Kerala High Court
State Of Kerala vs M/S Chendayad Granites (P) Ltd on 20 October, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR.JUSTICE BASANT BALAJI
WEDNESDAY, THE 20TH DAY OF OCTOBER 2021 / 28TH ASWINA, 1943
OT.REV NO. 93 OF 2021
AGAINST THE ORDER IN TAVAT 148/2018 OF S.T.A.TRIBUNAL,ADDITIONAL
BENCH,KZD., KOZHIKODE
REVISION PETITIONER/S:
STATE OF KERALA
REP.BY THE JOINT COMMISSIONER OF STATE TAX (LAW), STATE GST
DEPARTMENT, ERNAKULAM-682 011.
BY SENIOR GOVERNMENT PLEADER V K SHAMSUDHEEN
RESPONDENT/S:
M/S CHENDAYAD GRANITES (P) LTD.
VALIYAVELICHAM, KANNUR-670 671
THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON
20.10.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
O.T.(Rev) No. 93/2021
-2-
ORDER
S.V.Bhatti, J.
State of Kerala, represented by the Joint Commissioner of
State Tax, Ernakulam/appellant in TA (VAT) No.148/2018 is the
revision petitioner and challenges the order dated 27.08.2020 in
TA (VAT) No.148/2018 of KVAT (Appellate Tribunal), Kozhikode.
2. Heard Senior Government Pleader Mr V K
Shamsudheen for the revision petitioner.
3. The circumstances leading to the imposition of
penalty on M/s. Chendayad Granites (P) Ltd, a dealer registered
under the CST Act, are stated in detail by the orders impugned
before the appellate authority and the Tribunal. No omission or
error in the narrative of circumstances leading to the
O.T.(Rev) No. 93/2021
imposition of penalty is pointed out by the appellant. We keep
in perspective the narrative of the circumstances referred to in
the order of the Tribunal and for brevity avoid referring to all
the details in our judgment.
3.1 The Commercial Tax Officer, Kuthuparamaba,
through Annexure-A order dated 30.08.2016, in exercise of the
power conferred on him by Section 10A read with Section 10(d)
of the CST Act 1956, imposed a penalty of Rs.27,87,706/- on the
dealer for the alleged violations recorded by the Commercial
Tax Officer in the order dated 30.08.2016. The dealer carried
the matter in appeal before the Deputy Commissioner (Appeals)
and through Annexure-B order dated 17.11.2017, the Deputy
Commissioner (Appeals) allowed the appeal. The reasons
assigned by the appellate authority are useful both for our
consideration and appreciating the confirming findings
recorded by the Tribunal, hence are reproduced hereunder:
O.T.(Rev) No. 93/2021
"Even the use of Tippers in questions are used for other
purpose also in addition to the specified purpose for which they
were purchased it will not amount to an offence as it is
incidental to the manufacturing and sale of goods and therefore
no mensrea is attracted. In a similar issue the Hon'ble High
Court of Kerala in WP(C) No.35684 of 2015 has held that if the
vehicle are used for specific purpose in Section 8 of the CST Act,
the use of the vehicle for other incidental purpose will not
amount to an offence.
They very same issue of the same appellant for the same period
was discussed and allowed in appeal by the appellate authority
in VATA 1599/14, dtd 11.03.2015. The appellate authority held
that the appellant has not committed any false representation
as per Section 10(b) of the CST Act. The Hon'ble Supreme Court
of India in Commissioner of Sales Tax UP Vs. Sanjiv Fabrics &
Another (2011) 19 KTR1(SC) held as follows:
"In examining whether mensrea is an essential element of
an offence created under a taxing statute regard must be
had to the following factors (I) the object and scheme of
the statute (II) the language of the section and (III) the
nature of penalty. It is truce that object of Section 10(b) of
the CST Act is to prevent any misuse of the registration
certificate but the legislature has in the said section used
O.T.(Rev) No. 93/2021
for expression "falsely represents" in contra distinction to
wrongly represents". Therefore what we are required to
construe is whether the words "falsely represents" would
cover a mere incorrect representation or would embrace
only such representation which are knowingly, willfully
and intentionally false. Therefore, it is of the considered
view that the expression "falsely" represents" in section
10(b) of the CST Act comes into existence only where a
dealer acts deliberately undefiance of law or is guilty of
contumacious or dishones conduct. Therefore, it has to be
held that the finding of mensrea is a condition precedent
for levying penalty under Section 10(b) read with Section
10A of the CST Act".
