Kerala High Court
M/S. Moopan Automobiles vs The State Of Kerala on 12 April, 2024
Author: P Gopinath
Bench: P Gopinath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
FRIDAY, THE 12TH DAY OF APRIL 2024 / 23RD CHAITHRA, 1946
WP(C) NO. 34763 OF 2016
PETITIONER:
M/S. MOOPAN AUTOMOBILES
XIV.324, PERUVARAM, NORTH PARAVUR, ERNAKULAM,
REPRESENTED BY ITS PROPRIETOR, MR.BASHEER MOOPAN.
BY ADVS.
SMT.K.LATHA
SMT.M.K.HAJARA
RESPONDENTS:
1 THE STATE OF KERALA
REPRESENTED BY THE CHIEF SECRETARY TO THE GOVERNMENT,
GOVERNMENT OF KERALA, SECRETARIATE,THIRUVANANTHAPURAM-
695001
2 ASSISTANT COMMISSIONER
ASSESSMENT, SPECIAL CIRCLE, MATTANCHERRY-682010.
3 THE INTELLIGENCE OFFICER (IB)-I
OFFICE OF THE DEPUTY COMMISSIONER, DEPARTMENT OF
COMMERCIAL TAXES, SQUAD NO.-II, MATTANCHERRY AT
KARUKUTTY-682011
4 THE INSEPCTING ASSISTANT COMMISSIONER
COMMERCIAL TAXES, ERNAKULAM-682 030.
SRI. ARUN AJAY SHANKAR (GP)
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
12.04.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 34763 OF 2016 2
JUDGMENT
The petitioner was an assessee under the Kerala Value Added Tax Act. On 08.12.2015 Ext.P3 notice was issued to the petitioner under Section 67(1) of the Kerala Value Added Tax Act, 2003, proposing to impose upon the petitioner a penalty of Rs.31,29,220/- and calling upon the petitioner to submit its objections to the proposal. A reading of Ext.P3 suggests that the proposal to impose a penalty was on account of the fact that the petitioner had failed to file returns on time and to pay the tax collected to the Government within time. The petitioner filed Ext.P4 reply to Ext.P3 penalty notice on 12.12.2015. It is seen from Ext.P4 that the petitioner admitted that there was a delay in filing returns. It is stated in Ext.P4 that the petitioner had remitted the penalty of Rs.10,000/- under Section 67(1) before the assessing authority. Ext.P1 is the receipt for e-payment of the amount of Rs.10,000/- which shows the amount was paid on 10.12.2015. It is specifically stated in Ext.P4 as follows:
"The facts emerged from the above discussion is that the maximum penalty that can be imposed in our WP(C) NO. 34763 OF 2016 3 case is Rs.10000.00 as per the provisions of the Act as there is no tax evasion in this case. The assessing authority has imposed such a penalty of Rs.10000.00 even before service of your notice and we have remitted the penalty amount also.
Therefore, the levy of any further penalty is unwarranted in this case as the maximum penalty that can be levied in this case is Rs.10000.00 and that has already been levied and paid.
Finally, we request that further action as per your notice may be dropped taking into consideration of the facts narrated supra'.
The Intelligence Officer, Department of Commercial Taxes, Squad No.II, Mattancherry thereafter issued Ext.P5 order on 28.09.2016, imposing a penalty of Rs.27,83,702/- under Section 67(1) of the Kerala Value Added Tax Act, 2003, for the month of October, 2015. It is challenging this order that the petitioner has filed the present writ petition.
2. The learned counsel appearing for the petitioner would reiterate the contentions taken in the writ petition and would submit that the imposition of a further penalty under Section 67(1) was not warranted, especially in the light of the fact that the petitioner had already remitted the penalty, as is evident from Ext.P1 and had also paid the tax amount, including the interest thereon. It is submitted that the delay in filing returns and making the remittance was negligible WP(C) NO. 34763 OF 2016 4 and the returns were admittedly filed and the tax due for the month of October, 2015 was admittedly paid in the month of December, 2015. It is submitted that in such circumstances, there was no reason whatsoever to impose a huge penalty of Rs.27,83,702/- on the petitioner.
