IN THE HIGH COURT OF KERALA AT ERNAKULAM
OP No. 3898 of 1999(L)
1. TELLICHERRY PBOMBWS.
... Petitioner
Vs
1. THE SALES TAX INSPECTOR,TLY.
... Respondent
For Petitioner :SRI.T.M.SREEDHARAN
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice ANTONY DOMINIC
Dated :20/02/2007
O R D E R
ANTONY DOMINIC, J.
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O.P. NO. 3898 OF 1999
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Dated this the 20th day of February, 2007
J U D G M E N T
The petitioner seeks an order quashing Exhibits P3 to
P5 and a direction to the first respondent to forebear from
recovering penalty of Rs.17,288/- in any manner. The facts
which lead to the issuance of the impugned orders are that,
the petitioner, described to be a mutual benefit society and
operating a Mutual Benefit Welfare Scheme exclusively for
the private bus operators of Tellichery, who are also the
members of the scheme, deals in motor spare parts and
lubricating oils. For the assessment year 1991-92, it was
seen from the returns filed by it that the turn over was in
excess of Rs.50 lakhs, rendering the petitioner liable for
Turnover Tax at =% of the turn over relating to lubricating
oil and spare parts. In addition to this, the petitioner also
had the liability to pay tax at the rate of 4% on the sales
turn over of barrels.
OP 3898/1999 : 2 :
2. Although the returns were filed by the petitioner in
time, petitioner did not remit any amount towards tax for
the aforesaid assessment year. As a result of this, Exhibit P1
notice was issued to the petitioner calling upon it to file its
objections to the first respondent against the proposal to
impose a penalty of Rs.69,200/-, being double the amount
of tax due. In response, Exhibit P2 is the representation
filed by the petitioner and thereafter considering the
objections filed by Exhibit P3 order, the first respondent
imposed a penalty of Rs.69,100/- on the petitioner. In
Exhibit P3, it has been found that inspite of specific demand
made at the time of verification of accounts on 25/1/93, the
petitioner did not care to remit the tax and thus had
consciously continued to unauthorisedly retain tax due to
the Government. It is also stated that the dealer had failed
to supply any explanation for non payment of tax inspite of
service of notice. It was on this basis that the petitioner has
been found to have consciously violated the provisions of
OP 3898/1999 : 3 :
the Act deserving maximum penalty.
3. The petitioner pursued the matter in revision
before the 2nd respondent. But by Ext.P4 order it was found
that in view of the non remittance of tax, the order imposing
penalty is in accordance with law. However, the 2nd
respondent reduced the penalty to equal amount of tax due
that is Rs.34,576/- to be just and reasonable. Still
unsatisfied with the reduction at the hands of the 2nd
respondent, the petitioner again filed revision before the 3rd
respondent. By Exhibit P5, the 3rd respondent held that the
petitioner is guilty of the lapses as already found by the
lower authorities and deserve to be penalised. However,
considering the fact that the petitioner is an association of
bus operators and taking into account remittance of the
entire tax demanded by the assessing authority, the 3rd
respondent reduced the penalty amount to Rs.17,288/-
being 50% of the tax due. It is challenging this order that
the present O.P is filed.
OP 3898/1999 : 4 :
4. Counsel for the petitioner submits that even as on
date, the tax liability of the petitioner has not been finalised
in as much as the Sales Tax Appellate Tribunal, Additional
Bench, Kozhikode has passed order dated 24th February
1999 setting aside the assessment order in question and
remanded the matter to the assessing authority for fresh
assessment. According to him, the assessing authority is
still seized of the matter and the matter has not reached
finality. According to the counsel, at this stage it is
premature to impose penalty on the petitioner. It is also
submitted that the petitioner had no guilty intention or nor
was there any mens rea warranting imposition of penalty,
which, according to the counsel, is evident from the facts
detailed in the original petition.
5. Having considered the contentions of the learned
counsel for the petitioner and the submissions made by the
learned Government pleader, I am not satisfied that the
petitioner has made out a case for interference. It is an
OP 3898/1999 : 5 :
admitted fact that along with the return or even
subsequently on receipt of notice from the department, the
petitioner did not remit tax, which he was obliged to do
under the provisions of the Act. Thus in this case, there is
an admitted lapse on the part of the petitioner and such a
lapse, in terms of the provisions of the Act, attracts penal
consequences as embodied in Section 45A. Therefore the
proceedings initiated against the petitioner under Section
45A cannot be found fault with. I am also not persuaded to
accept the petitioner’s plea that there was no guilty
intention when they failed to remit the tax due. As already
noticed, not only was there violation of statutory obligation
to remit at the time when return was filed, but also even
subsequent notices issued by the department did not evoke
any response from the petitioner. The necessary inference is
that the attempt was only to avoid payment of tax.
6. What remains to be considered is the question
whether the amount of penalty that was imposed is just and
OP 3898/1999 : 6 :
reasonable. As per Section 45 A, double the tax is the
maximum leviable penalty, in cases where tax liability is
quantifiable as in this case. As already noted, while the 1st
respondent imposed double the amount of tax as penalty,
the 2nd respondent, in revision, reduced the same to equal
amount of tax. Still later, the 3rd respondent, in revision,
again reduced the same to 50% of the amount of tax. Thus
the quantum of penalty as finally levied on the petitioner is
only 50% of the tax due. In the circumstances of the case, I
do not think it is too disproportionate warranting
interference by this court.
In the result, writ petitioner is not entitled to the reliefs
sought for and writ petition is dismissed. No costs.
ANTONY DOMINIC, JUDGE
Rp