IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 22ND SEPTEMBER 2010 / 31ST BHADRA 1932 WP(C).No. 27513 of 2010(L) --------------------------------------- PETITIONER: ------------------- M/S. M.O.POONEN, PODIYADI, THIRUVALLA, REPRESENTED BY ITS MANAGING PARTNER, SRI. SUNIL GEORGE OOMEN. BY ADV. SRI.SOJAN JAMES. RESPONDENTS: ------------------------ 1. INTELLIGENCE OFFICER, SQUAD NO.II, THIRUVALLA, OFFICE OF INSPECTING ASSISTANT COMMISSIONER (1), COMMERCIAL TAXES, PATHANAMTHITTA-689110. 2. THE COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695 001. R1 & R2 BY GOVERNMENT PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22/09/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. C.K.ABDUL REHIM, J --------------------------- W.P(C) No. 27513 of 2010-L ---------------------------- Dated this the 22nd day of September, 2010. J U D G M E N T Ext.P5 order imposing penalty under Section 67(1) of the Kerala Value Added Tax Act is under challenge in this writ petition. Since the petitioner has got an effective remedy by way of appeal against Ext.P5, it is not proper for this Court to interfere in normal situations. But grievance voiced by the petitioner is that Ext.P5 is issued in total violation of principles of natural justice, without affording any opportunity to the petitioner to file objections against the proposal and also without affording an opportunity of personal hearing. 2. The proceedings was initiated subsequent to an inspection conducted on 30.12.2009 at the business place of the petitioner at Thiruvalla and at the branches at Maradu, Kochi and Kattakada, Thiruvananthapuram. It is the admitted case of both sides that out of the three shop inspections conducted, copy of report prepared with respect to inspection conducted at Thiruvalla alone was issued to the petitioner at the time of inspection. It was W.P(C) No. 27513 of 2010-L 2 contended by the respondents that the copy of SIR was not issued with respect to other two places because the persons who were present at the premises in charge of the business had refused to sign the SIRs. Pursuant to the inspections Ext.P3 notice was issued proposing to impose penalty. The said notice, eventhough dated 5.7.2010, was signed by the first respondent only on 4.8.2010. Admittedly, the said notice was served on the petitioner only on 4.8.2010. In Ext.P3 the date of hearing stipulated was 6.8.2010, ie. on the second day after service of Ext.P3. 3. It is the case of the petitioner that on receipt of Ext.P3 notice, the petitioner made request as per Ext.P4 for supply of copies of SIRs with respect to the branches at Ernakulam and Thiruvanathapuram. According to the petitioner, the copies of SIRs were made available to the petitioner only on 21.8.2010. But before serving copies of the SIRs the penalty orders was finalised by the first respondent. Ext.P5, which was originally dated as 19.8.2010 was corrected as 30.8.2010, is the conduction. According to the petitioner, the penalty order was finalised even prior to issuance of copies of SIRs and the same was issued subsequently by altering the date and by incorporating certain additional statements. No W.P(C) No. 27513 of 2010-L 3 opportunity to file objections nor any opportunity of personal hearing was afforded before finalising the proceedings, is the grievance of the petitioner. 4. Going by Ext.P5, it is mentioned that on receiving the notice for imposing penalty on 4.8.2010, the petitioner had applied for copies of two SIRs with respect to Ernakulam and Thiruvananthapuram, on 10.8.2010. It is further stated that the copies were taken from the office by the petitioner only on 21.8.2010. Findings in Ext.P5 is that, only the SIRs pertaining to inspection at the branch at Maradu was not available with the petitioner and since all the books of accounts are maintained at the head office there was no difficulty for production of the books of accounts, and that the non-availability of copies of SIRs was not a valid ground for not producing the books of accounts. Rejecting the contentions raised by the petitioner, penalty was confirmed through Ext.P5. 5. In a statement filed on behalf of the first respondent, it is averred that the petitioner was not at all co-operative in producing books of accounts and in participating with the enquiry. According to the respondents, the request made for copies of SIRs are only by W.P(C) No. 27513 of 2010-L 4 way of an excuse for delaying the matter. 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 evaluating rival submissions, it is evident that the copies of SIRs were made available to the petitioner only on 21.8.2010. It is also clear from Ext.P5, that the petitioner has not filed objections against the proposal, but only requested for copies of the SIRs. Nothing is discernible from the impugned order or from the statement filed on behalf of the first respondent that an effective opportunity was afforded to the petitioner to file objections after supplying copies of the SIRs. On a perusal of Ext.P5, it is evident that there is a correction effected on the date of the order as 30.8.2010, which was originally printed as 19.8.2010. Eventhough there is no materials to find that Ext.P5 order was finalised on an earlier date, the allegation of the petitioner regarding subsequent incorporation of certain facts could not be discarded in toto. However, I am not entering on any finding, regarding that controversy. It is evident that the petitioner was not afforded with opportunity to file objections after 21.8.2010 W.P(C) No. 27513 of 2010-L 5 and no personal hearing was afforded before finalising the order imposing penalty. Imposition of penalty under Section 67(1) of the KVAT Act is a penal procedure in which it is mandatory to ensure that all principles of natural justice has been complied with. As pointed out by learned counsel for the petitioner, this Court has emphasised the needs for strict compliance of such formalities in a recent decision reported in Suzion Infrastructure Service Ltd V. C.T.O (2010(3) KHC 299). There are ever so many precedents reiterating need for strict compliance of principles of natural justice in the matters of finalising penalty proceedings. Since it is evident that the petitioner was denied of an opportunity to file objections and opportunity of hearing, I am inclined to quash Ext.P5 and further to direct the first respondent to finalise the matter afresh after complying with such requirements. 7. In the result, the writ petition is allowed and Exts.P5 is hereby quashed. The petitioner is directed to file objections against Ext.P3 before the first respondent within a period of two weeks from today. The first respondent is directed to afford an opportunity to the petitioner to produce documents and accounts in support of his contentions. He shall be afforded with an opportunity of personal W.P(C) No. 27513 of 2010-L 6 hearing before finalising the proceedings. 8. Fresh proceedings in this regard will 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 ab