IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH FRIDAY, THE 9TH JANUARY 2009 / 19TH POUSHA 1930 RP.No. 1094 of 2008(C) ---------------------------------------- AGAINST THE JUDGEMENT IN WPC.15984/2008 Dated 18/06/2008 .................... REVIEW PETITIONER(S): PETITIONER IN W.P. ----------------------------------------------------------------- M/S.VARUN AGRO, VI/1036A, SHAN COMPLEX, BAZAR ROAD, MATTANCHERY, KOCHI-682002 REPRESENTED BY THE PARTNER KUSUM AJIT THAKER. BY ADV. SRI.C.K.THANU PILLAI RESPONDENT(S): RESPONDENTS IN W.P. ------------------------------------------------------------ 1. THE COMMISSIONER OF COMMERCIAL TAX, PUBLIC OFFICE BUILDINGS, THIRUVANANTHAPURAM 695033 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, MATTANCHERY. 3. THE INTELLIGENCE OFFICER, SQUAD NO.II, COMMERCIAL TAXES, ERNAKULAM. 4. THE ASSISTANT COMMISSIONER(ASSESSMENT) SPECIAL CIRCLE (PRODUCE), MATTANCHERY. BY GOVERNMENT PLEADER SHRI C.K. GOVINDAN THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 09/01/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: K. M. JOSEPH, J. -------------------------------------- R.P.NO.1094 OF 2008 IN W.P.C. NO. 15984 OF 2008 C -------------------------------------- Dated this the 9th January, 2009 ORDER Two contentions are raised. An order of penalty was imposed under Section 45A(1) of the KGST Act against the petitioner. The first Revision carried by the petitioner was successful. Proceedings were taken under Section 37 of the KGST Act by the Commissioner exercising suo motu powers. The order of the Deputy Commissioner under Section 45A(3) of the Act was interfered with and the matter was remitted back to the Intelligence Officer. It was this order of the Commissioner which was challenged before this Court. This Court by the Judgment under review, did not interfere with the remand, but ordered that when the matter is taken up by the Intelligence Officer, he will consider the matter uninfluenced by the observations of the Commissioner. Petitioner carried the Judgment in Appeal. But, the order in the Appeal reveals that RP.1094/08 IN WPC.15984/08C 2 the petitioner was permitted to move this Court and accordingly, this Review Petition is filed. 2. I heard Shri C.K. Thanu Pillai, learned counsel appearing for the petitioner and also the learned Government Pleader. Learned counsel for the petitioner would essentially raise two contentions. The first contention is that the petitioner had contended before this Court that the power which was resorted to in passing the impugned order by the Commissioner was the power under Section 37 of the KGST Act. He would contend that actually the Commissioner was vested with power of revision against the order of the Deputy Commissioner by virtue of Section 45A sub-section (5) and, therefore, the resort to the power under Section 37 was unjustified. He would contend that this is a matter of jurisdiction. Secondly, he would contend that at any rate the Commissioner ought not have remanded the matter back to the Intelligence Officer and the remand should have been to the Deputy Commissioner and the effect of the remand to the Intelligence Officer is that the Intelligence Officer RP.1094/08 IN WPC.15984/08C 3 is permitted to sit in judgment as it were over the superior authority. Learned Government Pleader, on the other hand, would point out that there is power under Section 37 and, at any rate, there is power under Section 45A(5) of the Act. Shri C.K. Thanu Pillai, on the other hand, would submit that the general proposition that even if a wrong provision is cited as the basis for a proceeding, as long as there is power, the proceeding is immune from interference,is, in fact, not available in the case of a penal action as in this case. 3. In this context, learned counsel for the petitioner relied on the decision of the Apex Court in Commissioner of Sales Tax, U.P., Lucknow v. Anoop Wines (71 STC 262)). Therein, the Apex Court has taken the view that the principle that if a particular action is supported by one Section, it cannot be rendered invalid because reference was made to another Section, is inapplicable in the case of a penal action. That was a case where penalty was imposed under a particular Clause of Section 8A of the U.P. Sales Tax Act. It is apposite to quote the entire RP.1094/08 IN WPC.15984/08C 4 paragraph: “We are not, in the instant case, concerned with the different provisos and the subsequent clauses. It appears that clause (d) has no application to the facts of this case. The dealer indeed in this case did not commence business during the course of the assessment year and as such he was not registrable in terms of that section. Clause (d) of the said section refers to a dealer who has commenced business during the course of an assessment year. It is abundantly clear in this case that the assessee had started his business in the preceding year and is not the one who commenced his business during the course of the assessment year 1977-78, therefore, clause (d0 is inapplicable to the assessee. The High Court noted that he is not said to have been covered by any other clause of sub-section (1) of Section 8-A. That is the parameter within which the matter was canvassed before the authorities below. Counsel for the Revenue, however, sough to urge before us that the order for the imposition of penalty could have been and should have been justified on clause (c) of section 8-A(1) being a dealer who RP.1094/08 IN WPC.15984/08C 5 would, but for any exemption made or granted under the Act, be liable to pay tax thereunder, provided his actual or estimated turnover for the assessment year is not less than fifty thousand rupees. This point was never agitated before the authorities below. The assessee or the dealer had never any occasion to meet this case. It is not a question of sustaining jurisdiction by reference to a wrong section as was done in the case of L. Hazari Mal Kuthiala v. Income-tax Officer, Special Circle, Ambala Cantt. (1961) 41 ITR 12 at page 20 where this Court held that if a particular action is valid under one section, it cannot be rendered invalid because reference was made to another section, and it makes no difference if the two empowering provisions are in the same statute. But, this principle will have no application where in a penal action, no notice was given or resort to such a provision was made to the delinquent or the offending party. In that view of the matter, we are of the opinion that without calling upon the assessee or the dealer to explain its claim on section 80-A(1) (c), the imposition of the penalty which was sought RP.1094/08 IN WPC.15984/08C 6 to be sustained and maintained under clause (d) of section 8-A(1) of the Act cannot be sustained in this case by reference to clause (c).” 