cannot be characterised either as arbitrary or perverse. The assessing authority, when S.T.Rev.No.11/2008 -4- he goes for best judgment assessment, is expected to do some guess work and that guess work, if it is shown to be arbitrary or unreasonable, then only this Court can interfere with the said best judgment assessment passed by the assessing authority. In our opinion, the assessing authority while concluding the best judgment assessment, has not done anything whimsically and therefore, the Tribunal was justified in confirming the orders of assessment passed by the assessing authority and reversing the findings reached by the first appellate authority. We do no see any error committed by the Tribunal in confirming the order of the assessing authority. (8). Accordingly, the revision petition requires to be rejected and it is rejected. The questions of law require to be answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.M.JOSEPH) JUDGE MS