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

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

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

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

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:

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

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/-