IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 12TH OCTOBER 2010 / 20TH ASWINA 1932 WP(C).No. 26553 of 2010(T) ---------------------------------------- PETITIONER(S): ------------------------ C.H.ASHRAFF, CRYSTAL TRADERS, P.P.ROAD, PERUMBAVOOR. BY ADV. SRI.A.KUMAR RESPONDENT(S): ---------------------------- 1. INTELLIGENCE OFFICER, SQUAD NO.V, DEPARTMENT OF COMMERCIAL TAXES, GOVERNMENT OF KERALA, MATTANCHERY. 2. THE COMMERCIAL TAX OFFICER, PERUMBAVOOR. R1 & R2 BY SR. GOVERNMENT PLEADER SRI. C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 12/10/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.26553 of 2010 ------------------------------------------- Dated this the 12th day of October, 2010 J U D G M E N T ---------------------- Ext.P6 to P8 orders issued by the 1st respondent imposing penalty on the petitioner under the provisions of Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act), are under challenge in this writ petition. The petitioner is a registered dealer in Plywood and Veneers borne on the rolls of the 2nd respondent. Pursuant to a shop inspection conducted by the Intelligence Wing of the Commercial Taxes Department, in which certain incriminating records were recovered, the 1st respondent had issued Ext.P2 notice proposing to impose penalty with respect to the assessment years 2006-07, 2008-09 and 2009- 10. Before issuing the said notice the Books of Accounts of the petitioner were verified. On comparison of the Books of Accounts with the documents recovered the 1st respondent noticed considerable variations and serious irregularities, and therefore the estimation of suppressed turnover was W.P.(C).26553/10- -2- made. The petitioner was requested to file objections if any against the proposal. The petitioner submitted reply to Ext.P2 notice, on 26.6.2010. Considering the reply, the 1st respondent revised the notice as evidenced from Ext.P3, rectifying certain mistakes in estimating the suppressed turnover, based on the allegations and records available. In the said notice it was also alleged that certain C-forms produced by the petitioner were found to be not genuine when verified with the data available in the TINXSYS. The petitioner was given a further opportunity to object the revised proposal, and he had filed Ext.P4 reply. It was contended that there was no reason to suspect genuineness of the C-forms issued by the consignees outside the State. According to the petitioner, the information available under the TINXSYS was incomplete as the website was not being properly updated. It is contended that the non-acceptance of C-forms depending on the data available in the TINXSYS, is highly improper and the same could not be used for imposing penalty. It was also contended that the seized records are not part of the regular Books of Accounts and it could not be considered as complete and correct reflection of the transactions undertaken by the petitioner, for the purpose of imposing penalty. W.P.(C).26553/10- -3- According to the petitioner there were no bogus transactions or any unaccounted sales and there was no instance of even a single consignment among the alleged transactions at the Check Post. Therefore it is contended that the penalty proposed without making any verification in the check post and without conducting any enquiry, on the basis of mere assumptions and without there being any detection at the check posts or by any other intelligence authorities, is unsustainable. In the reply submitted the petitioner had made specific request for affording opportunity for verification of the records recovered, in order to submit detailed explanations regarding item wise details of the alleged irregularities. The petitioner had specifically requested to afford further opportunities to file additional explanations after verification of such records. It is the case of the petitioner that in spite of repeated approaches made the 1st respondent has not afforded with any opportunity. However, the petitioner was served with copies of the books on 17.7.2010. But still the 1st respondent has not returned the computer system in which the petitioner was maintaining accounts, nor copies of any data regarding such accounts were furnished to the petitioner, in spite of specific requests made under Ext.P5. On the other hand, W.P.(C).26553/10- -4- the 1st respondent had finalised the penalty proceedings and Ext.P6 to P8 orders were issued. Under the above circumstances the petitioner is challenging those orders without resorting to the statutory remedy of appeal, on the ground that the impugned orders are issued in violation of principles of natural justice. 2. On a perusal of Ext.P6 to P8 orders it is noticed that the 1st respondent had observed that the petitioner had failed to produce any evidence to prove that the C-form declarations submitted with respect to the year 2006-07 are genuine, and he had failed to submit any reply in this regard. It is alleged that in spite of giving copies of the recovered records the petitioner has not filed any objection to the proposal. Under such circumstances proposal for imposition of penalty was seen confirmed. 3. Against Ext.P6 to P8 orders the petitioner has got an effective remedy by way of statutory appeal. The question to be considered is whether there is any special circumstances existing to entertain this writ petition, bypassing such statutory remedy. According to the petitioner, the penalty proceedings was finalised without affording ample opportunity to the petitioner to object the proposal and to substantiate his W.P.