IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM MONDAY, THE 11TH OCTOBER 2010 / 19TH ASWINA 1932 WP(C).No. 27811 of 2010(B) ---------------------- PETITIONER : ----------------- M/S.SUNI STEELS, PODIYADI.P.O, THIRUVALLA REPRESENTED BY ITS MANAGING PARTNER SRI.SUNIL GEORGE OOMMEN. BY ADVS. SRI.ANIL D. NAIR SRI. SREEJITH.R SMT. NIVEDITA A.KAMATH RESPONDENT(S): ------------------------ 1. THE INSPECTING ASSISTANT COMMISSIONER, PATHANAMTHITTA. 2. THE INTELLIGENCE OFFICER, SQUAD NO.II, COMMERCIAL TAX, PATHANAMTHITTA. 3. THE STATE OF KERALA, REPRESENTED BY ITS SECRETARY(TAXES), SECRETARIAT, THIRUVANANTHAPURAM. R1 TO R3 BY GOVERNMENT PLEADER SRI. C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 11/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Mn C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.27811 of 2010 ------------------------------------------- Dated this the 11th day of October, 2010 J U D G M E N T ---------------------- Ext.P8 order imposing penalty under Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act) is under challenge in this writ petition. Since the petitioner has got an effective alternate remedy of appeal, it is not proper for this court to interfere in normal situation. But the grievance voiced by the petitioner is that Ext.P8 is issued in total violation of principles of natural justice, without affording any opportunity to the petitioner to object against the proposal and also without affording any opportunity of personal hearing. 2. The proceedings in question was initiated pursuant to an inspection conducted on 30.12.2009 at the principal place of business of the petitioner at Thiruvalla and their branches at Maradu, Ernakulam and at Killi, Thiruvananthapuram. It is the admitted case that, the Shop Inspection Reports (SIR) in relation to the inspection conducted at the head office at Thiruvalla and the branch at W.P.(C).27811/10-B -2- Maradu were not served on the petitioner at the time of inspection. According to the respondents it is because of the reason that the persons in charge of those places had refused to sign the SIRs. Pursuant to the inspection, Ext.P6 notice was issued proposing to impose penalty. The said notice was served on the petitioner on 19.7.2010. In the said notice the petitioner was requested to submit objections within seven days, i.e. before 26.7.2010. According to the petitioner, on receipt of Ext.P6 notice he made request for supplying copies of Shop Inspection Reports with respect to the inspections conducted at Ernakulam and Thiruvananthapuram. It is stated that the copies were made available to him only on 21.8.2010. But before serving copies of the SIRs the penalty order was finalised by the 1st respondent. 3. It is noticed that Ext.P8 was issued with date noted thereon as 19.8.2010. At the same time it is mentioned in Ext.P8 that the dealer was served with copies of the SIRs on 21.8.2010. According to the petitioner the penalty order was finalised even prior to issuance of copies and the same was issued subsequently, by incorporating certain additional statements. It is contended that no opportunity to file objections and no opportunity of personal hearing was afforded before finalising the proceedings. W.P.(C).27811/10-B -3- 4. Going by Ext.P8 it is evident that the petitioner was served with Ext.P6 notice on 4.8.2010. It is also evident that petitioner had applied for copies of the SIRs on 1.8.2010. It is clearly mentioned that the copies were taken from the office by the petitioner only on 21.8.2010. Findings in Ext.P8 is that non- receipt of copies of SIRs was raised only as a lame excuse and the petitioner was not having any difficulty to produce Books of Accounts which were maintained in their head office. It is stated that non-availability of copies of SIRs is not a valid ground for not producing the Books of Accounts. In Ext.P8, rejecting all contentions raised by the petitioner, the proposal for imposing penalty was confirmed. 5. In a statement filed on behalf of the 2nd respondent, it is averred that the petitioner was not at all co-operating in producing Books of Accounts and in participating with the enquiry. According to the respondents, the request made for copies of SIRs was only an excuse to put forth as a device for delaying finalisation of the matter. It is stated that the petitioner had failed to produce Books of Accounts inspite of filing returns before the assessing authority and inspite of filing annual returns pertaining to the year concerned. 6. Considering the facts and circumstances and on W.P.(C).27811/10-B -4- appreciation of the rival submissions, I am convinced that the copies of SIRs were made available to the petitioner only on 21.8.2010. It is evident that the petitioner has not filed objections against Ext.P6 proposal, but only requested for issuance of copies of SIRs. It is discernible that no effective opportunity was afforded to the petitioner to file objections after issuing copies of the SIRs. On a perusal of Ext.P8 it is evident that the same was issued with a date of 19.8.2010 printed thereon. At the same time it is seen from the contents that there is a statement to the effect that the copies were served on the petitioner on 21.8.2010. Hence the allegation of the petitioner in this regard could not be discarded in toto. It is evident that the petitioner was not afforded with an effective opportunity to file objections, after 21.8.2010 and no opportunity of personal hearing was afforded before finalising the order. 7. Imposition of penalty under Section 67(1) is a penal procedure in which compliance of principles of natural justice is mandatory. As pointed out by learned counsel for petitioner, this court has emphasised the need for strict compliance of such formalities, in a recent decision reported in Suzion Infrastructure Service Ltd. Vs. C.T.O. (2010 (3) KHC 299). There are ever so many precedents reiterating need for W.P.(C).27811/10-B -5- compliance of principles of natural justice in matters imposing penalty. Since it is evident that the petitioner was denied of an opportunity to file objections and also an opportunity of personal hearing, I am inclined to quash Ext.P8 and to direct the 1st respondent to finalise the matter afresh after complying with such formalities. 8. In the result, the writ petition is allowed and Ext.P8 is hereby quashed. The petitioner is directed to file objections against Ext.P6 before the 1st respondent within a period of three weeks from today. The 1st respondent is directed to afford an opportunity to the petitioner for production of documents and Books of Accounts in support of his contentions. Petitioner shall be afforded with an opportunity of personal hearing before finalising the proceedings. Fresh proceedings in this regard shall be issued after complying with such requirements, at the earliest possible, at any rate within a period of six weeks from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, JUDGE. okb