IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 27513 of 2010(L)
1. M/S. M.O.POONEN, PODOYADI,
... Petitioner
Vs
1. INTELLIGENCE OFFICER,
... Respondent
2. THE COMMISSIONER, DEPARTMENT OF
For Petitioner :SRI.SOJAN JAMES
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :22/09/2010
O R D E R
C.K.ABDUL REHIM, J
---------------------------
W.P(C) No. 27513 of 2010-L
Dated----------------------------2010.
this the 22nd day of September,
J U D G M E N T
Ext.P5 order imposing penalty under Section 67(1) of the
Kerala Value Added Tax Act is under challenge in this writ petition.
Since the petitioner has got an effective remedy by way of appeal
against Ext.P5, it is not proper for this Court to interfere in normal
situations. But grievance voiced by the petitioner is that Ext.P5 is
issued in total violation of principles of natural justice, without
affording any opportunity to the petitioner to file objections against
the proposal and also without affording an opportunity of personal
hearing.
2. The proceedings was initiated subsequent to an
inspection conducted on 30.12.2009 at the business place of the
petitioner at Thiruvalla and at the branches at Maradu, Kochi and
Kattakada, Thiruvananthapuram. It is the admitted case of both
sides that out of the three shop inspections conducted, copy of
report prepared with respect to inspection conducted at Thiruvalla
alone was issued to the petitioner at the time of inspection. It was
W.P(C) No. 27513 of 2010-L 2
contended by the respondents that the copy of SIR was not issued
with respect to other two places because the persons who were
present at the premises in charge of the business had refused to
sign the SIRs. Pursuant to the inspections Ext.P3 notice was issued
proposing to impose penalty. The said notice, eventhough dated
5.7.2010, was signed by the first respondent only on 4.8.2010.
Admittedly, the said notice was served on the petitioner only on
4.8.2010. In Ext.P3 the date of hearing stipulated was 6.8.2010, ie.
on the second day after service of Ext.P3.
3. It is the case of the petitioner that on receipt of Ext.P3
notice, the petitioner made request as per Ext.P4 for supply of
copies of SIRs with respect to the branches at Ernakulam and
Thiruvanathapuram. According to the petitioner, the copies of SIRs
were made available to the petitioner only on 21.8.2010. But before
serving copies of the SIRs the penalty orders was finalised by the
first respondent. Ext.P5, which was originally dated as 19.8.2010
was corrected as 30.8.2010, is the conduction. According to the
petitioner, the penalty order was finalised even prior to issuance of
copies of SIRs and the same was issued subsequently by altering the
date and by incorporating certain additional statements. No
W.P(C) No. 27513 of 2010-L 3
opportunity to file objections nor any opportunity of personal
hearing was afforded before finalising the proceedings, is the
grievance of the petitioner.
4. Going by Ext.P5, it is mentioned that on receiving the
notice for imposing penalty on 4.8.2010, the petitioner had applied
for copies of two SIRs with respect to Ernakulam and
Thiruvananthapuram, on 10.8.2010. It is further stated that the
copies were taken from the office by the petitioner only on
21.8.2010. Findings in Ext.P5 is that, only the SIRs pertaining to
inspection at the branch at Maradu was not available with the
petitioner and since all the books of accounts are maintained at the
head office there was no difficulty for production of the books of
accounts, and that the non-availability of copies of SIRs was not a
valid ground for not producing the books of accounts. Rejecting the
contentions raised by the petitioner, penalty was confirmed through
Ext.P5.
5. In a statement filed on behalf of the first respondent, it is
averred that the petitioner was not at all co-operative in producing
books of accounts and in participating with the enquiry. According
to the respondents, the request made for copies of SIRs are only by
W.P(C) No. 27513 of 2010-L 4
way of an excuse for delaying the matter. The petitioner had failed
to produce books of accounts, inspite of filing returns before the
Assessing Authority and inspite of filing annual returns pertaining to
the year concerned.
6. Considering the facts and circumstances, and on
evaluating rival submissions, it is evident that the copies of SIRs
were made available to the petitioner only on 21.8.2010. It is also
clear from Ext.P5, that the petitioner has not filed objections against
the proposal, but only requested for copies of the SIRs. Nothing is
discernible from the impugned order or from the statement filed on
behalf of the first respondent that an effective opportunity was
afforded to the petitioner to file objections after supplying copies of
the SIRs. On a perusal of Ext.P5, it is evident that there is a
correction effected on the date of the order as 30.8.2010, which was
originally printed as 19.8.2010. Eventhough there is no materials to
find that Ext.P5 order was finalised on an earlier date, the allegation
of the petitioner regarding subsequent incorporation of certain facts
could not be discarded in toto. However, I am not entering on any
finding, regarding that controversy. It is evident that the petitioner
was not afforded with opportunity to file objections after 21.8.2010
W.P(C) No. 27513 of 2010-L 5
and no personal hearing was afforded before finalising the order
imposing penalty. Imposition of penalty under Section 67(1) of the
KVAT Act is a penal procedure in which it is mandatory to ensure
that all principles of natural justice has been complied with. As
pointed out by learned counsel for the petitioner, this Court has
emphasised the needs for strict compliance of such formalities in a
recent decision reported in Suzion Infrastructure Service Ltd V.
C.T.O (2010(3) KHC 299). There are ever so many precedents
reiterating need for strict compliance of principles of natural justice
in the matters of finalising penalty proceedings. Since it is evident
that the petitioner was denied of an opportunity to file objections
and opportunity of hearing, I am inclined to quash Ext.P5 and
further to direct the first respondent to finalise the matter afresh
after complying with such requirements.
7. In the result, the writ petition is allowed and Exts.P5 is
hereby quashed. The petitioner is directed to file objections against
Ext.P3 before the first respondent within a period of two weeks from
today. The first respondent is directed to afford an opportunity to
the petitioner to produce documents and accounts in support of his
contentions. He shall be afforded with an opportunity of personal
W.P(C) No. 27513 of 2010-L 6
hearing before finalising the proceedings.
8. Fresh proceedings in this regard will be issued after
complying with such requirements at the earliest possible, at any
rate within a period of six weeks from the date of receipt of a copy
of this judgment.
C.K.ABDUL REHIM
JUDGE
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