Full Judgment
C.N. Ramachandran Nair, J.
1. The petitioner is challenging exhibit P7 order whereunder the Commissioner of Commercial Taxes has sustained penalty levied on the petitioner under Section 45A of the Kerala General Sales Tax Act, 1963 for the year 1992-93. The petitioner was engaged in execution of works contract. During the year 1992-93 the petitioner received an amount of Rs. 15,36,875.70 from UTI for the work executed for them. When the Intelligence Officer of sales tax called for and examined accounts, he found omission to return the turnover and pay the tax by the petitioner during the year 1992-93. However, petitioner took the stand that turnover was returned and tax paid during 1993-94 when the final bill was raised. Therefore, the contention of the petitioner was that since there is no evasion of tax, levy of penalty is not tenable. However, petitioner's contentions were overruled and penalty was levied by the Intelligence Officer which is sustained in two rounds of revision against which this original petition is filed.
2. I heard Senior Counsel Sri K. B. Mohammed Kutty appearing for the petitioner and the Government Pleader for the respondents. Counsel during hearing produced copy of the assessment order for 1993-94 which shows that turnover as above referred for the work executed for UTI is assessed for 1992-93 and balance turnover is assessed in the next year. Counsel argued that there is only technical violation of Rule 8(4)(c) of the Kerala General Sales Tax Rules, 1963 on the part of the petitioner inasmuch as he has paid the tax in the succeeding year as against demand of tax based on progressive billing and receipt of amounts. The Government Pleader on the other hand contended that the payment of tax is after verification of accounts by the Intelligence Officer and after detection of the evasion. However, it is not clear from the orders of any of the authorities as to whether the petitioner paid the tax after Intelligence Officer verified the records and noticed suppression of turnover. In any case, it is seen in exhibit PI order of the Intelligence Officer that on verification of balance sheet for 1992-93, nothing is seen about the petitioner's business with UTI. If petitioner has not accounted the transactions in 1992-93, then of course there is suppression because petitioner has completed sizeable portion of the work and received more than 80 per cent of the contract amount during 1992-93. Therefore, petitioner was bound to account the receipts during 1992-93. Details about collection of tax, if any, by the petitioner from the awarder, namely, UTI, are also not available. Even though there is a statement in Commissioner's order that the petitioner has not remitted collected tax, the Intelligence Officer has not given any such finding in the first penalty order. In any case I find the turnover on UTI work is assessed and tax is stated to be remitted by the petitioner. The department also has not considered the circumstances under which UTI has not recovered sales tax from petitioner's work bills which it was bound to deduct and remit to the department under Rule 22A(2) of the KGST Rules. In the circumstances and in view of the assessment and remittance of tax, I feel maximum penalty at double the amount of tax is not called for. Therefore, I reduce the penalty to 50 per cent of the amount levied and sustained, i.e., equal to the tax sought to be evaded. Since stay was granted by this Court, liability to pay interest is also waived provided the petitioner remits the sustained penalty in two instalments, first of which will be paid on or before May 15, 2.006 and the next on or before June 15, 2006.
3. The original petition is disposed of as above.