IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA No. 168 of 2008()
1. PRAKASH GOLD PALACE (P) LTD. AND ANOTHER
... Petitioner
Vs
1. THE ASST. COMMISSIONER OF INCOME TAX,
... Respondent
For Petitioner :SRI.S.ARUN RAJ
For Respondent : No Appearance
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.M.JOSEPH
Dated :25/01/2008
O R D E R
H.L. DATTU, C.J. & K. M. JOSEPH, J.
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W. A. NO. 168 OF 2008
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Dated this the 25th January, 2008
JUDGMENT
H.L. DATTU, C.J:
This Appeal is directed against the orders passed by the learned Single
Judge in W.P.(C). No.24585/07 dated 22.8.2007. By the impugned Order, the
learned Judge has modified Ext.P9 order passed by the Assistant Commissioner of
Income Tax, Central Circle-I, Ernakulam dated 12.7.2007.
2. In this Order of ours, we will be referring the parties as arrayed in the Writ
Petition.
3. First petitioner is a manufacturer of gold ornaments. First petitioner claims
that the second petitioner is its employee. It is the claim of first petitioner Company
that it effects large scale sale of gold ornaments to various reputed gold merchants
and traders. It is further stated that it is an assessee under the provisions of the
Kerala Value Added Tax Act and Central Sales Tax Act. It is its further case that the
gold ornaments are principally manufactured in West Bengal and from their stock, it
was transferred to Chennai, and its further case is that the gold ornaments required
in Kerala are usually stock transferred from Chennai to Cochin.
4. Case of first petitioner is that the goods sent from Chennai to Kerala
through the second petitioner was seized by the Officials of the Income Tax
Department.
5. Second petitioner had filed a petition on 23.1.2007, inter alia, requesting
the respondents to release the gold ornaments seized on 24.7.2006.
6. The Assistant Commissioner of Income Tax, while entertaining the
petition, has directed the second petitioner to furnish sufficient Bank Guarantee of
equivalent amount, to release the seized gold ornaments (Ext.P9 order).
W.A.NO.168/08 2
7. Aggrieved by the said order passed by the Assistant Commissioner of
Income Tax, both the petitioners were before this Court in W.P.(C). No.24585/07.
The learned Single Judge by order dated 22.8.2007, has modified the order passed
by the Assistant Commissioner of Income Tax and further, has directed the
respondents in the Writ Petition to release the entire gold seized, to the petitioners
on the petitioners furnishing Bank Guarantee for 70 per cent of the value of the
goods and on both the petitioners jointly executing a simple bond without surety for
the balance 30 per cent in favour of the first respondent. The Order passed by the
learned Single Judge is as under:
“Since maximum rate of tax payable is 30% and even
if the entire value of goods is treated as escaped income,
the maximum tax and equal amount towards penalty will
account for 70% of it’s value and since first petitioner is an
assessee, W.P. is disposed of modifying Ext.P9 directing the
first respondent to release the entire goods to the petitioners
on petitioners together or first petitioner executing Bank
Guarantee for 70% of the value of the goods and on both
petitioners jointly executing a simple bond without surety for
the balance 30% in favour of the first respondent.”
8. Aggrieved by the orders passed by the learned Single Judge, the
petitioners are before us in this Writ Appeal.
9. Shri T.N. Seetharaman, learned counsel appearing for the appellants,
after arguing the matter for quite some time, may be knowing the mind of the court,
would submit that the first petitioner shall deposit a sum of Rs.24 lakhs for the
present and that amount may be adjusted towards the tax liability that may be
determined by the respondents either against the first or second petitioner and on
such payment, this Court may direct the first respondent to release the entire gold
seized on 24.7.2006.
W.A.NO.168/08 3
10. In view of the aforesaid submission made by learned counsel for the
appellant, we had requested Shri George K. George, learned counsel appearing for
the Income Tax Department to obtain appropriate instructions from the Officials of
the Income Tax Department.
11. Shri George K. George after obtaining instructions would inform us that
the Department is prepared to accept a sum of Rs.24 Lakhs (Rupees Twentyfour
Lakhs) that may be paid by the first petitioner for and on behalf of the second
petitioner, for release of the gold ornaments and the amount so deposited would be
adjusted towards any tax liability that may be fastened by the first respondent either
against the first petitioner or the second petitioner. He would further submit that
liberty may be reserved to the respondents to recover the balance amount that may
be found due after the proceedings are completed by the first respondent, either
from the first petitioner or from the second petitioner. In view of the submissions so
made by both the learned counsels, it may not be necessary for us at this stage to
go into the correctness or otherwise of Ext.P9 order passed by the Officers of the
Department or the Orders passed by the learned Single Judge. Accordingly, we
pass the following:
Order
(1) The Writ Appeal is disposed of.
(2) The first petitioner/first appellant shall deposit a sum of Rs.24 Lakhs
(Rupees Twentyfour Lakhs) with the first respondent within fifteen days from today. If
such deposit is made, the first respondent is directed to release the gold ornaments
seized on 24.7.2006 either in favour of the first petitioner or in favour of the second
petitioner.
(3) Liberty is reserved to the Income Tax Department to recover any amount
that may be found due after completing the assessment proceedings either against
the first petitioner or the second petitioner.
W.A.NO.168/08 4
(4) First respondent is directed to complete the assessment proceedings
initiated against the first or the second petitioner as expeditiously as possible and, at
any rate, within six weeks from today.
With these observations and directions, the Writ Appeal is disposed of.
Ordered accordingly.
H.L. DATTU,
CHIEF JUSTICE
K.M. JOSEPH,
JUDGE
kbk/DK.