IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP No. 8442 of 1998(E)
1. JOSEPH KALAPURACKAL
... Petitioner
Vs
1. THE ADDL.SALES TAX OFFICER-II
... Respondent
For Petitioner :SRI.T.KARUNAKARAN NAMBIAR
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice S.SIRI JAGAN
Dated :26/02/2007
O R D E R
S. SIRI JAGAN, J.
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O.P.NO. 8442 OF 1998
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DATED THIS THE 26th DAY OF FEBRUARY, 2007
JUDGMENT
Petitioner is an assessee under the Kerala General Sales Tax Act
(K.G.S.T. Act, for short) on the files of first respondent. In this original
petition, he is challenging Exts.P5, P9 and P13 orders of the authorities
under the K.G.S.T. Act, which are the original penalty order under
Section 45A and the revisional orders. The facts necessary for
disposal of the original petition are as follows:
2. By Ext.P1 order, the first respondent imposed on the
petitioner, penalty amounting to Rs.1,16,000/- on the ground that he
had transported 380.41 cubic meters of timber of various species
during the year 1991-92 through the port of Azheekkal without
entering the same in his books of account thus evading tax payable on
the sale transaction. The petitioner challenged the same before the
Deputy Commissioner of Sales Tax. The Deputy Commissioner, by
Ext.P2 order,found that Ext.P1 order was passed in violation of the
principles of natural justice and the matter was remanded to the first
respondent for fresh consideration after giving an opportunity to the
petitioner to produce the books of account and to file detailed
O.P.8442/98 2
objections. Pursuant to the same a fresh notice,Ext.P3 was issued
to the petitioner. It was stated therein that the investigation branch
of the Agricultural Income Tax and Sales Tax, Kannur gathered
certain details relating to the transport of timber through the port
of Azheekkal during the year 1991-92, which disclosed that 380.41
Cubic meters of timber were transported outside the state as stated
in the notice. The petitioner filed Ext.P4 reply to the show cause
notice totally denying any transport of timber through the
Azheekkal port during the period in question. He specifically
requested the first respondent to conduct a detailed enquiry with
the Azheekkal Port and to satisfy himself regarding the specific
contentions of the petitioner. The petitioner specifically alleged
that there cannot be any such entries in the records of the
Azheekkal Port. He also claimed an opportunity to prove that the
same is a forged document by summoning the records. He
specifically further alleged that no such opportunity was not given
to him earlier also. However, by Ext.P5 order, the first respondent
again imposed penalty of Rs.1,16,000/- on a finding that the
petitioner had in fact transported 380.41 Cubic meters of timber
through the Azheekkal Port. The petitioner challenged the same in
revision, which was rejected by Ext.P9 order by the Deputy
commissioner. The petitioner’s further revision before the Board of
Revenue also met with the same fate by Ext.P13 order. It is under
O.P.8442/98 3
the above circumstances, the petitioner has filed this original
petition challenging Exts.P5, P9 and P13 orders.
3. The contention of petitioner is that the burden of proof
in proving that the petitioner in fact transported the timber through
the Azheekkal Port is squarely on the first respondent, which
burden he has failed to discharge. The petitioner contends that
Ext.P3 notice issued to the petitioner does not contain the vital
information regarding the dates of transport and the name of
consignees, without which, the petitioner cannot file any
meaningful reply to the show cause notice. He would further
submit that he was also not given any copy of the extract stated to
have been obtained from the records of the Azheekkal Port, which
was the basis of the proceedings against him. He would point out
that in Ext.P4 reply to the show cause notice he had specifically
requested for an opportunity to prove that if there is actually any
entries in the Azheekkal Port, those entries are false. He had
specifically requested the first respondent to summon the
documents from the Azheekkal Port and to verify whether the same
is correct or not which the first respondent has failed to do. The
petitioner submits that no attempt whatsoever has been made by
the first respondent in this direction. However he would submit that
his attempt to verify the records of the Azheekkal port did not also
meet with any success since they refused to divulge any
O.P.8442/98 4
information to him. However by Ext.P8 communication, the Senior
Port Conservator of the Azheekkal Port informed the petitioner that
no documents relating to the year 1991-92 is available at the port,
since the entire records have been destroyed by a fire occurred in
the port on 15th November, 1994. (This is also corroborated by a
communication dated 12.2.07 from the Port Conservator of
Azheekkal Port, which is produced before me by the learned
Government pleader, in answer to my direction to obtain the
records from the Port authorities.)
4. In the above circumstances, the petitioner would submit
that the respondents have palpably failed to prove any case against
the petitioner for imposition of penalty under Section 45A. In view
of the destruction of the port records he is also incapacitated from
proving a negative fact also. On that ground, the petitioner seeks
quashing of the impugned orders.
5. In answer to the above contentions, learned
Government Pleader would submit that the petitioner had been
repeatedly directed to produce the books of account, delivery
notes, bank pass book etc., which the petitioner steadfastly refused
to do. In the above circumstances, the first respondent has no
other way to decide the case on the basis of material available with
him, which only he has done and therefore the impugned orders
are perfectly valid and proper. According to learned Government
O.P.8442/98 5
Pleader the very extract from the Port register collected by an
Officer of the Sales Tax Department would be more than sufficient
to prove the case against the petitioner for imposition of penalty
under Section 45A, especially in the absence of any allegations of
misconduct.
