IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 26TH MAY 2011 / 5TH JYAISHTA 1933 WP(C).No. 13884 of 2011(I) --------------------------------- PETITIONER(S): ------------------- N.VISWANATHAN, PROPRIETOR, VIMALA ICE CREAM PARLOUR, NARASIMHAPURAM, ALAPPUZHA DISTRICT. BY ADVS. SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.K.S.HARIHARAN NAIR RESPONDENT(S): --------------------- 1. INTELLIGENCE OFFICER, SQUAD NO.1, COMMERCIAL TAXES, ALAPPUZHA-688001. 2. COMMERCIAL TAX OFFICER, II CIRCLE, ALAPPUZHA-688001. BY GOVT.PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26/05/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: svs C.K.ABDUL REHIM, J. ------------------------------- W.P.(C).No.13884 of 2011 ------------------------------- Dated this the 26th day of May, 2011. J U D G M E N T Exts.P4 and P5 orders imposing penalty issued under section 67 of the Kerala Value Added Tax Act (KVAT Act) is under challenge in this writ petition. Under normal circumstances, due to availability of an effective alternative remedy, this Court may not be inclined to entertain the writ petition. But specific contention of the petitioner is that, inspite of detailed objections submitted to the proposal notices as evident from Exts.P2 and P3, the 1st respondent had failed to advert to such objections and to consider the same in its real perspective. Learned counsel for the petitioner draws my attention to the relevant portion of the observations contained in the orders imposing penalty (Exts.P4 and P5), which is extracted below :- “I have gone through the reply on merit. The reply filed is not convincing. The penalty notice was prepared on the basis of the recovered entire books of accounts of the dealer after verification. The books of accounts were mentioned in such a way to evade the VAT due to Government exchequer. It 2 W.P.(C).No.13884 of 2011 was established on examination of the books of accounts mentioned by the dealer. No additional evidence has been advanced by the dealer to deviate from the proposal. The reply filed is not convincing. No concrete evidence has been advanced against the established defect pointed out in the notice. Hence the reply filed dated 23.3.2011 stands rejected and the proposal is confirmed as notified to the dealer. In the circumstance, the following orders are passed.” 2. I take note of the fact that the above extracted statement is common in both the orders impugned. On perusal of Exts.P2 and P3, it is evident that specific objections were raised on different aspects, pertaining to the accounts kept by the petitioner as well as to the alleged irregularities and suppression. But in the impugned orders, it is not revealed as to whether such contentions were adverted to by the 1st respondent. Nothing is reflected in the orders with respect to consideration of the merits of such contentions. Further, according to the petitioner, the orders were finalised without affording any opportunity of hearing. Hence the petitioner also challenges the orders imposing penalty as one issued in violation of principles of 3 W.P.(C).No.13884 of 2011 natural justice, and in violation of the procedure contemplated under section 67(3). 3. Imposition of penalty under section 67 of the KVAT Act is a proceeding having penal nature. Unless and until the authorities became satisfied that there was clear omission on the part of the assessee either in keeping true and correct accounts or an attempt in suppressing the real turn over, imposition of penalty may not be sustainable. Therefore, the authority exercising jurisdiction wested under section 67 is expected to go into the merits of whatever contentions raised by the assessee. Further, it is mandatory that the orders imposing penalty should reflect proper consideration of such contentions. A cryptic statement to the effect that the objections are not convincing, will not be sufficient to observe that the assessee is liable to be imposed with penalty. 4. Under such circumstances, I am of the view that the impugned orders are unsustainable in the eye of law. Accordingly, the writ petition is allowed and Exts.P4 and P5 4 W.P.(C).No.13884 of 2011 orders are hereby quashed. The 1st respondent is directed to consider the matter afresh and to pass fresh orders after proper advertence to all the contentions raised by the petitioner in Exts.P2 and P3 objections, and also after affording an opportunity of personal hearing to the petitioner. 5. Fresh orders in this regard shall be issued at the earliest possible, at any rate within a period of 1 month from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, Judge ami/