IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 11TH JANUARY 2008 / 21ST POUSHA 1929 OP.No. 33202 of 2002(C) ----------------------- PETITIONER: ------------ SREE GOKULAM HOTELS (INDIA) PVT. LTD., KALOOR, COCHIN, REPRESENTED BY BABY JOSE, POWER OF ATTORNEY OF A.M.GOPALAN, DIRECTOR BY ADV. SRI.JOSE JOSEPH RESPONDENTS: ------------- 1. THE SALES TAX OFFICER (WC AND LT) OFFICE OF THE DEPUTY COMMISSIONER, THEVARA, ERNAKULAM 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM 3. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM 4. THE STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY TO GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY SHRI.K.P.PRADEEP, GOVERNMENT PLEADER THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 11/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P.NO. 33202/2002 ORDER ON CMP NO. 56202/2002 IN O.P.NO. 33202/2002. DISMISSED. 11/01/2008 SD/- (C.N.RAMACHANDRAN NAIR, JUDGE) APPENDIX PETITIONER'S EXHIBITS P1 : COPY OF PETITIONER'S LETTER TO R1. P2 : COPY OF ORDER OF R1 IMPOSING PENALTY. P3 : COPY OF ORDER OF R2 IN STRP 15/2002. P4 : COPY OF ORDER OF R3 IN STRP 50/2002. // TRUE COPY // PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR, J. ----------------------------------- O.P. No. 33202 of 2002 ------------------------- Dated, this the 11th day of January, 2008 J U D G M E N T Petitioner is challenging penalty order issued under Section 45A of the KGST Act for failure to deduct sales tax as Awarder from contractors’ bills. Learned counsel for petitioner submits that Section 7B, violation of which led to penalty, is declared invalid through this Court's decision in Seimens Ltd. Vs. State of Kerala, reported in 2002(3) KLT 443. However, learned Government Pleader submitted that petitioner did not challenge the statutory provisions during the year and since the provision was in force during the relevant period, there is violation by petitioner. He further pointed out that Section 7C was introduced in the statute immediately after pronouncement of the judgment by this Court declaring Section 7B as illegal. I do not think, the judgment of this Court stands in the way of levying penalty because of introduction of Section 7C. However, learned counsel for petitioner submitted that failure to deduct tax was not deliberate and on being pointed out to the petitioner by the Assessing Officer through the penalty notice, petitioner remitted the tax. If petitioner has remitted the tax and interest thereon before 1st respondent, then the violation is only technical and I find no justification to impose penalty O.P.NO. 33202/2002 -2- separately on petitioner, more so when this Court declared the provision as illegal, though later. In the circumstances, this original petition is disposed of vacating the orders of penalty with direction to 1st respondent to re-consider the matter. The Officer should compute the tax liability and call for the details of payments of tax made by petitioner as well as by contractor, if he is registered. If entire tax and interest thereon are paid, then 1st respondent shall not levy any penalty on petitioner. I make it clear that if the contractor is not a registered dealer and has not paid the actual tax over and above the remittance made by petitioner at the prescribed percentage, then it would be open to 1st respondent to consider penalty on petitioner but after taking into account the decision of this Court and with reference to Section 7C to the statute. Petitioner will furnish the address of the contractor and the details of registration, if he is registered, for 1st respondent to call for records from contractor to ensure full payment of tax on the contract amount. If the contractor is not registered, 1st respondent or the concerned officer, should consider penalty on him also. Penalty on petitioner will be considered with reference to penalty and assessments, if any, proposed against the contractor. (C.N.RAMACHANDRAN NAIR, JUDGE.) jg