IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE THURSDAY, THE12H DAY OF DECEMBER201321ST AGRAHAYANA, 1935 WA.No. 99 of 2008 ------------------------------ AGAINST THE JUDGMENT
IN OP NO.5465/1999 OF HIGH COURT OF KERALA DATED1911-2007 ..... APPELLANT(S)/PETITIONER:: ------------------------------------------------ M/S.GAJANANA AGENCIES, KANHANGAD675351, REP.BY ITS MANAGING PARTNER, H.SATHISH KAMATH, S/O.LATE H.VITTAL KAMATH, RESIDING AT HOSDURG, KANHANGAD. BY ADVS.SRI.T.M.SREEDHARAN SRI.V.P.NARAYANAN RESPONDENT(S)/RESPONDENTS:: ------------------------------------------------------ 1. THE INTELLIGENCE OFFICER, SQUAD NO.II, AGRICULTURAL INCOME TAX AND SALES TAX, KASARAGOD.
2. THE DY.COMMISSIONER OF COMMERCIAL TAXES, KANNUR.
3. THE COMMISSIONER OF COMMERCIAL TAXES, VIKAS BHAVAN, THIRUVANANTHAPURAM.
4. STATE OF KERALA REPRESENTED CHIEF SECRETARY, GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM.
5. THE TAHSILDAR (R.R), HOSDURG, KANHANGAD. R1 TO R5 BY GOVERNMENT PLEADER SRI.T.K.SHAIJ RAJ THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON1212-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WA.NO.99/2008 APPENDIX APPELLANT'S ANNEXURE: ANNEX.A: COPY OF ORDER
DATED2101/04 IN T.A.NO.222/02 PASSED BY THE SALES TAX APPELLATE TRIBUNAL, ADDL.BENCH, KOZHIKODE. RESPONDENT'S ANNEXURES: N I L /TRUE COPY/ P.A.TO JUDGE Kss MANJULA CHELLUR, C.J.
& A.M.SHAFFIQUE, J.
------------------------------ W.A. No. 99 OF2008------------------------------ Dated this the 12th day of December, 2013
JUDGMENT
~~~~~~~~~~~ Shaffique, J.
Appeal is filed by the petitioner against the judgment of the learned Single Judge refusing to set aside the penalty levied under Section 45A of the KGST Act. Learned Single Judge, however, reduced the interest payable under Section 23(3) on balance penalty to 50% on condition that the petitioner remits the balance penalty on or before 15.2.2008.
2. The facts involved in the case would disclose that the Intelligence Squad No. II, Kasaragod had collected duplicate copy of the delivery note No.279219 dated 12.12.1996 used by the petitioner for the transport of 10,000 kgs. of raw rubber valuing Rs.4,30,000/- to M/s.Kottacherry Trading Company, Panathur. Subsequently, the books of account of the petitioner for the assessment year 1996-97 were called for and verified. On verification, it was found that the petitioner had effected purchase of raw rubber from places within a distance of 40 to W.A.No.99/2008 2 50 kms and it was transported to the business place of petitioner at Kottachery using delivery note in form No.26 in Mini lorries and heavy vehicles plying with National permit having capacity to have 6000 kgs. to 10,000 kgs. of raw rubber. On verification, the Intelligence Officer found that the quantity accounted as revealed from the books of account and available in the original copies of the delivery notes was 400 kgs. to 1,000 kgs of raw rubber. This anomaly lead the officer in suspecting tax evasion and, therefore, further verification was done with reference to the duplicate copy of the delivery notes. Petitioner produced the duplicate copy of the delivery note in respect of delivery note No.279219 dt.12.12.1996. The Intelligence Officer found certain discrepancies in the same.
3. In the light of the said finding, genuineness of entries in the original books of account were also verified. 16 delivery notes were identified and the petitioner was called upon to produce the duplicate copies of the same. Apparently, petitioner himself was transporting the goods with his own vehicle. Though sufficient time was granted by the assessing officer, the petitioner could not produce any of those duplicate copies and, W.A.No.99/2008 3 in that view of the matter, the Intelligence Officer formed an opinion that there is substantial discrepancy in the accounts and it was found that the petitioner was trying to evade tax. In that view of the matter, penalty was imposed on the petitioner at Rs.5,22,000/-. The finding of the officer is as under:
1. There is contravention of the provisions of section 27 and 28(1) of the Act and Rule 32(17), 32 (18), 32(21) and 33A(1) of the Rules.