(C).26553/10- -5- contentions. It is evident from Ext.P4 reply that, while explaining the irregularities pointed out through the proposal notice, the petitioner had stated as follows:- “We may also submit that the books, register have been recovered and hence we are not able to furnish detailed item wise explanations for individual irregularities. Unless the recovered books, registers are verified we will not be able to explain the reason for differences. We may be granted further time to furnish additional explanations after verification and also opportunity for personal hearing.” It is further evident that the petitioner had submitted Ext.P5 request, in which it is mentioned that the petitioner is maintaining the accounts in the computer system and unless the particulars of the invoices are furnished to the purchasing dealers they will not be able to collect C-forms with respect to each such transactions. Hence a request was made to return the computer processor or to furnish coies of the data in order to enable them to collect C-form and resume normal business. Specific contention of the petitioner is that the 1st respondent has not afforded an opportunity to file additional objections, after permitting verification of the seized records and after returning computer processor. 4. Even though it is evident that the relevant copies of W.P.(C).26553/10- -6- the seized records were furnished to the petitioner on a later stage, it is not clear as to whether the petitioner was given any further opportunity to file additional objections based on such records. Further, it is also pertinent to note that, the 1st respondent had failed to consider the request of the petitioner to return the computer system or to furnish copies of the data contained therein. Under such circumstances, contention of the petitioner that he was denied of proper opportunity to dispute the estimation on an item wise basis and to establish genuineness of each transactions, deserve merit. It is also worth noticing the contentions of the petitioner is that the 1st respondent has not made any efforts to verify genuineness of the C-forms and the entire estimation is made based on the presumption that such C-forms are not genuine, merely because the details were not available in the TINXSYS. 5. In a statement filed on behalf of the 1st respondent it is contended that copies of the recovered records and documents were given to the petitioner as per letter dt.14.7.2010, and it was handed over on 17.7.2010. According to the 1st respondent time was allowed for filing reply and that the petitioner was given a further opportunity of personal hearing on 24.7.2010. But the W.P.(C).26553/10- -7- petitioner has not turned up to file any objections and he has also not availed for a personal hearing, and therefore the 1st respondent was constrained to finalise the proceedings. The contention of the petitioner regarding return of CPU was refuted stating that no request from the petitioner was received before despatch of the impugned orders. On the other hand, the request for return of the CPU dt.24.7.2010 was filed by the petitioner only on 3.8.2010, is the contention. It is further pointed out that even in Ext.P5 the petitioner had never sought time for filing reply to the proposal for imposing penalty. 6. While considering the question as to whether there was any denial of proper opportunity before finalising the proceedings in question, I am of the considered opinion that this court was not justified in interfering with the impugned orders on merits considering availability of the effective alternate remedy. At the same time challenge against the impugned orders can be entertained if there is any serious violation of the mandatory procedures or if there is any apparent violation of principles of natural justice. It is evident that the proposal notices were duly served on the petitioner and he had submitted detailed reply as per Ext.P4. It is true that the petitioner had W.P.(C).26553/10- -8- requested for copy of the seized records and documents. But it is evident that copy of such records were made available to the petitioner and a further opportunity was afforded for filing additional objections and for personal hearing. 7. Through a reply affidavit filed, the petitioner asserts that Ext.P5 request was within the knowledge of the 1st respondent even at the time when the penalty proceedings was finalised and the orders were despatched. However, there is no convincing evidence to prove that such a request was submitted before the crucial date. Since the petitioner has not availed of the opportunities afforded after supplying copies of the relevant records, I am of the view that the dispute regarding request for return of CPU has no much relevance on the issue. However, I am of the considered opinion that there is no circumstances warranting interference of this court with the impugned orders, in exercise of powers under Article 226 of the Constitution of India. On the other hand, I feel that it is only just and proper to relegate the petitioner to avail the statutory remedy, leaving open all the contentions for agitation. 8. Accordingly the writ petition is dismissed making it clear that, if the petitioner files statutory appeal against Ext.P6 W.P.(C).26553/10- -9- to P8 before the appropriate appellate authority within a period of 2 (two) weeks from the date of receipt of a copy of this judgment, such appeals shall be entertained as if it is filed within the time limit prescribed. Needless to say that the petitioner will be at liberty to seek appropriate interim reliefs from the appellate authority. In order to facilitate the petitioner to approach the appellate authority as directed above and to seek interim relief, recovery of the amounts covered under Ext.P6 to P8 shall be kept in abeyance for a period of 4 months from today. C.K.ABDUL REHIM, JUDGE. okb