3. The learned Government Pleader points out that Ext.P3 notice proposing to impose a penalty of Rs.31,59,250/- was issued by the Intelligence Officer, Department of Commercial Taxes, Squad No.II, Mattancherry on 08.12.2015. It is submitted that immediately on receipt of Ext.P3, the petitioner surreptitiously remitted the sum of Rs.10,000/- with a view to take the contention that the penalty under Section 67(1) had already been paid and therefore, no further penalty can be imposed on the petitioner. It is submitted that this is also clear from Ext.P4 reply filed on 12.12.2015 to Ext.P3 notice proposing to impose a penalty where the petitioner raised a contention that because he had already remitted a sum of Rs.10,000/- towards penalty under Section 67(1) on 10.12.2015, no further penalty ought to be imposed on it. The learned WP(C) NO. 34763 OF 2016 5 Government Pleader submits that with reference to the provisions of Section 67(1) of the Kerala Value Added Tax Act, 2003, that where the amount of tax or other amounts sought to be evaded is quantifiable, the penalty that can be imposed is an amount not exceeding twice the amount of tax or other amount sought to be evaded and it is only when the amount cannot be quantified that the penalty of Rs.10,000/- is to be levied. It is submitted that the surreptitious way in which the petitioner approached the issue clearly disentitles him to relief from this Court under Article 226 of the Constitution of India.
4. Having heard the learned counsel for the petitioner and learned Government Pleader, I am of the view that there is considerable merit in the contention taken by the learned Government Pleader that there was a surreptitious attempt to pay an amount of Rs.10,000/- towards penalty and thereafter take a contention that no further penalty can be imposed on the petitioner as it had already paid the penalty contemplated by the provisions of Section 67(1) of the Kerala Value Added Tax Act, 2003. Though it is the contention of the petitioner WP(C) NO. 34763 OF 2016 6 that the amount of Rs.10,000/- was paid in terms of the demand made by the assessing authority, there is nothing on record to show that such a demand was raised by the assessing authority. It would be seen that Ext.P3 notice proposing to issue a penalty was on 08.12.2015. The petitioner made the payment of Rs.10,000/- on 10.12.2015 without there being any further demand in order to raise the contention that the penalty payable in terms of the provisions of Section 67(1) has already been paid by it. After paying the amount of Rs.10,000/- on 10.12.2015, the petitioner filed Ext.P4 reply, contenting that since the penalty of Rs.10,000/- had already been paid on 10.12.2015, no further penalty can be imposed on the petitioner under Section 67(1) of the Kerala Value Added Tax Act, 2003. Section 67(1) of the Kerala Value Added Tax Act, 2003, to the extent it is relevant, reads as follows:
67. Imposition of penalty by authorities.-
xxx
(c) has failed to submit any return as required by the provisions of this Act or the rules made there under; or Such authority may direct that such person shall pay, by way of penalty, an amount not exceeding twice the amount of tax or other amount evaded or sought to be evaded where it is practicable to quantify the evasion or an amount not exceeding ten thousand rupees in any other case: WP(C) NO. 34763 OF 2016 7
It is clear from the provisions of Section 67(1) that the penalty of Rs.10,000/- in a situation where the amount of tax or other amount sought to be evaded cannot be quantified. Therefore, the payment of a sum of Rs.10,000/- is leviable by the petitioner without there being any demand for it two days after the issuance of Ext.P3 notice does not absolve the petitioner of liability to penalty under the provisions of Section 67(1) of the Kerala Value Added Tax Act, 2003. However, it is seen that the penalty imposed under Ext.P5 is for the month of October, 2015. It is seen from Ext.P5 that the tax payable for the month of October,2015 was paid on 09.12.2015. Therefore, the imposition of a penalty of Rs.27,83,702/- appears to be harsh. I am of the opinion that the competent among the respondents must consider reducing the penalty without demanding twice the amount of tax for the month of October. For this purpose and only for the purpose of re-quantifying the appropriate amount of penalty to be imposed, the matter will stand remanded to the files of the 3rd respondent. The 3rd respondent shall pass fresh orders keeping in mind the observations of this Court. I make WP(C) NO. 34763 OF 2016 8 it clear that the payment of the amount of Rs.10,000/- by the petitioner will not absolve him of the liability to penalty under Section 67 of Kerala Value Added Tax Act, 2003. In the light of the finding that the petitioner had adopted a surreptitious method to avoid penalty under Section 67, I am of the opinion that no credit need be given to the amount of Rs.10,000/-
paid by the petitioner. To enable reconsideration of quantum of penalty to be imposed, Ext.P5 will stand set aside.
Sd/-
GOPINATH P. JUDGE LEK WP(C) NO. 34763 OF 2016 9 APPENDIX OF WP(C) 34763/2016 PETITIONER EXHIBITS EXT.P1. TRUE COPY OF THE MONTHLY RETURN FOR THE MONTH OF OCTOBER 2015 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT EXT.P2. TRUE COPY OF THE E-CHALLAN PAYMENT OF PENALTY OF RS.10,000/- DATED 10/12/2015 REMITTED BY THE PETITIONER` EXT.P3. TRUE COPY OF THE NOTICE DATED 8/12/2015 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER EXT.P4. TRUE COPY OF THE REPLY FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT P3 PENALTY NOTICE.
EXT.P5. TRUE COPY OF THE PENALTY ORDER NO.ISM/II/DV/134/2015-16 DATED 28/9/2016 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.