2. They have contravened the provisions deliberately in conscious disregard of their obligations under the statute.
3. That violation is intentional with an ulterior motive to evade tax due under the Act.
4. They have evaded an amount of Rs.5,21,325/- being the Sales Tax due under the Act and that 5) There is sufficient reason to invoke the penal provision warranting penalty u/s.45A(1) of the Act and also satisfied that this is a case warranting maximum penalty. Any how considering the whole aspects of the case the amount of penalty is limited to Rs.5,22,000/-." 4. Learned Single Judge found that it was very strange that the quantity recorded by the petitioner as transported in trucks with six tonnes to ten tonnes capacity is 400 kgs and 1000 kgs. It was also found that the petitioner is bound to maintain W.A.No.99/2008 4 the delivery note for transport under Rule 32(18) read with sub- rule 21 of the KGST Rules. Having not produced the document, there is substantial evasion of tax and, therefore, there is no reason to interfere with the orders passed by the assessing officer and the appellate authority.
5. Learned senior counsel appearing on behalf of the appellant contends that as far as delivery note No. 279219 dt.12.12.1996 is concerned, though penalty was imposed on the petitioner, the same had been set aside by the appellate authority and, therefore, the same reasoning cannot be made applicable as far as the 16 delivery notes are concerned. But, it is relevant to note that the Intelligence Officer had called upon the petitioner to produce the duplicate copies of the 16 delivery notes and not even a single copy of the delivery note was produced. Therefore, the Intelligence Officer has no other method other than to find out that there is clear evasion of tax. Since the appellate authority has also on factual circumstances concurred with the view expressed by the Intelligence Officer, we do not think that a further verification of the factual circumstance is required to be done in respect of the above W.A.No.99/2008 5 evasion of tax. In these circumstances we do not intend to interfere with the judgment of the learned Single Judge and we confirm the same.
6. Learned counsel also pointed out that under Section 45A of the KGST Act, the liability on the assessee is only to pay a fine of Rs.10,000/-. We do not think so. On a bare reading of Section 45A itself would indicate that if the assessee has failed to keep true and complete accounts; or has submitted an untrue or incorrect return; or has acted in contravention of any of the provisions of this Act or any rule made thereunder. The authority can direct such person to pay penalty at an amount not exceeding twice the amount of Sales Tax or other amount evaded or sought to be evaded, where it is practicable to quantify the evasion or an amount not exceeding Rs.10,000/-.
7. In the present case, the petitioner have shown 1,000kgs in the delivery note, whereas he has actually transported 10,000kgs. As against 600 kgs he would have transported 6,000 kgs. and likewise, in respect of all the delivery notes, he had transported 10 times the quantity that is shown as per the delivery note and the books of account. He could have W.A.No.99/2008 6 proved the actual quantity transported by producing the duplicate copy. In the absence of production of any such record, we do not find any illegality on the part of the assessing officer to come to the conclusion that there was evasion of tax and quantification of tax is also an acceptable formula. The learned counsel for appellant relies upon the judgment of this Court in U.K.Monu Timbers (M/s.) v. State of Kerala [2012(3) KHC111 inorder to indicate that the assessing officer cannot impose penalty on the basis of best judgment whereas, it has to be based on specific particulars. This is not a case where the penalty has been imposed on best judgment. 16 delivery notes were verified by the Intelligence Officer and the quantity as shown in the delivery note and the books of account were verified. There is a clear finding that when the vehicle was having a capacity of 6,000 kgs to 10,000 kgs and that too national permit vehiclesowned by petitioner. Hence there is every possibility that the petitioner would have carried at least ten times quantity as shown the delivery note. In fact, the assessing officer had only taken ten times, whereas, it is possible that the petitioner would have even carried the full capacity of the truck involved in W.A.No.99/2008 7 the carriage of goods. Under these circumstances,we do not think that the petitioner/appellant is justified in contending that the quantum of penalty is excessive. In the result, this Writ Appeal is dismissed. Sd/- MANJULA CHELLUR, CHIEF JUSTICE. Sd/- A.M.SHAFFIQUE, JUDGE. ps/16/12