Kerala High Court
Poddar Plantations vs State Of Kerala on 21 August, 2025
Author: A.Muhamed Mustaque
Bench: A.Muhamed Mustaque
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O.T.Rev.No.107 of 2018 2025:KER:63089
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE
&
THE HONOURABLE MR. JUSTICE HARISANKAR V. MENON
THURSDAY, THE 21ST DAY OF AUGUST 2025 / 30TH SRAVANA, 1947
OT.REV NO. 107 OF 2018
AGAINST THE ORDER DATED 23.07.2018 IN T.A.(VAT) NO.472 OF 2014
OF INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,
KOZHIKODE
------
REVISION PETITIONER/APPELLANT:
PODDAR PLANTATIONS,
RIPPON ESTATE, MEPPADI, WAYANAD.
BY ADVS.
SRI.C.S.ARUN SHANKAR
SRI.S.SHYAM KUMAR
SRI.T.G.MADHAVANUNNI
SMT.REVATHY P.NAIR
SRI.R.JAIKRISHNA
KUM.NARAYANI HARIKRISHNAN
SHRI.ANISH P.
RESPONDENT/RESPONDENT:
STATE OF KERALA,
REPRESENTED BY DEPUTY COMMISSIONER (LAW),
COMMERCIAL TAXES, KOZHIKODE.
BY SRI.V.K.SHAMSUDHEEN, SENIOR GOVERNMENT PLEADER
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 18.08.2025,
THE COURT ON 21.08.2025 DELIVERED THE FOLLOWING:
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O.T.Rev.No.107 of 2018 2025:KER:63089
ORDER
Harisankar V. Menon, J.
This Other Tax Revision Petition, at the instance of the
assessee, seeks to challenge the imposition of penalty under
Section 67 of the Kerala Value Added Tax Act, 2003 (hereinafter
referred to as the "Act") as confirmed by the Appellate Tribunal.
Three reasons have been pointed out by the Intelligence Officer
for initiating steps under Section 67 of the Act, as under:-
i. Sale of pruning machine for Rs.46,000/-, upon which
tax was not paid.
ii. Consignment stock transfer for Rs.3,14,08,021/-,
upon which reverse tax liability ought to have been
satisfied by the revision petitioner.
iii. The petitioner carried forward the input tax of
Rs.85,179/- from the previous year.
A penalty of Rs.9,52,596/-, being double the tax due, is imposed
on the revision petitioner by an order dated 31.03.2012. The first
appellate authority, by an order dated 06.08.2012, has modified
O.T.Rev.No.107 of 2018 2025:KER:63089
the penalty to the extent found in Annexure B order. The further
appeal to the Appellate Tribunal has been unsuccessful, as
evidenced by Annexure C order dated 23.07.2018. It is in such
circumstances that the petitioner-assessee has filed the
captioned Other Tax Revision Petition.
2. Heard Sri.Jaikrishna, the learned counsel for the revision
petitioner, and Sri.V.K.Shamsudeen, the Senior Government
Pleader (Taxes).
3. The short issue which arises for consideration in this
Other Tax Revision Petition is as regards the sustainability or
otherwise of the imposition of the penalty under Section 67 of the
Act. It is not in dispute that the penalty has been imposed for the
three reasons noticed earlier. It is also not in dispute that the
three reasons have been detected by the Intelligence Officer from
the books of accounts maintained by the revision petitioner in the
regular course of business. There is no case for the revenue to
the effect that the details have been detected from sources other
than the books of accounts of the revision petitioner. It is on the
basis of the above that we proceed to consider the rival
O.T.Rev.No.107 of 2018 2025:KER:63089
contentions.
4. As regards the first reason for the imposition of
penalty - sale of pruning machine - we notice that the revision
petitioner has debited the afore amount in its books of accounts,
since according to it the person to whom the machine was
entrusted had not returned the same. That does not mean that a
sale has taken place within the meaning of the said term with
reference to the relevant provisions of the Act, as well as the
provisions of the Sale of Goods Act, 1930, contends the
petitioner-assessee.