4. There was no notice issued to the assessee calling upon him to answer the case based on the provision under which the action could have been supported. It is clear that the proposed action being penal, as a penalty was imposed, certainly the assessee had a legal right which stems essentially from elementary principles of natural justice, to be informed about the case which he has to met upon failure of which, he will be visited with penal action. In the facts of this case, however, it is to be noted that Section 37 empowers the Commissioner to take suo motu action when the order of the lower authority is prejudicial to the interest of Revenue. On the other hand, it is relevant to notice the power under Section 45A(5) which the learned counsel for the petitioner insists, will apply, if at all, invoking the doctrine of specialia generalibus derogant. Section 45A(5) reads as follows: RP.1094/08 IN WPC.15984/08C 7 “45A(5): The Board of Revenue may, either suo-motu or on an application, call for and examine the record of any order passed under sub- section (1) or sub-section (3) and make such order as it thinks fit: Provided that the Board of Revenue shall not admit an application made after the expiry of thirty days from the date of receipt by the applicant of the order under sub-section (1) or sub-section (3), as the case may be, unless it is satisfied that the applicant had sufficient cause for not making the application within the said period. Provided further that no order enhancing a penalty or cancelling the waiver of a penalty shall be passed unless that person affected thereby is given an opportunity of being heard in the matter.” 5. In the impugned order, no doubt, the Commissioner would appear to have exercised the powers invoking Section 37. But, having regard to the width of the power under Section 45A (5), I do not see any reason in the facts of this case to interfere. A mere perusal of the provision can leave no-one in doubt about RP.1094/08 IN WPC.15984/08C 8 the absolute width of power available to the Commissioner. No condition precedent is embedded in the Section upon fulfillment of which alone the power could be exercised. Therefore, it cannot be said that the fact that the power was invoked purportedly under Section 37, cannot detract from the all embracing scope of Section 45A(5). Learned counsel for the petitioner also relied on the decision of a Division Bench of this court in Bhima & Brother Jewellers And Diamond Merchants v. State of Kerala (138 STC 343). There, as in this case, the original order of penalty was set aside in the first Revision. The Board of Revenue took up the matter in suo motu proceedings. The order of the Board of Revenue was challenged in Appeal before this Court. It was in the said context that this Court proceeded to hold as follows: “5. It cannot be taken that, if an order under Section 45A(1) is passed by one authority a suo motu revision by the Board of Revenue is maintainable and if the same order is passed exercising the same power by another authority, such revision will not be maintainable. So the RP.1094/08 IN WPC.15984/08C 9 revision by the Board of Revenue shall be under the same provision and in the same manner. So the revision by the Board of Revenue against an or3der under section 45A(1) or by the Deputy Commissioner under section 45A(3) shall be in terms of section 45A(5) and not under section 37 of the Act. An appeal to the High Court will be maintainable if the Board of Revenue exercises suo motu power under section 37 of 59A of the Act. 6. Here the initial proceedings were under section 45A(1). So, the revision by the Board of Revenue shall only be under section 45A(5) of the Act. Merely because the Board of Revenue has cited section 37 of the Act, it cannot be taken that the Board of Revenue have power under that section. It shall be taken as only in terms of section 45A(5) of the Act. Viewed so, no appeal will lie against such an order.” 6. It is pertinent to refer to the following sentence in paragraph 6: “Merely because the Board of Revenue has cited Section 37 of the Act, it cannot be taken that the Board of Revenue have power under that Section and it shall be taken as RP.1094/08 IN WPC.15984/08C 10 only in terms of Section 45A(5) of the Act.” 7. I also notice that the order was passed admittedly after issuing notice to the petitioner. A perusal of Ext.P7 order would not show that the contention which the petitioner has taken that there is no jurisdiction to suo motu revise the order, is seen pressed. 8. Regarding the second contention of the petitioner that the matter should not have been remitted back to the Intelligence Officer, I do not see much merit in the contention of the learned counsel for the petitioner. I do not see how it will amount to allowing the Intelligence Officer to sit in judgment over the order of the Deputy Commissioner. At any rate, the power of remand with the Commissioner is not in dispute. By virtue of the remand to the Intelligence Officer where the Intelligence Officer has been directed to verify the facts, I do not see why I should interfere in this Review Petition. I also made it clear in the judgment under review that the Intelligence Officer will consider the matter in accordance with law and untrammelled by RP.1094/08 IN WPC.15984/08C 11 the observations contained in Ext.P7. In this view of the matter, I see no merit in the Review Petition and it is liable to be dismissed and I do so. Sd/= K. M. JOSEPH, JUDGE kbk. // True Copy // PS to Judge