IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR THURSDAY, THE 24TH JULY 2008 / 2ND SRAVANA 1930 WP(C).No. 35464 of 2005(V) -------------------------- PETITIONER: ------------ M/S. INSTYLE DECORATORS & DISTRIBUTORS, VAZHUTHAKADU, THIRUVANANTHAPURAM, REP. BY P. VINAYACHANDRA KUMAR (PARTNER). BY ADV. SRI.JOSE JOSEPH RESPONDENTS: ------------- 1. THE INTELLIGENCE OFFICER (IB), COMMERCIAL TAXES, KOTTAYAM. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, KOTTAYAM. 3. THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDINGS, THIRUVANANTHAPURAM. 4. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, THIRUVANANTHAPURAM. BY G.P. SRI. K.P. PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE REVISED NOTICE UNDER SECTION45 A OF THE KGST ACT DATED 21.4.2003 EXT.P2 TRUE COPY OF THE PETITIONER'S OBJECTION DATED 14.6.2003 EXT.P3 TRUE COPY OF FURTHER REVISED NOTICE UNDER SECTION 45A OF THE KGST ACT DATED 30.3.2003 EXT.P4 TRUE COPY OF THE OFFER FROM KRISHNA VINYLS LTD. TO M/S. MALAYALAM COMMUNICATIONS DATED 31.5.2000 EXT.P5 TRUE COPY OF PURCHASE ORDER PLACED BY MALAYALAM COMMUNICATIONS LTD. TO KRISHNA VINYLS LTD. DATED 18.7.2000 EXT.P6 TRUE COPY OF WORK ORDER ISSUED TO THE PETITIONER FOR LAYING VINYLS FLOORINGS DATED 18.7.2000 EXT.P7 TRUE COPY OF THE LETTER FROM PETITIONER TO THE FIRST RESPONDENT DATED 18.10.2003 EXT.P8 TRUE COPY OF THE LETTER FROM 1ST RESPONDENT TO PETITIONER DATED 25.10.2003 EXT.P9 TRUE COPY OF LETTER FROM KAIRALI TO 1ST RESPONDENT DATED 1.8.2003 EXT.P10 TRUE COPY OF LETTER FROM PETITIONER TO FIRST RESPONDENT DATED 6.11.2003 EXT.P11 TRUE COPY OF ORDER OF THE FIRST RESPONDENT LEVYING PENALTY UNDER SECTION 45A OF THE KGST ACT FOR THE YEARS 1999-00 AND 2000-01 DATED 30.4.2004 EXT.P12 TRUE COPY OF SIR NO. 369863 IN RESPECT OF M/S.. S.V. AGENCIES DATED 16.11.2002 EXT.P13 TRUE COPY OF ORDER OF THE 2ND RESPONDENT IN RP 39& 40/04 DATED 31.12.2004 EXT.P14 TRUE COPY OF REVISION BEFORE THE 3RD RESPONDENT DATED 9.2.2005 EXT. P15 TRUE COPY OF ORDER NO. R3-9618/05 OF THE 3RD RESPONDENT DATED 17.11.2005 EXT.P16 TRUE COPY OF SNOTICE ISSUED BY THE 4TH RESPONDENT UNDER SECTION 35 OF THE KGST ACT DATED 9.3.2005 RESPONDENTS' EXHIBITS:; NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- W.P.C. NO. 35464 OF 2005 -------------------------------------------- Dated this the 24th day of July, 2008 JUDGMENT Heard counsel for the petitioner and Government Pleader. The order under challenge is penalty levied under Section 45A of the Act confirmed in second revision by the Commissioner of Commercial Taxes vide Ext.P15 order. Penalty is levied for both the years, 1999- 2000 and 2000-01. Even though counsel for the petitioner contended that there is nothing to connect between the petitioner and the transactions, I do not think the argument is tenable because all the three authorities concurrently found that petitioner is the real party who carried on business under the name of one S.V. Agencies. In fact in the course of search conducted in the name of Krishna Vinyls Ltd., it was found that petitioner was engaged in purchase of materials for Vinyl flooring from them and was executing work for others. Besides this, certain commission payments were made to petitioner probably for purchases arranged by them. Searched party got evidence to prove that transactions were made by the petitioner, which is engaged in Vinyl 2 flooring work. However, petitioner tried to prove that the business was carried on by one S.V. Agencies, whose propritor was found to be a coolie by the department. It is seen from the orders that the Department has established with evidence that S.V.Agencies is nothing but an organisation promoted by the petitioner to avoid payment of tax. In the circumstances, I find no ground to interfere with levy of penalty for evasion of tax under Section 45A of the Act. However, since demand of tax and penalty is based on estimation of turnover, I feel some modification is required in regard to extent of penalty levied. Consequently penalty orders are modified by reducing the penalty for 1999-2000 to one and a half times of tax as against two times levied. However, for the next year, penalty levied is upheld. W.P. is disposed of as above. (C.N. RAMACHANDRAN NAIR) Judge kk 3