Escaped turnover estimation upheld where suppression was detected and the appellate reduction lacked basis in reassessment proceedings.

Escaped turnover estimated in reassessment under the Kerala Value Added Tax Act was upheld where suppression had been noticed in soft drinks, snacks and provisions and compounding had followed. The assessing authority estimated suppressed cooked food and beverage turnover at 15 per cent of liquor sales; the first appellate authority reduced that figure without basis, and the Tribunal restored the original assessment. The court found the reduction unsustainable and held that the estimation method was neither unreasonable nor illegal in light of the admitted turnover and the suppression detected. No substantial question of law arose, and the Tribunal's restoration of the assessment was sustained.

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Issues: Whether the estimation of escaped turnover made in the reassessment proceedings under the Kerala Value Added Tax Act was unreasonable or illegal, and whether interference with the first appellate authority's reduction was justified.

Analysis: The assessment related to a year in which the assessee had returned taxable turnover from cooked food and beverages and separate liquor sales. On inspection, suppression was found in relation to purchases of soft drinks, snacks and provisions, and a compounding under section 67 of the Kerala Value Added Tax Act, 2003 followed. In the escaped assessment proceedings under section 25(1) of the Kerala Value Added Tax Act, 2003, the assessing authority estimated turnover by adopting 15 per cent of liquor sales as suppressed cooked food and beverage turnover. The first appellate authority reduced the addition, but the Tribunal restored the assessment. The court held that the first assessing authority had reduced the escaped assessment to five per cent without basis, and that the Tribunal was justified in interfering with that reduction. It further held that the method adopted by the assessing authority for estimating turnover was not unreasonable or illegal, particularly in the light of the admitted turnover and the suppression noticed.

Conclusion: The estimation of turnover and the Tribunal's restoration of the assessing authority's order were upheld, and no substantial question of law arose.

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