IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 20TH OCTOBER 2011 / 28TH ASWINA 1933 WP(C).No. 29941 of 2006(M) ------------------------------ PETITIONER: -------------- M/S. MIDLAND TREADS PRIVATE LIMITED, P. JOHN ZACHARIAH BUILDINGS, KOTTAYAM-686 001, REP. BY ITS DIRECTOR SMT. ANNA VARGHESE. BY ADV. SRI.JOSEPH MARKOSE, SENIOR ADVOCATE RESPONDENTS: ----------------- 1. THE SALES TAX OFFICER, ETTUMANOOR. 2. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY SPL. GOVT. PLEADER SRI.SOJAN JAMES THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20/10/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN WPC 29941/2006 PETITIONER'S EXHIBITS: EXT. P1 TRUE COPY OFAPPLICATION DT. 6.6.88 SUBMITTED BY THE EPTITIONER BEFORE FIRST RESPONDENT EXT. P2 TRUE COPY OF THE REGISTRATION CERTIFICATE DT. 14.2.94 ISSUED BY THE FIRST RESPONDENT EXT. P3 TRUE COPY OF THE LETTER DT. 28.2.94 SENT BY THE PETITIONER TO THE FIRST RESPONDENT EXT. P4 TRUE COPY OF THE NOTICE DT. 12.9.2000 ISSUED BY THE FIRST RESPONDENT TO THE PETITIONER EXT. P5 TRUE COPY OF THE OBJECTIONS DT. 30.10.00 FILED BY THE PETITIONER BEFORE THE FIRST RESPONDENT EXT. P6 TRUE COPY OF THE PENALTY ORDER DT. 31.10.2000 FROM THE FIRST RESPONDENT TO THE PETITIONER EXT. P7 TRUE COPY OF THE ORDER DT. 30.5.01 PASSED BY THE DY. COMMISSIONER, COMMERCIAL TAXES, KOTTAYAM EXT. P8 TRUE COPY OF THE REVISION DT. 7.7.01 FILED BY THE PETITIONER BEFORE THE SECOND RESPONDENT EXT. P9 TRUE COPY OF THE ARGUMENT NOTES DT. NIL FILED BY THE PETITIONER EXT. P10 TRUE COPY OF THE ORDER DT. 28.6.06 ISSUED BY THE SECOND RESPONDENT TO THE PETITIONER /TRUE COPY/ PA TO JUDGE P.R.RAMACHANDRA MENON,J - - - - - - - - - - - - -- - - - - - - - - - - - W.P.(C)No. 29941 OF 2006 - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20th day of October, 2011 JUDGMENT The petitioner is challenging the correctness and sustainability of imposition of penalty under Section 10A of the CST Act, as per the order passed by the 1st respondent, modified by the first revisional authority and confirmed by the second revisional authority. The sequence of events is as follows. 2. The petitioner is a manufacturer of 'tread rubber', who applied for CST registration on 10.06.1980. It is stated that the certificate of registration was however granted only on 14.02.1994, with effect from 10.06.1980, the date of original application. In the course of the trade being pursued by the petitioner, verification of books of accounts was conducted in the year 2000; when it was brought to light that the petitioner had issued 'C Forms' in respect of some items which were not actually included in the Certificate of Registration; thus misusing the C Forms. This led to proceedings for imposition of penalty culminating in Ext.P4 order dated 12.09.2000, whereby the WP(C) No. 29941 of 2006 -:2:- petitioner was required to satisfy a sum of `4,26,124/-. On calling for objections, if any, the petitioner preferred Ext.P5 statement of objections and after considering the matter, Ext.P6 order was passed on 31.10.2000 confirming the proposal in Ext.P4. 3. Being aggrieved of the situation, the petitioner preferred a statutory revision petition before the Deputy Commissioner, who passed Ext.P7 order dated 30.05.2001 holding that, the guilt was established, however reducing the quantum of penalty by 50%. Petitioner pursued the matter further, by filing Ext.P8 revision petition before the 2nd respondent. After hearing both the sides, interference was declined and Ext.P10 order was passed on 28.06.2006 confirming the order passed by the Deputy Commissioner, which in turn is under challenge in this writ petition. 4. The learned counsel for the petitioner submits that the impugned orders have been passed without proper application of mind and also without regard to the fact that the petitioner had preferred Ext.P1 application as early as on WP(C) No. 29941 of 2006 -:3:- 06.06.1988, seeking to include the disputed items i.e., “synthetic rubber, emery paper, wire” (which form the basis of imposition of penalty in Ext.P6) in the Certificate of Registration. The learned counsel submits that Ext.P2 Certificate of Registration was issued only subsequently, i.e. 14.02.1994, without considering Ext.P1 application and as such, no penalty ought to have been imposed on the petitioner under any circumstance. It is also the case of the petitioner that the petitioner was continuing the business as a bona fide trader/dealer and that there was no wilful attempt to defraud the revenue. Reliance is sought to be placed on the decision rendered by this Court reported in P.K. Varghese and Sons v. Sales Tax Officer, Special Circle [16 SCC 323] and also the verdict passed by the Apex Court in Commissioner of Sales Tax, Uttar Pradesh v. Sanjiv Fabrics [(2010) 9 SCC 360], pointing out that in the absence of any 'mens rea' on the part of the dealer, no penalty can be imposed under any circumstance. 