IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 29TH OCTOBER 2009 / 7TH KARTHIKA 1931 OT.Rev.No. 37 of 2009() ----------------------- TA(VAT)NO.107/2008 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM .................... PETITIONER/APPELLANT ---------------------------------------- S.SANAL KUMAR, ANCHUKALLUMOODU, KOTTAPPURAM, PARAVOOR P.O., KOLLAM DISTRICT. BY ADV. SRI.V.P.SUKUMAR SRI.KURYAN THOMAS RESPONDENT(S): RESPONDENT ------------------------- STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. BY G.P. SRI.MOHAMMED RAFIQ THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 29/10/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... O.T. Rev. No.37 of 2009 .................................................................... Dated this the 29th day of October, 2009. ORDER Ramachandran Nair, J. Revision case is filed against the orders of the Tribunal partly confirming and partly remanding the case for redisposal. The facts leading to the impugned orders are the following. The petitioner is a dealer registered under the Kerala Value Added Tax Act (hereinafter called "the Act") engaged in sale of cement. However, the department got information that besides trading in cement, petitioner was engaged in clandestine business in gold ornaments. An inspection was conducted on 12.2.2007 and the department seized 2248 grams of gold ornaments. The startled petitioner took divergent stand before the officers, first by saying that ornaments do not belong to him and later by stating that the same belongs to his wife and close relatives. In any case there is no dispute that the gold ornaments found was in trade quantity and was seized since petitioner did not include the same in the accounts maintained by him which pertains to only cement. When the 2 department initiated proceedings for seizure and sale of the ornaments under Section 44(9), the petitioner approached this court and this court vide Annexure-5 judgment directed deposit of double the amount of tax for ordering stay against sale. However, respondents were allowed to proceed with the adjudication. Even though petitioner claimed gold as belonging to his close relatives, department treated the seizure as still falling under Section 44(9) i.e. as unclaimed goods and ordered sale. In between, apprehending sale of gold, petitioner deposited 50% of the value of ornaments and got the gold released. The order impugned before the Tribunal was Annexure-4, which is an order declining to release the gold to the petitioner. The Tribunal dismissed the appeal, but gave an opportunity to the petitioner to get the gold released on deposit of the penalty provided under Section 44(8) of the Act. Government Pleader submitted that even after the Tribunal's order which is modified through a review order, the Intelligence Officer has proposed to confiscate the gold under Section 44(9). Obviously the proposal covered by Annexure-15 is not tenable because the entire gold is released to the petitioner on payment of 50% of the value which is 3 the maximum fine payable under Section 44(8) of the Act. 2. After hearing both sides and after going through the orders impugned, we feel this is not a case of seizure of gold ornaments unclaimed by anybody. In fact, the petitioner has claimed the gold as belonging to his relatives and even if the claim is rejected, then it cannot be said that the gold is unclaimed by anybody, but should be treated as belonging to the petitioner. Therefore, this is a case falling under Section 44(8) of the Act which provides for maximum penalty at half the value of the unaccounted goods found. The VAT Act came only in April 2005 and the seizure is in the year immediately succeeding the year in which the statute came into force. The department has not been able to find any evidence about unaccounted sale done by the petitioner previously which means that petitioner has not done business in a clandestine manner for long periods. We, therefore, feel maximum penalty under Section 44(8) is not called for. Since the petitioner has been agitating the matter before different forums and is in this court a second round, we feel for the sake of finality the matter can be closed by fixing the penalty under Sectio 44 4 (8) at 25% of the value of the goods. Since there is no other penalty proceedings, the amount deposited at double the amount of tax pursuant to Annexure-5 judgment should also be adjusted towards 25% of the value of the goods. The balance collected amount should be refunded to the petitioner within a period of one month from the date of production of copy of this judgment. The O.T. Revision case is disposed of as above. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms