IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 10TH DECEMBER 2008 / 19TH AGRAHAYANA 1930 OP.No. 10824 of 2000(L) ------------------------------- PETITIONER(S): ----------------------- GEORGE THOMAS, M/S. AL-ANI TRADERS, VADAKKANCHERY BY ADV. SMT.S.K.DEVI ADV. SANTHOSH P. ABRAHAM ADV. DEEPSUR D. JAYAN RESPONDENT(S): ------------------------- 1. INTELLIGENCE OFFICER, SQUAD NO.1 DEPT. OF COMMERCIAL TAXES, KOTTAYAM. 2. THE DEPUTY COMMISSIONER, DEPT. OF COMMERCIAL TAXES, KOTTAYAM. 3. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER (TAXES) SRI. TEK CHAND FOR R1 TO 3 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 10/12/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 10824 of 2000(L) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 - TRUE COPY OF BILL NO.4 DATED 13.4.1995 ISSUED BY PETITIONER. EXT.P2 - TRUE COPY OF BILL NO. 575 DATED 13.4.1995 ISSUED BY BISMI RUBBERS EXT.P3 - TRUE COPY OF FORM NO. 25 DATED 15.5.1995 ISSUED BY BISMI RUBBERS. EXT.P4 - TRUE COPY OF ORDER NO. OR 83/95-96 (ISE (i) DATED 19.2.1999 ISSUED BY 1ST RESPONDENT. EXT.P5 - TRUE COPY OF ORDER NO. RP 45/99 DATED 13.8.1999. EXT.P6 - TRUE COPY OF ORDER NO. STRP 107/99 (R1-49631/99/CT/3-12-1999 ISSUED BY 3RD RESPONDENT. EXT.P7 - TRUE COPY OF ORDER NO. CR 82/95-96/ISK/I/DTD. 1.4.1998 ISSUED BY 1ST RESPONDENT. / TRUE COPY/ PA TO JUDGE rhs S.SIRI JAGAN, J ================== O.P. No. 10824 of 2000 ================== Dated this the 10th day of December, 2008. J U D G M E N T The petitioner was a rubber dealer and a registered dealer under the provisions of Kerala General Sales Tax Act, 1963, on the files of the sales tax officer, Alathur. He is challenging proceedings under Section 45A of the Kerala General Sales Tax Act, by which penalty has been imposed on the petitioner which were confirmed in 1st and 2nd revisions. The original and revisional orders are Exts.P4, P5 and P6. The contention of the petitioner is that rubber is a commodity to which tax under the KGST Act is attracted only at the last purchase point. The petitioner sold large quantities of rubber to M/s. Bismi Rubbers, another registered dealer. The petitioner obtained purchase bills as also Form No. 25 declarations from the purchaser which were available in the petitioner's books of accounts. However, proceedings were initiated against the petitioner on the ground that these purchase bills do not tally with the books of accounts maintained by the purchaser. As per books of accounts of the purchaser, in respect of the same transaction carbon copies of O.P. No. 10824 of 2000 - 2 - another sets of purchase bills were detected. Treating both the purchase bills available with the petitioner and the carbon copies available with the purchaser as separate transactions which were not accounted for, proceedings under Section 45A of the KGST Act were initiated which culminated in Ext.P4 order of penalty and Exts.P5 and P6 orders in revision, confirming the original order, Ext.P4. 2. The petitioner's contention is that the petitioner cannot be found guilty in so far as nothing illegal has been found in his books of account and the petitioner was sought to be penalised merely on the basis of the books of accounts of the purchaser. According to the petitioner, it was not the petitioner who committed the offence but the purchaser alone in so far as the petitioner's accounts were in order. Petitioner's case is that, petitioner would have been able to prove the same conclusively had the petitioner been given an opportunity to cross-examine the purchaser, for which purpose petitioner had put in an application before the 1st respondent at the first instance itself which was not allowed. The petitioner contends that there is no requirement in law to obtain purchase bills from the purchaser O.P. No. 10824 of 2000 - 3 - but what is required under law is only a Form 25 declaration issued by the purchaser, which the petitioner had obtained from the purchaser. Genuineness of that Form 25 has not been disproved. Therefore according to the petitioner the finding of guilt on the petitioner relying solely on books of accounts of the purchaser, without affording an opportunity of cross-examining the purchaser with reference to the purchase bills and Form 25 certificates issued by him, is patently illegal and violative of the principles of natural justice. 3. The learned Government Pleader vehemently opposes the contentions of the petitioner. According to him, in so far as the guilt of the petitioner has been conclusively proved with reference to the books of accounts of the petitioner as well as the purchaser, it was not necessary to go for oral evidence of cross- examining the purchaser. He further submits that the intention in seeking cross-examination of the purchaser was only to delay the passing of orders under Section 45A. The Government Pleader therefore argues for dismissing the original petition. 4. I have considered the rival contentions in detail. 5. Regarding the arguments of the Government Pleader to O.P. No. 10824 of 2000 - 4 - the effect that the object of seeking cross-examination of the purchaser by the petitioner is to delay, I find the following facts from the records. The petitioner was issued with a notice under Section 45A on 27.3.1996. It had culminated in an order only on 19.2.1999 , i.e. almost three years after the issue of notice. That being so, the contention that the request for cross-examination of the purchaser, which was made in the beginning itself appears to be hollow. 6. It could not be disputed by the learned Government Pleader that looking at the books of accounts of the petitioner alone nothing incriminating was found by the 1st respondent. The petitioner was found guilty solely based on the books of accounts of the purchaser. In such circumstances, the petitioner can prove the genuineness of his accounts only by confronting the purchaser with the documents which he is stated to have obtained from the purchaser, particularly the Form 25 declaration. That being so, the petitioner could not have been found guilty, without first affording the petitioner an opportunity to cross-examine the purchaser, since that was the only way the petitioner could have proved his innocence. The fact that the O.P. No. 10824 of 2000 - 5 - petitioner had requested the 1st respondent for an opportunity to cross-examine the purchaser, and the same was denied to the petitioner is clearly admitted in Ext.P4 order itself. The explanation now given by the learned Government Pleader for not affording that opportunity is far from convincing. First of all, when the petitioner had in the first instance itself requested for the opportunity to cross-examine the purchaser and the 1st respondent had taken three years to complete the proceedings, there is little conviction in the contention that the petitioner was trying to protract the matter by seeking cross-examination of the purchaser. The second contention raised by the learned Government Pleader is that in so far as the guilt was proved by the records, it was not necessary to afford an opportunity to cross-examine the purchaser. That would be true only when the guilt can be proved with reference to the records of himself. But here, independent of the records of the purchaser, the 1st respondent could not find anything wrong with books of accounts of the petitioner. That being so, the only way the petitioner could have proved his innocence is by proving that the records of the purchaser was the one which was bogus. The only way the O.P. No. 10824 of 2000 - 6 - petitioner could have proved the same was by cross-examining the purchaser and confronting him with the documents in the possession of the petitioner, which he claims are the ones issued by the purchaser himself. That opportunity was denied to the petitioner by the 1st respondent. That amounts to violation of principles of natural justice. For holding so it is not necessary to go into the precedents on the subject which have been cited before me, some which have been mentioned in Ext.P4 order itself. Therefore the Impugned orders are liable to be quashed on that ground. I do so. If at this point of time the 1st respondent can still complete the proceedings afresh after affording an opportunity of cross-examining the purchaser to the petitioner, the 1st respondent may do so. The original petition is allowed as above. S.SIRI JAGAN, JUDGE rhs