8. I have considered the rival contentions in detail. At the
outset I should observe that the papers produced before me is
palpably lacking in the vital details relating to the alleged transport
of the timber by the petitioner through the Azheekkal Port. If an
officer of the Sales Tax Department had in fact made an inspection
of the Azheekkal port to gather any information regarding the
transport of timber by the petitioner through that port, the first and
foremost thing, an officer should have collected, is the dates of the
transport as well as the names of the consignees, which
information is not before me. No counter affidavit has also been
filed in this case. Ext.P3 notice only reveals some names of the
species of the timber allegedly transported and the quantity. The
dates of transport and names of assignees are conspicuously
absent. Inspite of the specific request made by the petitioner in
Ext.P4 seeking summoning of the documents from the Azheekkal
Port for which the second respondent had ample powers under the
Kerala General Sales Tax Act, no effort is seen made by the first
respondent in that direction. That itself would prove the case of
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the petitioner to a great extent that he has been denied natural
justice while imposing penalty on him. The Government Pleader
has also no case that a copy of the extract stated to have been
obtained by the Officer of the Department from the records of the
Azheekkal port had been supplied to the petitioner which also
would prove violation of principles of natural justice in passing
Ext.P5 order. Of course, the Government Pleader, on the basis of
the impugned orders would raise a contention that the petitioner
had repeatedly refused to produce the documents and books of
accounts called for by the Assessing Officer which itself shows a
guilty mind on the part of the petitioner. But I am of opinion that
perception of guilty mind by the Assessing Officer, without support
of material documents to prove at least a prima facie case for
imposition of penalty under Section 45A on the petitioner, is not
sufficient to pass an order like Ext.P5, that too without complying
with the principles of natural justice. That being so, Ext.P5 order
and consequently Exts.P9 and P13 orders suffer from serious legal
infirmities and are therefore liable to be quashed. I do so.
9. However, the case does not end there. In all the
impugned orders, it is repeatedly stated that the petitioner has not
produced delivery notes and bank pass books inspite of direction
issued to him for that purpose. As I have already stated non-
production of those documents have been made one of the grounds
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to impose penalty on the petitioner but it appears that at the time
of second revision, the petitioner had infact produced some delivery
notes and pass book. In respect of the delivery notes, Board of
Revenue had found thus:
” The contentions advanced by the
petitioner have been examined in detail. The
investigation Branch of the department has
gathered the details of timber despatched by
the petitioner through Azheekkal port during the
year 1991-92. As per the extracts the
petitioner had transported 380.41 Cms of the
Timber and Timber sizes at various dates from
4.4.1991 to 23.3.1992. The property trade
mark registration in all the consignment noted
as “PSMJ” (Payyavur Saw Mills Joseph
Kalapurakkal) and the style is being continued
till date. Shipping fee was borne by the
petitioner on each occasions of transport.
Therefore the contention of the petitioner that
somebody had despatched the goods in his
name and their property mark had been
wrongly entered in the port records is not
sustainable. The investigation branch has relied
only on Government records is register
maintained at the port. If there is any misuse
of property mark as contended by the petitioner
he ought to have filed complaint before the
competent authority. But the petitioner has
failed to do so. Inspite of that he contents that
it is irrelevant.
The Intelligence Officer has verified the
assessment records relating to the year 1991-92
and found that the originals of certain delivery
notes were not produced before the assessing
authority. Now at the time of hearing of the case
the petitioner has produced Triplicate copies of
Delivery Notes 548651, dated 25.1.1990.
548652/1.2.1990,548653/5.2.1990,548654/21.2
.1990, 548655/17.6.90 which shows transport of
charcoal locally. But in the delivery note register
the date of accounting the transaction was noted
initially as 5.12.1991 which is seen corrected as
O.P.8442/98 8
5.12.1990. Triplicate copies of delivery note
Nos. 548691, 187258 and 187295 which was
stated by the petitioner as used for the year
1991-92 are seen cancelled. But the petitioner
has not produced the original and duplicate
copies thereon for verification. Similarly delivery
notes 548658, 548659, 548660, 548664,548669
are also shown as cancelled. But the original and
duplicate copies of the same have not been
produced for verification. In the absence of
original and duplicate copies of the delivery note
the contention of the petitioner that the same
was used during the previous year and promptly
accounted in the regular books of accounts
cannot be accepted. The manipulations in the
register speaks against the petitioner.”
10. In respect of the pass book produced by the petitioner
also there is an observation to the following effect:
” The intelligence officer had
collected details of bank deposits in the name
of the petitioner in State Bank of Travancore,
Sreekantapuram, Syndicate Bank,
Sreekantapuram and Payyavur Service Co-
operative Bank, Sreekantapuram as detailed in
the penalty order. The petitioner has failed to
produce the Bank pass book for verification by
the Intelligence Officer. At the time of hearing
the revision petition the petitioner has
produced pass book issued by the Syndicate
Bank, Sreekantapuram and State Bank of
Travancore, Sreekantapuram along with the
Ledger for the year 1991-92. The transaction
in the aforesaid banks were accounted in
ledger at pages 25 and 26. As per the Bank
pass book and ledger the petitioner had
received an amount of Rs.75,000/- by Demand
draft on 3.9.1991. But the source was not
explained by him. Further the petitioner has
not produced the Bank pass book at the time of
checking of accounts for the purpose of
assessment for 1991-92. Besides as per the
check note the assessing authority has signed
in the ledger at folios 2,3,5,7 only. All the
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above facts clearly shows that the petitioner
has failed to maintain true and complete
accounts relating to his business for the year
1991-92 and the penalty imposed by the
Intelligence Officer is justifiable.”
In view of the said observations, I hold that it is open to the
first respondent to take further proceedings against the petitioner
for not maintaining true and correct accounts as required under
law, in spite of my quashing of the impugned orders on the ground
that no evasion of tax has been proved by showing that the
petitioner had actually transported timber through the Azheekkal
port. With the above observations, this original petition is
disposed of.
S. SIRI JAGAN, JUDGE
Acd
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