Opinion
Argued September 7, 1988
Decided October 13, 1988
Appeal from the Appellate Division of the Supreme Court in the Third Judicial Department.
Robert Abrams, Attorney-General (Daniel Smirlock, O. Peter Sherwood and Peter H. Schiff of counsel), for appellants.
Abraham S. Guterman and Alan E. Marder for respondent.
MEMORANDUM.
The order of the Appellate Division should be reversed, with costs, and the determination of the State Tax Commission reinstated.
Those required to collect sales tax must maintain records which " shall be available for inspection and examination at any time upon demand" by the Tax Commission (Tax Law § 1135 [d] [emphasis supplied]). In turn, the Tax Commission is authorized to assess a sales tax return deemed to be incorrect or insufficient with "such information as may be available" (Tax Law § 1138 [a] [1] [emphasis supplied]).
The record, supported by substantial evidence, establishes that although Continental Arms may have maintained complete and accurate records for itself, it frustrated the accomplishment of an unabridged audit by refusing in a course of conduct to make those records available upon demand by the Commission's auditor. Under these circumstances, the Tax Commission is authorized to use a test period method audit; it is not compelled to resort only to its subpoena authority; and its action may not be said to be arbitrary, capricious or illegal (see, Matter of Licata v Chu, 64 N.Y.2d 873, 874; Matter of Grant Co. v Joseph, 2 N.Y.2d 196, 206; Matter of Surface Line Operators Fraternal Org. v Tully, 85 A.D.2d 858, 859; Tax Law § 1143 [a]).
Moreover, after the tax deficiency was assessed by the test period audit, the taxpayer still had the opportunity to contest the assessment by production of its books (see, Matter of Sol Wahba, Inc. v State Tax Commn., 127 A.D.2d 943, 944; Matter of On the Rox Liqs. v State Tax Commn., 124 A.D.2d 402, 403-404, lv denied 69 N.Y.2d 603; Tax Law § 1138).
Chief Judge WACHTLER and Judges SIMONS, KAYE, ALEXANDER, TITONE, HANCOCK, JR., and BELLACOSA concur in memorandum.
Order reversed, etc.