5. Similarly, as regards the second reason for the
imposition of the penalty, the revision petitioner has raised a
specific contention to the effect that the tea sent outside the State
is manufactured from the tea leaves, procured from its own
estate. If, as contended above, the quantity that is sent outside
the State was produced out of the own tea leaves procured from
the estate owned by the revision petitioner, there was no
requirement to satisfy reverse tax, since there was no
involvement of any input credit. However, such a contention
O.T.Rev.No.107 of 2018 2025:KER:63089
specifically seen raised before the original authority and the
appellate authorities, including the Tribunal, is not seen adverted
to or adjudicated by the authorities.
6. As regards the third reason for the imposition of
penalty - the availment of input credit by carrying forward the
same from the previous year - we notice that the revision
petitioner has specifically raised a contention that a step taken
for completion of assessment on that basis has not been finalized
on the basis of the explanations offered by it. Further, even if the
revision petitioner was not entitled to carry forward the input
credit under the Act, how the provisions of Section 67 are
attracted is also not clear, since the petitioner was entitled for
refund of the excess input credit which was remaining
unadjusted. We also notice that the proceedings are in respect of
the year 2006-07 - 2nd year after the introduction of the Value
Added Tax system - and hence the revision petitioner may be
justified in contending that it proceeded as if it could carry
forward the input credit remaining unadjusted.
O.T.Rev.No.107 of 2018 2025:KER:63089
7. The learned counsel for the petitioner also sought to rely
on the judgment of the Apex Court in Sree Krishna Electricals
v. State of Tamil Nadu and Another [(2009) 11 SCC 687],
wherein the Apex Court considering the imposition of penalty, on
account of non-inclusion of certain transactions in the returns
under the statute, has held as under:-
"7. So far as the question of penalty is concerned the items
which were not included in the turnover were found
incorporated in the appellant's accounts books. Where certain
items which are not included in the turnover are disclosed in
the dealer's own account books and the assessing authorities
includes these items in the dealers' turnover disallowing the
exemption penalty cannot be imposed. The penalty levied
stands set aside."
Again, a Division Bench of this Court in State of Kerala v.
Joemon Rajan [2018 (4) KHC 513], has also deprecated the
practice of the Intelligence Officer venturing into quantifying the
turnover for the purpose of arriving at the tax evasion, holding
that it is only possible through regular assessment steps.
Applying the principles laid down in the afore judgments to the
case at hand, we notice that the tax, which is stated to have been
evaded, is being estimated by the Intelligence Officer and further
O.T.Rev.No.107 of 2018 2025:KER:63089
reduced by the first appellate authority. Again, the three reasons
have been detected from the books of accounts of the revision
petitioner alone and this itself proves that if at all any action could
have been taken against the revision petitioner, it could have
been only the assessment proceedings with reference to the
relevant provisions of the Act.
8. On the whole, we are of the opinion that the
provisions of Section 67 of the Act are not attracted to the facts
and circumstances of the case at hand.
Resultantly, we allow the Other Tax Revision Petition,
holding that the revision petitioner is not to be saddled with the
penalty under the provisions of Section 67 of the Act.
Sd/-
A.MUHAMED MUSTAQUE
JUDGE
Sd/-
HARISANKAR V. MENON
JUDGE
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O.T.Rev.No.107 of 2018 2025:KER:63089
PETITIONER'S ANNEXURES:
ANNEXURE A THE TRUE COPY OF THE ORDER DATED 31/03/2012 OF
THE INTELLIGENCE OFFICER (IB), WAYANAD FOR THE
YEAR 2007-08.
ANNEXURE B THE TRUE COPY OF THE ORDER DATED 06/08/2012
PASSED BY THE DEPUTY COMMISSIONER (APPEALS)II,
KOZHIKODE IN KVAT APPEAL NO.595/2012.
ANNEXURE C THE CERTIFIED COPY OF THE ORDER DATED 23/07/2018
PASSED BY THE KERALA VALUE ADDED TAX/AGRL.
INCOME TAX AND SALES TAX APPELLATE TRIBUNAL
ADDL. BENCH, KOZHIKODE IN TA (VAT) NO.472/2014.
ANNEXURE D1 THE TRUE COPIES OF THE REPLIES DATED 03/03/2011
AND 28/03/2012 CONTAINS THE OBJECTIONS AGAINST
THE PROPOSAL OF PENALTY.
ANNEXURE D2 TRUE COPY OF THE BANK GUARANTEE
NO.017491G130000001 DATED 06/02/2013 FOR
RS.2,74,083/- OF INDIA BANK, KALPETTA BRANCH.
