IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN MONDAY, THE 7TH APRIL 2008 / 18TH CHAITHRA 1930 OP.No. 29833 of 2000(B) ----------------------------------- PETITIONER: -------------------- M.SULAIMAN KUNJU, VALIYAVEEDAN STORES, KUNNICODE, KOLLAM DISTRICT. BY ADV. SRI.V.P.SUKUMAR SRI.BOBBY JOHN RESPONDENTS: ------------------------ 1. THE SALES TAX OFFICER, PUNALUR. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, KOLLAM. 3. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. V.TEKCHAND THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 31/10/2007, THE COURT ON 7/04/2008 DELIVERED THE FOLLOWING: Kss ORDER ON C.M.P.NO.50553/2000 IN O.P.NO.29833/2000 E DISMISSED 7/04/2008 SD/- THOTTATHIL B.RADHAKRISHNAN,JUDGE APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE LETTER DTD. 1/1/1992 SUBMITTED BY SHRI. NOUSHAD, SON OF THE PETITIONER BEFORE THE FIRST RESPONDENT. EXT.P2: COPY OF THE PENALTY ORDER DTD. 4/1/1992 PASSED BY THE FIRST RESPONDENT FOR 89-90. EXT.P3: COPY OF THE PENALTY ORDER DD. 4/1/1992 FOR THE YEAR 90-91 ISSUED BY THE SALES TAX OFFICER, PUNALUR. EXT.P4: COPY OF THE ORDER DTD. 21/05/1992 PASSED BYTHE SECOND RESPONDENT. EXT.P5: COPY OF THE ORDER DTD. 29/11/1993 FOR THE YEAR 89-90 PASSED BY THE FIRST RESPONDENT. EXT.P6: COPY OF THE ORDER DTD. 29/11/1993 FOR THE YEAR 90-91 PASSED BY THE FIRST RESPONDENT. EXT.P7: COPY OF THE ORDER DTD. 20/10/1994 PASSED BY THE SECOND RESPONDENT. EXT.P8: COPY OF THE ORDER DTD. 23/3/1996 PASSED BY THE THIRD RESPONDENT. EXT.P9: COPY OF THE ORDER DTD.10/07/1997 PASSED BY THE FIRST RESPONDENT FOR THE YEAR 89-90. EXT.P10: COPY OF THE ORDER DTD. 10/07/1997 PASSED BY THE FIRST RESPONDENT FOR THE YEAR 90-91. EXT.P11: COPY OF THE ORDER DTD. 12/11/1997 PASSED BY THE SECOND RESPONDENT FOR THE YEAR 89-90. Kss ..2/- ...2.... O.P.NO.29833/2000 B EXT.P12: COPY OF THE ORDER DTD. 12/11/1997 PASSED BY THE SECOND RESPONDENT FOR THE YEAR 90-91. EXT.P13: COPY OF THE APPELLATE ORDER DTD. 15/08/1998 ISSUED BY THE APPELLATE ASSISTANT COMMISSIONER, KOLLAM. EXT.P14: COPY OF THE NOTICE DTD. 19/11/1999 FOR THE YEAR 89-90 ISSUED BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. EXT.P15: COPY OF THE NOTICE DTD. 19/11/1999 FOR THE YEAR 90-91 ISSUED BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. EXT.P16: COPY OF THE REPLY DTD. 14/2/2000 FILED BY THE PETITIONER BEFORE THE THIRD RESPONDENT. EXT.P17: COPY OF THE ORDER DTD. 27/03/2000 PASSED BY THE THIRD RESPONDENT RESTORING EXHIBIT P9 PENALTY ORDER. EXT.P18: COPY OF THE ORDER DTD. 27/03/2000 PASSED BY THE THIRD RESPONDENT RESTORING EXHIBIT P10 PENALTY ORDER. /TRUE COPY/ P.S.TO JUDGE Kss THOTTATHIL B. RADHAKRISHNAN, J. = = = = = = = = = = = = = = = = = = = = = = = = O.P.No.29833 of 2000-B = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 7th day of April, 2008. JUDGMENT 1. The petitioner, a registered dealer on the files of the Sales Tax Officer, Punalur, the first respondent, challenges the proceedings leading to Ext.P18 order of the Commissioner of Commercial Taxes issued under Section 37 of the Kerala General Sales Tax Act, 1963 setting aside the order of the Deputy Commissioner and restoring the order of the assessing authority imposing penalty. 2. The petitioner, a dealer in cement, has a son Noushad, who is a registered dealer in cement at Thodupuzha. He is also a partner in another business at Adoor, going by the pleadings in the writ petition. Following a shop inspection, on 24-9-2000, by the Sales Tax OP.29833/2000 -: 2 :- Officer, Punalur, 18 business slips and two exercise note books were recovered for further verification. That was in the presence of Noushad, the son of the petitioner. On subsequent verification, difference in stock was revealed and the assessing authority imposed a penalty of Rs.3,02,738/- at twice the amount of tax sought to be evaded. Against that order dated 4-1-1992, a revision was carried to the Deputy Commissioner who remanded the case for fresh disposal on 21-5-1992. On further checking of the records, the assessing authority imposed penalty of Rs.1,46,369/-, an amount equal to the tax sought to be evaded. That order was issued on 29-11-1993. The first revisional authority dismissed the revision against that order. The Board of Revenue again remanded the case on 23-3-1996 directing further opportunity of hearing. Thereafter, the assessing authority imposed penalty of Rs.1,08,291/-, an amount equal to the tax sought to be evaded. The Deputy Commissioner, OP.29833/2000 -: 3 :- Kollam interfered with that order on 12-11-1997 in R.P.No.132/1997 filed by the assessee, the petitioner. The Commissioner invoked the suo motu power under Section 37 of the Act and proceeded to set aside the aforesaid order of the first revisional authority. The petitioner was notified of that proposal. He did not appear for any personal hearing, but filed objections taking the stand that he was not available in the shop at the time of inspection and his son Noushad was present at the time of inspection and that the recovered records belong to Noushad, who has separate business of his own. He took the stand that the seized records are not returned and are with the department and that cement is a controlled commodity and therefore, it can be purchased and sold only with permits. According to him, he has no registration certificate under the CST Act and therefore, first sales have not been proved to attract liability to tax and penalty. He also pleaded that penalty can be OP.29833/2000 -: 4 :- imposed only when the offence is fully established. Accordingly, he stated that the proposal to revise the first revisional order may be dropped. 