IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR WEDNESDAY, THE 9TH JANUARY 2008 / 19TH POUSHA 1929 WP(C).No. 36186 of 2004(G) -------------------------- PETITIONER: ------------ T.M.SALIM MANZOOR, PROPRIETOR, SUN SHINE STEEL FURNITURE, MAYYANAD, KOTTIYAM, KOLLAM DISTRICT. BY ADV. SRI.V.P.SUKUMAR SRI.BEJOY CHERIYAN RESPONDENTS: ------------- 1. THE INTELLIGENCE OFFICER (IB), COMMERCIAL TAXES, KOLLAM. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, KOLLAM. 3. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY G.P. SRI. K.P. PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 09/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE PENALTY ORDER DATED 2.12.2001 PASSED BY THE FIRST RESPONDENT. EXT.P2 TRUE COPY OF THE ORDER DATED 7.9.2002 PASSED BY THE 2ND RESPONDENT. EXT.P3 TRUE COPY OF THE ORDER DATED 17.3.2004 PASSED BY THE THIRD RESPONDENT. RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- W.P.C. NO. 36186 OF 2004 -------------------------------------------- Dated this the 9th day of January, 2008 JUDGMENT Petitioner is challenging Ext.P3 whereunder the Commissioner has confirmed with slight modification the first revisional order of penalty levied under Section 45A of the KGST Act. Petitioner's case is that even though there was suppression of sales from the accounts such sales were exempted as petitioner was a Khadi Industry entitled to sales tax exemption. This was the argument raised by the petitioner before the Commissioner and the same is repeated by counsel for the petitioner in this Court also. If the petitioner was not liable to pay sales tax, then I see no reason why the petitioner really suppressed the turnover more so when the sales were to government departments. However, I find some force in the contention of the petitioner that the unit was substantially enjoying sales tax exemption because only small turunover was declared by the petitioner under taxable turnover. Since petitioner suppressed the sales, the Department could not identify the item as to whether the products are manufactured by the petitioner or 2 traded commodity. However, since petitioner is admittedly engaged in unaccounted sales, petitioner cannot plead that such sales were exempt. In any case since the department has basically accepted the petitioner's eligibility for exemption on sale of products I modify the penalty to equal amount of tax as against one and a half times sustained by the lower authorities. Penalty should be reworked by applying the rate at 10% as held by the Commissioner, but limiting it to equal amount of tax on the suppressed turnover. W.P. is disposed of as above. (C.N. RAMACHANDRAN NAIR) Judge 3