In the appellant's case the appellant has not committed any
offence under Section 10 of the CST Act. Therefore, the penalty
imposed by the assessing authority is not sustainable in the eye
of law.
There was a specific findings in the above said appellate order.
The assessing authority has not care the appellate order.
In the circumstances discussed above, I am of the considered
view that the penalty impossed by the assessing authority u/s.
10A r/w Section 10(d) of the CST Act, 1956 is not legally
sustainable. Therefore I cancel the penalty and the appeal is
allowed. Order accordingly."
O.T.(Rev) No. 93/2021
3.2 The State filed TA (VAT) No. 148/2018 before the
Appellate Tribunal. Through Annexure-C order dated 27.08.2020
the appeal filed the State stood dismissed. Hence, the revision
under Section 63 of the KVAT Act, 2003 read with Rule 80 of the
KVAT Rules.
4. Senior Government Pleader Mr Shamsudheen argues
that the Tribunal and the appellate authority fell in error of law
by applying the principle of res judicata to the penalty imposed
on the respondent/dealer through order dated 07.10.2014,
which was set aside by the order in VATA 1599/2014 dated
11.03.2015. According to him, the principle of res judicata is not
applicable and the orders in Annexures-B and C are amenable to
the jurisdiction of this Court under Section 63 of the KVAT Act.
5. We have taken note of the argument and we are
unable to accept, for the Tribunal has not put it on the ground
O.T.(Rev) No. 93/2021
as now sought to be canvassed as principle of res judicata. The
Tribunal, firstly, has noticed that the order in VATA 1599/2014
dated 11.03.2015 is, by choice, concealed by the Assessing
Officer while imposing the penalty through Annexure-A order
dated 30.08.2016. Secondly, the reasons which weighed with
the authority while making the order dated 11.03.2015 do have
bearing in appreciating the second effort of the appellant
herein to impose penalty for the same circumstances referred
in the order dated 07.10.2014. The observation and the finding
of the Tribunal go to the root of the matter in appreciating
whether the levy of penalty afresh subsequently to the order of
the VATA 1599/2014 dated 11.03.2015 is justified and valid.
There is no justification independent of reasons stated in order
dated 07.10.2014 to invoke the power of levying penalty. The
Tribunal had, in fact, examined all the circumstances and
confirmed the finding of Deputy Commissioner (Appeals). The
O.T.(Rev) No. 93/2021
grounds raised are either unavailable or untenable.
After taking note of the confirming finding recorded by
the Tribunal and the totality of circumstances accepted therein,
we are of the view that the revision, at the instance of the
appellant, is without merit and accordingly dismissed.
Sd/-
S.V.BHATTI
JUDGE
Sd/-
BASANT BALAJI
JUDGE
jjj
O.T.(Rev) No. 93/2021
APPENDIX OF OT.REV 93/2021
PETITIONER ANNEXURE
Annexure A A TRUE COPY OF THE PENALTY ORDER NO 32121039633
FOR THE ASSESSMENT YEAR 2012-13 DATED 30.8.2016,
ISSUED BY THE COMMERCIAL TAX OFFICER,
COMMERCIAL, TAXES, KUTHUPARAMBA
Annexure B TRUE COPY OF THE ORDER OF THE STATUTORY 1ST
APPELLATE AUTHORITY IE THE DEPUTY COMMISSIONER
9APPEALS) 11, COMMERCIAL TAXES, KOZHIKODE NO
VATA 1188/17 DATED 17.11.2017
Annexure AC TRUE COPY OF THE ORDER DATED 27.8.2020 IN TA(VAT0
148/2018