5. The case of the petitioner is strongly opposed from the part of the Revenue. The learned Special Government WP(C) No. 29941 of 2006 -:4:- Pleader appearing on behalf of the respondents submits that the 'modus operandi' pursued by the petitioner has been vividly explained by the 1st respondent in Ext.P6 order. It is also stated that Ext.P1 application was in fact never produced before the said authority at any point of time. 6. It has been observed by the 1st respondent in Ext.P6 that, the Registration Certificate under CST Act issued to the petitioner was never produced, till the date of Ext.P6 order, for causing necessary amendment. There is no case for the petitioner that the said observation in Ext.P6 order is not true or correct. It was after considering all the facts and figures, that the first revision proceedings were finalised by the Deputy Commissioner by passing Ext.P7 order, however modifying the quantum of punishment by reducing the same to 50%. The merits of the case of the petitioner were further examined by the 2nd respondent, while considering Ext.P8 (second revision petition) and Ext.P10 order was passed, confirming the order passed by the Deputy Commissioner, which does not suffer from any infirmity, illegality or irregularity and hence is not assailable WP(C) No. 29941 of 2006 -:5:- under any circumstance, submits the learned Special Government Pleader. 7. With regard to the factual position, there is no dispute for the petitioner that the three particular items, which form the basis for imposition of penalty in Ext.P6 order, are not included in Ext.P2 Registration Certificate. The factum of issuance of 'C Forms' in respect of the aforesaid items is not also disputed by the petitioner. The only case of the petitioner is that the petitioner had sought for inclusion of the above items by submitting Ext.P1 application as early as on 06.06.1988. No material has been produced before this Court, nor was it produced before the concerned authority, to show that Ext.P1 was actually filed by the petitioner. There is no case for the petitioner that the same was sent by registered post, nor was it served by obtaining necessary endorsement in any handbook of delivery or otherwise. This being the position, the finding of fact arrived at by the 1st respondent as confirmed by the Deputy Commissioner and affirmed by the 2nd respondent vide Ext.P10 order does not call for any interference by this Court. WP(C) No. 29941 of 2006 -:6:- 8. With regard to the imposition of penalty, in the light of the rulings cited by the petitioner, it is to be noted that, the situation contemplated in the case dealt with by this Court reported in[16 STC 323] (supra) stands on a different footing. The petitioner therein was transacting business under the bona fide impression that the additional item, with regard to which the insinuation was made, was also included in the Certificate of Registration. A finding was rendered by this Court on the basis of the factual position available therein and the imposition of penalty was intercepted. Coming to the case in hand, the petitioner was very much aware that the 'three items' forming the basis of Ext.P6 order were actually not sought for to be included in the Registration Certificate and hence not included in Ext.P2 Registration Certificate. 9. The knowledge is quite conceded from the fact, when the petitioner contends that he wanted to have the same included as additional items vide Ext.P1 application dated 06.06.1988. By virtue of the course and events, it is discernible that the petitioner was transacting the business knowingly that WP(C) No. 29941 of 2006 -:7:- the relevant items were not actually sought to be included in the original application dated 10.06.1980 and not included in Ext.P2 Registration Certificate. The petitioner having no proof to substantiate the fact that Ext.P1 application was actually preferred before the concerned authorities, the revenue cannot be blamed under any circumstance, for having pursued the matter leading to imposition of penalty by passing Ext.P6 order. This Court finds that the petitioner is not entitled for the benefit of the decision rendered by this Court in 16 STC 323(supra). 10. Similarly, the law declared by the Apex Court in [(2010) 9 SCC 630](supra) does not support the case of the petitioner in relation to the factual matrix as available in the present case. This is more so, when the specific observation made by the 1st respondent in Ext.P6 order that Ext.P2 Certificate of Registration was never surrendered for getting it amended at any point of time, till passing of the said order, stands uncontroverted. 11. The penalty originally ordered by the 1st respondent vide Ext.P6 has been reduced to 50% by the Deputy WP(C) No. 29941 of 2006 -:8:- Commissioner while passing Ext.P7 order. The correctness and sustainability of the said order stands affirmed by the 2nd respondent while passing Ext.P10 order. This Court does not find any tenable ground to intercept Ext.P10 order in any manner. The Writ Petition fails and the same is dismissed accordingly. P.R.RAMACHANDRA MENON, JUDGE ttb