JUDGMENT The judgment of the Court was delivered by V. V. KAMAT, J. - Under section 41 of the Kerala General Sales Tax Act, 1963, if this Court finds that there is an erroneous decision, there is a justified exercise of revisional powers. The petitioner is an assessee in regard to a hotel business. The assessment year is 1985-86. The hotel is a vegetarian hotel in the name and style of Arya Bhavan situated at Thampanoor, Trivandrum. 2. For the year in question a return showing total turnover of Rs. 18,30,326.55 was filed and naturally because of the limit taxable turnover was shown as nil. The assessee claimed exemption in respect of the entire turnover in view of the permissible limit. 3. The petitioner received a notice under section 17(3) of the Act pointing out the following defects : "1. No inventory is kept for opening and closing stock. 2. Purchases are not fully supported with bills. 3. No bills issued for sales, nor a chitta kept to account the daily sales. 4. Sales turnover of containers are taxable. 5. From the trial balance filed by you it is evident that you had dealings with soft drinks at Madurai. Inter-State purchases of soft drinks have not been brought to the accounts. 6. There are 22 employees working in the hotel considering this fact and also considering the expenditure, purchase, etc., the sales turnover conceded is too low to be accepted. 7. Sales of straw is taxable. 8. The turnover of curd is not conceded. This will be estimated at Rs. 15,000." and thereafter the notice contained reference to inspection dated November 28, 1985 and the following stock differences with regard to the stock checked. They are as follows : Excess "Mixture 8 kgs. .. Mollasses 3 kgs. .. Gilebi 140 nos. .. Bolly 75 nos. .. Padusha 40 nos. .. Mysore pak 60 nos. .. Halva 5 kgs. .. Laddu 42 nos. .. Chips 6 kgs. .. Chocolate burpy 25 nos. .. Coconut 500 nos. .. Curd 25 litres .. Tamarind 5 kgs. .. Coriander Turmeric 25 kgs. .. Pappadam 2 bdle. .." 4. On the basis, the notice requisition as per the particulars stated therein a taxable turnover of Rs. 5,10,991.40 and invited objections as per the above provision of law. 5. Chips 6 kgs. .. Chocolate burpy 25 nos. .. Coconut 500 nos. .. Curd 25 litres .. Tamarind 5 kgs. .. Coriander Turmeric 25 kgs. .. Pappadam 2 bdle. .." 4. On the basis, the notice requisition as per the particulars stated therein a taxable turnover of Rs. 5,10,991.40 and invited objections as per the above provision of law. 5. The objections raised by the assessee by a communication dated February 22, 1988 (annexure B) exhibit a series of situations peculiar to the hotel business. It would be necessary to consider these objections in the light of defects found and reproduced hereinbefore in view of the situation in regard thereto that all the three authorities, it would have to be observed have not done justice either way as the objections are found only continued to be in the said annexure throughout, not being noticed in regard to the importance thereof. 6. At the forefront it is urged that the situation is only imaginable that in a hotel no inventory of stock is usually kept or is easily possible to be continued because various items required for sales for a few days would be available at the end of the year. It is urged that there are no purchase bills for the purchase of milk, vegetables, firewood, etc., and because there are no purchase bills a conclusion is not possible that there are no accounts in regard thereto. Sale chits are issued and maintained with regard to all sales and they are brought to the accounts at the end of every day. 7. It is emphasized that containers are not assessable as along with the contents tax is suffered and there are no inter-State purchases of soft drinks. It is necessary to emphasize that with regard to item No. 5 above regarding dealing with soft drinks at Madurai it is specified in paragraph No. 5 of the objections that this item of Rs. 20 represented the outstanding balance of an old deposit with a party at Madurai. 8. Regarding inference sought to be drawn from the fact that there are 22 employees (item No. 6 of the defects), the source is not disclosed at all. It is urged that the factor is not a pointer to resort to estimate in regard to the turnover on the basis of employees in regard thereto. 9. 8. Regarding inference sought to be drawn from the fact that there are 22 employees (item No. 6 of the defects), the source is not disclosed at all. It is urged that the factor is not a pointer to resort to estimate in regard to the turnover on the basis of employees in regard thereto. 9. There are sales of straw as sought to be contended and it is urged in regard thereto that even it is not possible to understand the material on the basis of which the officer inserted the said defects. It is also against the common course of conduct in regard thereto that straws are not separately sold but are in the nature of accompaniments of cold drinks served for the customer of the hotel. As regards curd it is stated that the milk is purchased and curd is prepared out of it and therefore any attempt to proceed to estimation would be without any basis in regard thereto. 10. As regards the inspection conducted on November 28, 1995, finding of excess stock is denied and the very finding regarding the character of the stock being in excess is challenged. 11. It is submitted that the defects pointed out are not worth the name to its credit the accounts submitted having been maintained in the normal course of business of the assessee. 