3. Upon perusing the files and noticing the facts stated above, the Commissioner, going by Ext.P18, considered the contentions of the petitioner. An examination of the inspection report, crime file and connected records revealed to the Commissioner that the findings arrived at in R.P.132/1997 on 12-11-1997 by the Deputy Commissioner, Kollam are factually incorrect and against law. The records revealed that Noushad was present throughout the inspection and the plea that the recovered records belong to Noushad had not been proved even though several opportunities were afforded to the assessee as well as Noushad. The Commissioner relied on the provisions in Section 45A regarding the burden of proof and found that the assessing authority having OP.29833/2000 -: 5 :- discharged the initial burden, the same has not been disturbed in any manner. Accordingly, Ext.P18 order was issued reversing the decision of the first revisional authority and restoring the decision of the assessing authority imposing penalty, equivalent to the tax sought to be evaded. 4. In support of the writ petition, it was argued that Ext.P10 would disclose that the assessee Sri.Noushad had produced the books of accounts of his business at Thodupuzha. It was also pointed out that a suo motu revision under Section 37 would not be invoked unless the order of the first revisional authority is prejudicial to the interest of the Revenue and is erroneous. The decision of this Court in M/s.Bismillah Trading Co. v. The Intelligence Officer and others [(2000) 8 KTR 264] was referred to. In support of the position that penalty would not be imposed unless an element of mens rea is established, the decision of OP.29833/2000 -: 6 :- this Court in P.D.Sudhi v. Intelligence Officer [85 (1992) STC 337] and that of the Apex Court in Commissioner of Sales Tax v. Mool Chand Shyam Lal [71 (1988) STC 226] were referred to. 5. This is not a case where the first revisional authority had set aside imposition of penalty. It had only reduced the quantum of penalty by confining it in such manner that the order does not depend upon the allegations made in relation to transactions in cement. A perusal of the orders of the Deputy Commissioner on R.P.132/1997 (Ext.P12) would show that, that decision was rendered after holding that irregularities in maintaining accounts properly and correctly, of the business of the petitioner, is an established fact as per the observations of the Sales Tax Officer and the said order has been issued on the mere premises that there is no substantial evidence that the petitioner had purchased the cement from outside the State. In Ext.P12, the first OP.29833/2000 -: 7 :- revisional authority proceeded to hold that there is no corroborating evidence and relevancy between the recovered business slips, excise note books etc. That view was taken on the basis that petitioner's son Noushad is a registered dealer at Thodupuzha and a partner of a firm in Adoor and that he is maintaining all the three units of business. One fails to understand as to from where such a theory emerged before the first revisional authority and still further, whether that was acceptable at all when the premises in question is the proprietory concern of the petitioner and it would be insufficient for him to say that the slips and work book recovered from his place of business in Punalur related to Noushad's business at Thodupuzha and Adoor. Such versions are insufficient to dislodge the presumption as to burden of proof, as is available under Section 45A of the Act. Not only that, the fact that the tax was sought to be evaded had been clearly established, particularly when the OP.29833/2000 -: 8 :- petitioner was only attempting with a slippery defence as was made by him before the authorities below. The issuance of Ext.P12 was, therefore, rightly interfered with by the Commissioner of Commercial Taxes by issuing Ext.P18. 6. It has been categorically found in Ext.P18 that the contention of the assessee that there is no observation in the shop inspection report that the recovered records relate to his business is an exercise in futility. The materials on record have been considered by the Commissioner and clear and cogent reasons have been stated in support of Ext.P18 order. I do not find any jurisdictional error or legal infirmity in the impugned order. The writ petition fails. The same is accordingly dismissed. THOTTATHIL B. RADHAKRISHNAN, JUDGE. Sha/030408 OP.29833/2000 -: 9 :- THOTTATHIL B. RADHAKRISHNAN,J. = = = = = = = = = = = = = = = = O.P.No.29833 of 2000-B = = = = = = = = = = = = = = = = JUDGMENT Dated: 7th April, 2008.