P.RAMACHANDRAN V. THE COMMISSIONER,COMMERCIAL TAXES

WP(C)/12340/2011

AI Insights

The case involves P. Ramachandran, a businessman dealing with cashews, who faced penalties under Section 45A of the KGST Act for the assessment years 1995-96, 1996-97, and 1997-98, totaling approximately \\u20b91,13,29,628. The penalties were based on an estimated turnover following a surprise inspection by the 3rd respondent, the Intelligence Officer, in 1998. The petitioner, due to a critical health condition post-accident, was unable to produce required documents, leading to the imposition of penalties. Subsequent appeals and revisions to the penalties were dismissed, prompting the filing of this writ petition. The court found the imposition of penalties based on estimated turnover to be unsustainable, referencing several precedents that mandate penalties to be proportionate to the gravity of the offense.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 693943 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 08-12-2014
• Assessment Year: misc
• Other Referred Cases: Yeses International V. State of Kerala (2008 (4) KLT 454), P.D. Sudhi V. Intelligence Officer, Agricultural Income-Tax and Sales Tax, Mattancherry and Others (1992 (85) STC 337), U.K. Monu Timbers V. State of Kerala (2012 (3) KHC 111 (DB))
• Laws Referred To: KGST Act, Section 45A
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: BOBBY JOHN PULICKAPARAMBIL
• Assessee Lawyers: S K DEVI
• Keywords: Assessment years; Estimated turnover; Penalty; Remand; Surprise inspection
• Section: 45A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 8TH DAY OF DECEMBER 2014/17TH AGRAHAYANA, 1936 WP(C).No. 12340 of 2011 (N) ---------------------------- PETITIONER : -------------------------- P.RAMACHANDRAN, GLOBAL CASHEWS, KOLLAM. BY ADV. SMT.S.K.DEVI RESPONDENT(S): ---------------------------- 1. THE COMMISSIONER,COMMERCIAL TAXES, KOLLAM. 2. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, KOLLAM.PIN-691 001 3. THE INTELLIGENCE OFFICER, SQUAD NO.1, KOLLAM. PIN-691 001 4. THE DEPUTY TAHSILDAR (RR), KOLLAM. PIN-691 001 R1 TO R4 BY GOVERNMENT PLEADER SRI.BOBBY JOHN PULICKAPARAMBIL THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts WP(C).NO.12340/2011 APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF THE ORDER ISSUED BY THE THIRD RESPONDENT DATED NIL. P2 COPY OF THE ORDER ISSUED BY THE SECOND RESPONDENT DATED 23/6/2008 P3 COPY OF THE ORDER ISSUED BY THE TRIBUNAL DATED 24/4/2009 P4 COPY OF THE ORDER ISSUED BY THE FIRST RESPONDENT DATED 27/11/2010 P5 COPY OF THE DEMAND NOTICE ISSUED BY THE FOURTH RESPONDENT FOR THE YEAR 1995-96 DATED 25/2/2011 P6 COPY OF THE DEMAND NOTICE ISSUED BY THE FOURTH RESPONDENT FOR THE YEAR 1996-97 DATED 25/2/2011 P7 COPY OF THE DEMAND NOTICE ISSUED BY THE FOURTH RESPONDENT FOR THE YEAR 1997-98 DATED 25/2/2011 RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts P.R. RAMACHANDRA MENON, J. ----------------------------------- W.P(C). No. 12340 of 2011 ------------------------------------------- Dated this the 8th day of December, 2014 J U D G M E N T The petitioner is aggrieved of penalty imposed upon him in respect of the assessment years 1995-96, 1996-97 & 1997-98 under Section 45A of the KGST Act to an extent of nearly `1,13,29,628/-. The case of the petitioner is that the petitioner was doing business dealing with 'cashew' during the aforesaid years. There was a surprise inspection at the premises by the 3rd respondent on 16.01.1998 and some documents were seized. By the end of 1998 the petitioner met with an accident and his condition was critical, by virtue of which, he was not in a position to produce the documents when the same was called for in the year 2000. The proceedings came to be finalised imposing penalty with respect to the years 1996-97 and 1997-98. On challenging the same, the impugned order was set aside and the matter was remanded. This led to Ext.P1 common order for the years 1995-96, 1996-97 & 1997-98. Though the petitioner preferred a revision before the 1st revisional authority, interference was declined and the revision came to be dismissed WP(c). No.12340 of 2011 2 as per Ext.P2 order. Met with the situation the petitioner approached the 2nd revisional authority ie; the 1st respondent herein, who passed Ext.P4 order, virtually confirming the penalty which in turn is under challenge in this writ petition. 2. A counter affidavit has been filed on behalf of the 3rd respondent seeking to sustain the course and proceedings. 3. Heard both the sides in detail. 4. During the course of hearing the learned counsel for the petitioner submits that, the orders passed by the 3rd respondent fixing the penalty upon the petitioner on the basis of estimated turnover is per se wrong and unsustainable in all respects. In view of the law declared by the Division Bench of this Court in S.T. Revision No.77/2012 dated 31.07.2012 and also the decision in Yeses International V. State of Kerala (2008 (4) KLT 454), the learned counsel further submits that maximum penalty has been imposed upon the petitioner which could not have been there, in view of the ruling rendered by another Division Bench of this Court reported in P.D. Sudhi V. Intelligence Officer, Agricultural Income-Tax and Sales Tax, Mattancherry and Others (1992 (85) STC 337) holding WP(c). No.12340 of 2011 3 that punishment has to be proportionate to the gravity of the offence. 5. During the course of hearing it is also brought to the notice of this Court that the assessment proceedings were completed earlier. But subsequently, the very same officer, who was holding the Office of the 3rd respondent came to occupy the chair of the 'Assessing Authority', when he reopened the assessment and made exorbitant additions, mulcting huge liability upon the petitioner. On challenging the same, the 1st appellate authority modified the same to some extent. But the petitioner moved the Tribunal by way of 2nd appeal and after considering the merits involved, the Tribunal as per Ext.P3 order dated 24.04.2009 set aside the impugned orders and remanded the matter for fresh consideration. It is stated that the proceedings are still to be finalised. Even though the petitioner produced a copy of Ext.P3 order before the 1st respondent the same was refused to be looked into and the proceedings were finalised in a mechanical manner and hence the challenge. 6. The learned Government Pleader however points out that the idea and understanding of the petitioner that penalty WP(c). No.12340 of 2011 4 could not have been imposed for want of finalsiation of the assessment is not at all correct or sustainable. Reliance is sought to be placed on the decision reported in J&J Timbers V. Intelligence Officer (IB) (2010 (18) KTR 203). The learned Government Pleader is perfectly right in saying so, as the assessment and penalty are two different streams and it is open for the concerned authority to consider and finalise the proceedings in accordance with the relevant provisions of law based on the actual facts and figures. 7. The question to be considered herein is whether the penalty now imposed upon the petitioner could be held as sustainable. Undisputedly, the penalty has been quantified by the 3rd respondent based on 'estimated turnover', which cannot be so, in view of the law already declared by the Division Bench of this Court and also in U.K.Monu Timbers V. State of Kerala (2012 (3) KHC 111 (DB). This Court finds that the matter requires to be reconsidered. 8. Accordingly, the impugned orders imposing penalty upon the petitioner are set aside and the matter is remanded for fresh consideration by the 3rd respondent. This shall be done after WP(c). No.12340 of 2011 5 giving an opportunity of hearing to the petitioner at the earliest, at any rate within 'three months' from the date of receipt of a copy of this judgment. The writ petition stands disposed of. The petitioner shall produce a copy of this judgment along with a copy of this writ petition before the 3rd respondent for further steps. Sd/- P.R. RAMACHANDRA MENON, JUDGE. Pn "