12. With reference to the proposal of addition of 40 per cent, objection is that there is no basis for this percentage of estimation. It is submitted that basis could be the appellate order for the previous year in question. It is submitted that no finality is reached in regard thereto also as the same be under challenge before the appellate Tribunal. 13. It is submitted that firewood, cooking gas, coconut, etc., in regard to the assessment are exempted categories. 14. Lastly it is also submitted that curd was not purchased any time and estimate in regard thereto is highly speculative. 15. It is thereafter that the Agricultural Income-tax and Sales Tax Officer passed the order fixing the taxable turnover stated at the outset. 14. Lastly it is also submitted that curd was not purchased any time and estimate in regard thereto is highly speculative. 15. It is thereafter that the Agricultural Income-tax and Sales Tax Officer passed the order fixing the taxable turnover stated at the outset. With regard to the contents what is available in the assessment order is reproduced hereinbelow : "It is contended that (1) No inventory is kept in hotels, (2) No bills for the purchase of milk, vegetables, etc., (3) No bills or chitta for sales, (4) Sales turnover of containers are not taxable, (5) They bad no inter-State purchase of soft drinks, (6) Vague observation, (7) No sale of straw, (8) No turnover of curd and hence not conceded, (9) There was no excess stock as alleged. The contention cannot be accepted for the following reasons. Every dealer is expected to maintain stock inventory. No sales chitta produced before me and hence the contention cannot be treated as correct. The sales turnover of empties are taxable to be taxed." Obviously the reasons would show that the assessing officer expects every dealer to maintain stock inventory, sale chits and account of sale of empties. The assessing officer also wonder it from what source observed that it is a well-known fact that curd is supplied in Arya Bhavan hotel and the contention is against circumstances and facts. 16. The situation before the first appellate authority (Appellate Assistant Commissioner of Agricultural Income-tax and Sales Tax, Trivandrum) is not different in any way. The appellate authority confirmed everything except the estimation of Rs. 15,000 on purchase of curd reducing it to Rs. 10,000. 17. It would be seen from the perusal of the first appellate order that the observations referred to above of the assessing officer are virtually reproduced with a prefix of careful examination of the contentions and the connected records. What is found as could be considered as the reasoning of the first appellate authority is to be found in a small paragraph reproduced hereinafter : "On the basis of the irregularities pointed out the rejection of accounts is rightly warranted in this case. What is found as could be considered as the reasoning of the first appellate authority is to be found in a small paragraph reproduced hereinafter : "On the basis of the irregularities pointed out the rejection of accounts is rightly warranted in this case. Considering the quantum of suppressions in the light of the irregularities pointed out, the addition of 40 per cent made is found to be excessive and I have reduced the same to 25 per cent which will be a reason-able addition to cover up all the omissions and suppressions. Exemption allowed at 40 per cent for completely exempted items is also found to be low. Estimate of purchase of curd will be fixed at Rs. 10,000 and the empties will also be fixed at Rs. 10,000. No other modifications called for." The appellate authority has reduced the percentage of the estimate from 40 per cent to 25 per cent in addition to the reduction as regards curds as stated above. 18. It appears that in pursuance of the directions of the first appellate authority as regards the revision of the assessment, the assessing authority (annexure E) by the order dated May 30, 1989 carried out the said directions. 19. However in the meantime the petitioner-assessee approacheda against this order of the first appellate authority dated November 10, 1988. 20. The appellate Tribunal, it is unfortunate also treated the question of rejection of accounts and resorting to the process of estimation not in a different manner. The discussion of this aspect is reproduced below : "The next contention of the representative is that the defects pointed out are not serious enough to reject the accounts or to warrant an exorbitant estimate as made in this case. The assessing authority has found out as many as 9 defects in the accounts including absence of stock inventories, unsupported purchases in several items, absence of sale bills or, at least a sales chitta for the sales, absence of comparison between the sales turnover and expenditure incurred, number of employees in the hotel, etc. The inspection conducted in the hotel also revealed considerable stock variations in several items. Though the assessee has tried to explain away these defects in his reply to the pre-assessment notice, the assessing authority has not accepted his explanations. The inspection conducted in the hotel also revealed considerable stock variations in several items. Though the assessee has tried to explain away these defects in his reply to the pre-assessment notice, the assessing authority has not accepted his explanations. On going through the various defects and the explanations offered by the appellants representative, we are also of the opinion that the rejection of accounts is on valid grounds and the assessing authority is justified in his conclusion that the accounts are not acceptable for assessment purposes and, an estimate is warranted in this case. This finding of the assessing authority is, therefore, confirmed." 