IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN THURSDAY, THE 26TH FEBRUARY 2009 / 7TH PHALGUNA 1930 WA.No. 400 of 2009() -------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.33241/2008 Dated 15/01/2009 .................... APPELLANT(S): PETITIONER ------------------------ SOUTHERN ISPAT LTD 19/629(1) "SREYAS" NEAR YAKKARA SCHOOL BUS STOP, WEST YAKKARA, PALAKKAD - 678 001, REPRESENTED BY ITS EXECUTIVE OFFICER, SRI.K.K.AGARWALLA. BY ADV. SRI.S.RAMESH BABU ADV. SRI.SUKUMAR N. OOMMEN RESPONDENT(S): RESPONDENTS -------------------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE INTELLIGENCE OFFICER (SPECIALTEAM), SQUAD NO.1, ERNAKULAM. 3. THE ASSISTANT COMMISSIONER (SPECIAL CIRCLE), COMMERCIAL TAXES, PALAKKAD, KERALA. 4. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM. BY SPL. G.P. SRI.VINOD CHANDRAN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 26/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. .................................................................... Writ Appeal No.400 of 2009 .................................................................... Dated this the 26th day of February, 2009. JUDGMENT Ramachandran Nair, J. Appeal is filed against judgment of the learned Single Judge modifying an interim order passed by the appellate authority in two appeals filed by the appellant against penalty orders for 2005-2006 and 2006-2007. Appellant is a manufacturer of steel ingots from scrap imported from out of India and from outsides States. During search conducted in the business premises of the company and residence of the Director, the department found that appellant was engaged in unaccounted purchase, production and sale of steel ingots. Appellant's accounts were verified with reference to the data available in the seized records and materials like foreign invoices, Bank accounts etc. and the Intelligence Wing of the Department established case of suppression and consequently penalty is levied under Section 67 of the Kerala Value Added Tax Act. The total penalty levied for the two years is above Rs.3.39 crores. Even though the appellate authority directed 2 payment of 40% as condition for stay against recovery, this court in the Writ Petition filed by the petitioner modified the conditional stay order by reducing the payment to Rs.82 lakhs with direction to furnish security for the balance amount. Two weeks' time was also granted for compliance of the judgment. Writ Appeal is filed against the judgment among other things contending that the statutory provision under which penalty is levied is unconstitutional. Appellant has also raised contentions on merits of the case. We have heard counsel appearing for the appellant and Government Pleader appearing for the respondents. 2. We do not find any justification to interfere with the judgment of the learned Single Judge for more than one reason. In the first place, the challenge against statutory provision providing for penalty for evasion of tax has no foundation. In fact, such a challenge is raised only to entertain challenge against penalty in this proceedings before the High Court. In any case we do not wish to pronounce on this issue and the question is left open for the petitioner to raise after statutory appeals are over and after the impugned penalty orders achieve finality. Moreover, if petitioner gets relief from statutory authorities, then 3 petitioner cannot have grievance against the statutory provision. So far as the merits of the case is concerned, even though counsel submitted that tax paid by the appellant along with monthly returns was not considered by the adjudicating authority, it is not correct. In fact, returns are admittedly filed based on books of accounts which on comparison with data collected were found to be incorrect and incomplete. In fact, suppression of raw materials, production and sales are seen established with records. It is open to the appellant to challenge the findings on these matters before the statutory authority. We are of the view that the learned Single Judge rightly declined to consider the case on merits because the same will amount to taking over the appellate jurisdiction which is vested with statutory authorities. So far as the challenge against the interim order directing part payment is concerned, it would not be possible for this court in writ proceedings to modify the stay order without considering the case on merits. If any other issue raised against the adjudication order is considered on merits and decided by this court, the appeal before the statutory authority will become infructuous. Therefore, it would not be correct practice for this court to consider the case on merits or even 4 if considered for the purpose of granting some interim relief, the court should not discuss and decide the issue which would restrict the jurisdiction and authority of the appellate authority. However, prima facie we have considered the issue and we notice that the judgment of the learned Single Judge directing payment of Rs.82 lakhs which is only 25% of the penalty demanded, is not irrational or arbitrary. We, therefore, confirm the judgment of the learned Single Judge and dismiss the Writ Appeal. In fact, it is seen that on account of non- compliance with the interim relief granted by the learned Single Judge, the stay has got vacated and full amount is recoverable as of now. However, it is open to the appellant to make payment and move this court for extension of time. C.N.RAMACHANDRAN NAIR Judge K.SURENDRA MOHAN Judge pms