IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 28TH AUGUST 2008 / 6TH BHADRA 1930 WP(C).No. 25693 of 2008(H) ----------------------------------------------- PETITIONER: ------------------ M/S. S.G.& CO., S.G.COMPLEX, VADAKKE STAND, THRISSUR - 680 020, REPRESENTED BY ITS MANAGING PARTNER, JISSY SHAJI. BY ADV. SRI.V.P.SUKUMAR SRI.BEJOY CHERIYAN RESPONDENTS: ----------------------- 1. THE INTELLIGENCE OFFICER, SPECIAL SQUAD, ERNAKULAM. 2. THE INTELLIGENCE OFFICER, SQUAD NO . II, COMMMERCIAL TAXES, THRISSUR. BY GOVERNMENT PLEADER SHRI C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K. M. JOSEPH, J. -------------------------------------- W.P.C. NO. 25693 OF 2008 H -------------------------------------- Dated this the 28th August, 2008 JUDGMENT Petitioner challenges Ext. P8. Ext.P8 is an order by which the petitioner was visited with penalty under Section 44(8) of the KVAT Act in a sum of Rs.41,97,797/=. Briefly put, the case of the petitioner is as follows: Petitioner is a Firm dealing in home appliances under the name and style "S.G. & Co." Ext.P1 is the Registration Certificate. Petitioner's husband is running a proprietory Concern under the name and style "Esjee & Co." and Ext.P2 is the Certificate of Registration of that Concern. On 15.7.2008, the first respondent and the squad under him inspected the business place of the petitioner and prepared a Shop Inspection Report (Ext.P3). After completing inspection, they moved to the building bearing No.XVII/266 and they prepared another Shop Inspection Report treating that the said building is the WPC.25693/08 H 2 undeclared godown of the petitioner. Ext.P4 is the Shop Inspection Report dated 15.7.2008. Ext.P5 is the mahazar prepared at the time of inspection of Building No.XXVII/266. Petitioner was issued with Ext.P6 notice under Section 44(8) to which the petitioner filed a reply as Ext.P7 along with supporting documents before the first respondent and it is rejecting the same that Ext.P8 order is passed. 2. I heard the learned counsel for the petitioner and the learned Government Pleader. Counsel for petitioner points out that the procedure adopted is illegal. It is submitted that there is violation of the principles of natural justice. Ext.P6 notice was issued by the first respondent, but the order was passed by the second respondent. He who hears must decide, it is submitted. It is further contended that what is involved is imposition of penalty. It is the case of the respondents that the goods found in the godown bearing Door No.XXVII/266 belonged to the husband of the petitioner. Counsel for petitioner submits that WPC.25693/08 H 3 the respondents should have proceeded to seize the records of the husband's proprietory Concern and cross checked. The goods were fully accounted by the husband. In such circumstances, without hearing the case of the husband of the petitioner, it was illegal on the part of the respondents to proceed to find that the goods found at the so-called undeclared godown belonged to the petitioner. Counsel for petitioner points out that Ext.P2 Certificate of Registration would show that the Door bearing No.XXVII/266 is the declared godown of the husband and if at all, there were unaccounted goods, penalty should be imposed on the husband. Counsel for petitioner has also relied on the decisions of this Court in C.K. Sunny v. Additional Sales Tax Officer-I ((2004) 12 KTR 360 (Ker.)), Subair Haji v. Secretary to Government (2007 (4) KLT 865) and Jose Pallissery v. Additional Sales Tax Officer, Chalakkudy And another ((1993) 89 STC 165). In Jose Pallissery v. Addl. WPC.25693/08 H 4 Sales Tax Officer, Chalakkudy ((1993) 89 STC 165), a learned Single Judge of this Court while considering a case under Section 45A which provided for levy of penalty under the KGST Act, took the view that being a penal provision, there must be strict adherence to the procedure which is called for before imposing penalty. It is pointed out that going by the decision in C.K. Sunny v. Addl. Sales Tax Officer-I ((2004) 12 KTR 360 (Ker)), if the reply is not accepted, opportunity of hearing should be given even if not asked for. 3. Per contra, learned Government Pleader would point out that the first respondent is actually the Intelligence Officer, Special Squad, Ernakulam and Ext.P7 objection is filed to the Intelligence Officer, Special Squad, Thrissur. He further points out on instructions that the husband's place of business is at Wadakanchery, Thrissur and that place was also inspected and the husband said that he has no godown. It is further pointed out that the godown of the husband is situated at Thrissur, near the business place of the petitioner. It is stated that when the raid WPC.25693/08 H 5 took place on the petitioner's business place on 15.7.2008, it is on her saying that she has goods godowned at the undeclared godown at Door No.XXVII/266 that the team went there and the goods were found. 4. In Ext.P3 dated 15.7.2008, which is the shop inspection report of the petitioner's business place, it is stated, inter alia, that there is a godown at Chempukavu - Cheroor Road, Door No.27/266 of Thrissur Municipal Corporation (undeclared). In Ext.P5 Mahazar also, it is stated that it was understood that the petitioner had the godown (mentioned earlier). Petitioner was given a week's time by Ext.P6. I feel that this is a matter where the petitioner should be relegated to prefer an Appeal where she can raise all the contentions. But, at the same time, I feel that in the facts of this case, if the petitioner prefers an Appeal within two weeks from today, the Appellate Authority will consider the Appeal on merits and if the petitioner pays a sum of Rs.5 lakhs (Rupees Five lakhs) within a period of three weeks from today, recovery proceedings against the petitioner pursuant to Ext.P8 WPC.25693/08 H 6 will be kept in abeyance till the disposal of the Appeal. I make it clear that the Appeal will be considered untrammelled by any observation made by me in the course of this Judgment. The Writ Petition is disposed of as above. Sd/= K. M. JOSEPH, JUDGE kbk. //True Copy// PS to Judge