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. 30997 of 2010(Y) -------------------------- PETITIONER : ------------------ PALATHUMPATTU SKY JEWELLERY, M.C.ROAD, CHENGANNUR, REPRESENTED BY ITS MANAGING PARTNER NINAN JOHN. BY ADVS. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE SRI.K.M.FIROZ RESPONDENT(S): ------------------------ 1. THE INTELLIGENCE OFFICER, SQUAD NO.III, COMMERCIAL TAXES, ALAPPUZA-680 001. 2. DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES DEPARTMENT, KOLLAM-695 001. 3. THE INSPECTING ASSISTANT COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, CHENGANNUR-689 121. R1 TO R3 BY GOVT.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.30997 of 2010 ------------------------------------------- Dated this the 11th day of October, 2010 J U D G M E N T ---------------------- Ext.P4 order of interim stay issued by the 2nd respondent is under challenge in this writ petition. Through Ext.P1 order, penalty was imposed on the petitioner to the tune of Rs.39,32,809/- under Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act). The penalty was imposed based on an inspection conducted at the place of business of the petitioner, from where some incriminating records were seized and variation in the stock was detected. Aggrieved by Ext.P1 the petitioner had filed statutory appeal accompanied by a stay petition. Ext.P4 is the order issued by the appellate authority disposing the stay petition. 2. Considering the contentions raised in the appeal and after affording an opportunity of personal hearing the appellate authority had issued Ext.P4 granting conditional stay, subject to payment of 50% of the amount of penalty imposed. Ext.P4 order is challenged by the petitioner W.P.(C).30997/10-Y -2- contending that, even though the appellate authority had illustrated some of the grounds, the said authority had not properly applied its mind and has not arrived at any findings regarding merits of such grounds. On the other hand the conditional stay was imposed in a quite mechanical manner through a cryptic order, is the contention. 3. On a perusal of Ext.P4 it is revealed that the order reflects consideration of the grounds raised at the time of personal hearing. The authority had observed that the petitioner had made out a prima facie case for granting conditional stay. On a consideration of Ext.P4, I cannot agree with the contention that it is an order passed with total non- application of mind. It reflects advertence to the contentions, eventhough it lacks very elaborate discussions on such contentions. Learned counsel for petitioner points out that the ground raised regarding the question of limitation has not been considered by the appellate authority. It is further contended that the penalty imposed on the purchase turnover assuming that tax is liable under Section 6(2) is not at all sustainable in view of the rebate available to the petitioner under Rule 38(5) of the KVAT Rules. It is pointed out that in Ext.P4 the appellate W.P.(C).30997/10-Y -3- authority observed that the contention in this regard is having some force. But it is submitted that the authority had failed to take note of the fact that if the rebate under Rule 38(5) is available to the petitioner, then the quantum of penalty will be reduced considerably, even to the extent of 50% of the amount. 4. On a consideration of totality of circumstances attendant in this case, I am of the opinion that the condition imposed in Ext.P4 is not reasonable and justifiable on the basis of the contentions raised in the appeal. It is pertinent to note that the impugned proceedings is one imposing penalty under Section 67(1). I am of the view that having made out a prima facie case which is based on factual aspects the authority ought to have imposed a lesser onerous condition, pending disposal of the appeal. 5. Under the above circumstances the writ petition is disposed of directing the appellate authority to consider and dispose of Ext.P2 appeal at the earliest possible. 6. Ext.P4 order of the appellate authority is modified to the extent of granting stay till the disposal of the appeal, subject to condition of the petitioner remitting 25% of the amount of penalty imposed, in 2 equal monthly installments falling due on W.P.(C).30997/10-Y -4- or before 15.11.2010 and on or before 15.12.2010. The petitioner will also furnish security with respect to the balance amount. C.K.ABDUL REHIM, JUDGE. okb