21. Thus it would be seen that the three authorities have dealt with the jurisdictional question which is a pre-condition for resort to estimation in a totally unsatisfactory manner. 22. We find that if these defects are taken into consideration keeping in mind that the assessee is engaged in hoteling business which has its own peculiarities which have been emphasized and placed on record in the objections. It would have to be held that there is no justification for rejection of the accounts of the assessee. For this purposes we will have to consider the situation independently and in regard thereto it would not be out of place to mention that earlier to this revision cases we had an occasion to find similar defects in T.R.C. No. 287 of 1992 [Vadayattu Jewellery v. State of Kerala reported in [1997] 104 STC 121 (Ker)] leading us to hold that such defects do not go to make out a justifiable basis for resort to the process of estimation. We have already reproduced the defects as well as the objections in extenso hereinbefore. We have to appreciate the situational peculiarities of hoteling activity to emphasize that very few items from the preparations could be understood to be away from perishable character in expecting rigorous maintenance of technicalities such as inventory of stock, the situation is required to be appreciated on the basis of imagination of situational peculiarities. We have to appreciate the situational peculiarities of hoteling activity to emphasize that very few items from the preparations could be understood to be away from perishable character in expecting rigorous maintenance of technicalities such as inventory of stock, the situation is required to be appreciated on the basis of imagination of situational peculiarities. It is not uncommon that the purchase of recurring requirements in a day such as milk, vegetables and firewood, perfect requirements of maintenance of bills would not be possible and if the accounts are maintained in regard thereto exhibiting maintenance on day to day basis, the aspect cannot be appreciated as a justification for throwing away the accounts without sale chits cover transactions in regard thereto. When the accounts are placed unless and until there is intrinsic material to justify throwing them away, resort to estimation taking rejection almost as an automatic process is difficult for appreciation in the context. There are 22 employees in the hotel according to defects notified as above. There is no material for this basis. No particulars of the inspection are referred to in any of the orders of the fact-finding authorities even with regard to the excesses which are specifically reproduced hereinbefore. The question is not as to whether the excesses are found on a day of inspection but the question is as to whether this would be a justification for rejection of the accounts. Intrinsically when the defects are pointed out, in our judgment, are not satisfactory as a basis, the situation gets worsened when objections of the assessee are taken up for perusal and its effect. In the objections many practical features are placed on record as situational peculiarities of the business activity of hoteling. The material on record also does not tell the court as to how the inspection dated November 28, 1985 would show that the items could be understood as items of excess, because in all the three orders beyond its description to be found in the defects notified there is no material to show that these are actually items in excess on the basis of any kind of accounting in regard thereto. 23. Conserving the material on record in the nature of the defects along with the objections, it is not possible to consider the material as the justifiable basis for rejection of the accounts. 24. 23. Conserving the material on record in the nature of the defects along with the objections, it is not possible to consider the material as the justifiable basis for rejection of the accounts. 24. Learned Government Pleader strenuously urged and impressed upon us the enormity of the business activity of the assessee. He took us through the astronomical figures of turnover. According to him, perhaps ignoring that for the assessment year 1985-86 in question turnover below Rs. 20 lakhs had exemption from levy of payment of sales tax. The increase therefore are not to be appreciated in isolation but in the context of the situation showing the reason of nil return in regard thereto. Learned Government Pleader submitted that ultimately annexure E would show that the rounded tax liability is a meagre amount of Rs. 15,665. That is not the question and as stated above the question is of the liability at the inception as well as justification on the basis of the material on record, in our judgment, does not justify rejection of accounts and resort to the process of estimation since the question was not taken up satisfactorily and since we thought that it is erroneously decided, supported by the reasons recorded hereinbefore we quash and set aside all the orders, namely, annexure C, dated March 22, 1988 of the Additional Sales Tax Officer II, Trivandrum, annexure D dated November 10, 1988 of the Appellate Assistant Commissioner, annexure E, dated May 30, 1989 of the Additional Sales Tax Officer III - passed in pursuance of annexure D, and annexure F dated March 11, 1991 of the Kerala Sales Tax Appellate Tribunal, Trivandrum and consequently direct the assessing authority to accept the accounts as submitted and proceed with the assessment accordingly. T.R.C. is allowed accordingly. Petition allowed.