IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 21ST DECEMBER 2009 / 30TH AGRAHAYANA 1931 ST.Rev..No. 257 of 2009() ------------------------- TA.87/2009 of COMMR.KERALA AGR.IT & STAT,TVM. .................... REVISION PETITIONER/APPELLANT-ASSESSEE ---------------------------------------------------------- CREATIVE POLYMERS, PLOT NO.31, DEVELOPMENT PLOT, MUNDAKKAL, KOLLAM. (REPRESENTED BY S.KISHORE, MANAGER). BY ADV. SRI.VIJAYAN. K.U. SRI.K.N.SREEKUMARAN RESPONDENT(S): REVENUE/RESPONDENT --------------------------------- STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, GOVT.SECRETARIAT, THIRUVANANTHAPURAM, PIN-695 001. BY G.P. SRI.P.K. SHAMSUDEEN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 21/12/2009, ALONG WITH STRV NO. 258 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & V.K. MOHANAN, JJ. -------------------------------------------- S. T. Rev. No. 257 & 258 OF 2009 -------------------------------------------- Dated this the 21st day of December, 2009 JUDGMENT Ramachandran Nair, J. Connected Revisions are filed against orders of the Tribunal, upholding disallowance of sales tax exemption for the petitioner under notification, SRO 295/98. Petitioner is a small scale industrial unit which was granted sales tax exemption for seven years for the manufacture and sale of electrical conduit pipes made of PVC. During 2000-01 a crime was booked against the petitioner, which ended up in a penalty of around Rs. 4,000/-. By virtue of the notification SRO 295/98, petitioner will forfeit the benefit of tax exemption because it was involved in tax evasion. However, counsel has relied on the judgment of this Court IN M/S. SAHIB RUBBER INDUSTRIES V. STATE OF KERALA, 14 KTR 184 wherein this Court has held that by virtue of the specific provision contained in the notification dealers can continue to get exemption if they remit the compounding fee with double the amount of tax sought to be evaded. Counsel for the 2 petitioner submitted that there was only an omission on the part of the petitioner to avail the benefit under the notification and in fact double the amount of tax was recovered towards security which was converted into penalty. We find force in this contention because if the petitioner was aware of the benefit of compounding, petitioner would have certainly compounded the offence and retained the benefit. We do not think a technical flaw should lead to complete loss of benefit in the form of sales tax exemption granted to the petitioner under government notification. We therefore feel that petitioner can be granted relief conditionally. Even though maximum compounding fee is Rs. 2 lakhs during 2003-04, we feel the maximum compounding fee that was payable on the date of commission of offence being Rs. 1 lakh, petitioner can be extended the benefit of payment of compounding fee of Rs. 1 lakh. Tax Revisions are allowed declaring the eligibility of the petitioner for continued exemption, if it is denied exemption only on account of one crime during 2000-01 referred above, on petitioner remitting Rs. 1 lakh along with a copy of this judgment before the assessing officer, who will rectify all the assessments and grant 3 exemption in terms of the certificate issued to the petitioner. Petitioner is granted two weeks' time from the date of receipt of a copy of this judgment to remit compounding fee of Rs. 1 lakh and avail the benefit. However, we make it clear that if petitioner is involved in any other case, SRO 295/98 would be invoked with reference to such proceedings. (C.N.RAMACHANDRAN NAIR) Judge. (V.K. MOHANAN) Judge. kk 4