IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 26TH JUNE 2008 / 5TH ASHADHA 1930 WP(C).No. 17705 of 2008(G) -------------------------- PETITIONER: ----------------- SRI.PADMABALAJI ALLOYS (P) LTD., 308/1, NIDA, MENOON PARA ROAD, PUDUSSERY CENTRAL VILLAGE, KANJIKODE 678 621, PALAKKAD DISTRICT REPRESENTED BY ITS AUTHORISED SIGNATORY SRI.M.S.SREEVALSAN. BY ADV. SRI.RAJU JOSEPH RESPONDENTS: ---------------------- THE INTELLIGENCE OFFICER, SQUAD NO.1, SPECIAL TEAM, COMMERCIAL TAXES, ERNAKULAM, KOCHI 24. BY GOVT. PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M.JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - - - WP.(C) No.17705 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 26th day of June, 2008 JUDGMENT Briefly put the case of the petitioner is as follows: Petitioner is a registered dealer engaged in production of ingots from metal scrap, sponge etc. According to the petitioner, petitioner filed monthly returns. Returns were not rejected under Section 25 of the Kerala Value Added Tax Act. While so, the petitioner came to be issued with Ext. P1 notice under the Act proposing penalty. Petitioner filed Ext.P2 pointing out irregularity. Ext.P3 is a letter dated 26.10.2007 by the Deputy General Manager, KSIDC. According to the petitioner, the author of Ext.P3 came to be examined by the factory owners in whose factories inspection is conducted. Ext.P4 is the deposition. By Ext.P5, the petitioner is visited with a penalty of Rs.31,51,000/- being twice the amount of tax evaded. Petitioner preferred writ petition. But in the meantime, petitioner preferred Ext.P6 appeal and this court, by Ext.P7 judgment directed the appellate authority to pass orders on the stay petition. Pursuant to the same, Ext.P8 order was passed. In Ext.P8 order, petitioner was called upon to pay 40% of the penalty amount and security for the balance amount. WPC. 17705/2008. 2 2. I heard learned counsel for the petitioner and the learned Government Pleader. 3. Petitioner challenges Ext.P5 penalty order and seeks allied reliefs. Learned counsel for the petitioner points out that 98% of the penalty is based on the excess production, which is in turn based on the energy consumed. According to the respondents, for producing one metric tone, 800 units are required. According to the petitioner, this assumption of the respondent is fallacious. This assumption, according to the petitioner, is based on the stand taken by the KSIDC in the letter. It is the submission of the petitioner that a perusal of Ext.P4 examination of the official who is the author of Ext.P3 letter would show that it is totally unsafe to conclude that it takes 800 units alone to manufacture one metric tonne. It is petitioner's case that as far as the petitioner is concerned, it would be in the region of 950-1047 units. He would contend therefore that there is no concealment. It is contended that in fact it is a matter of penalty. Notice to produce accounts is issued, he submits. 4. The assessing authority has found that even going by the figures conceded by the petitioner there is excess production which has not been conceded. When it was brought to the notice of the petitioner that for the month of July, the electricity consumption is shown as 995596 and for the month of October it is shown as 869894. Counsel for the petitioner WPC. 17705/2008. 3 points out that actual figures are as in Annexure B to Ext.P2. He then produced the bills before this court to show that the figures of the electricity consumption noted in Ext.P5 is erroneous. The learned Government Pleader was then directed to get instructions. The learned Government Pleader on instructions submits that the figure for the month of July is erroneous. As far as October is concerned, he would submit that though it is shown as 869894, actually production is worked out by dividing 804984 by 800, and the calculation is correct. Having regard to the totality of facts, I would think that the interests of justice would be met if Ext.P6 order is modified and petitioner is called upon to pay a sum of Rs.Seven Lakhs and furnishes security for the balance amount. Accordingly, I modify Ext.P6 and direct that it suffices if the petitioner pays a sum of Rs.Seven Lakhs and provide security for the balance amount as a condition for stay. This will be done within a period of two weeks from today. I leave open all the contentions of the parties. (K.M. JOSEPH, JUDGE) sb