IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 26TH MAY 2011 / 5TH JYAISHTA 1933 WP(C).No. 5651 of 2011(F) ------------------------- PETITIONER: ----------------- M/S. PRIYA LTD., 38/3296, PRIYA HOUSE, CHERUPARAMBATH ROAD, KADAVANTHARA, ERNAKULAM, KOCHI-682 020, A PUBLIC LTD. COMPANY, REP.BY ITS BRANCH MANAGER, SRI. K.R.VARMA. BY ADVS. SRI.E.P.GOVINDAN SMT.G.DEEPA RESPONDENTS: --------------------- 1. THE INTELLIGENCE OFFICER, SQUAD NO.I, COMMERCIAL TAXES, ERNAKULAM 682 015. 2. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695001 BY SENIOR GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26/05/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: VK C.K.ABDUL REHIM, J. ------------------------------- W.P.(C).No.5651 of 2011 ------------------------------- Dated this the 26th day of May, 2011. J U D G M E N T Ext.P1 order imposing penalty under section 67(1) of the Kerala Value Added Tax Act (KVAT Act) is under challenge in this writ petition. Under normal circumstances, this Court may not be inclined to entertain the challenge against an order imposing penalty, because of availability of an effective alternative remedy. But in the case at hand, the petitioner raises a specific contention regarding unsustainability of Ext.P1 order on the ground that, it is barred by limitation as prescribed under the proviso to Section 67(1) of the Act. 2. The place of business of the petitioner was inspected by the 1st respondent on 27.4.2006. Pursuant to the inspection, books of accounts were called for. According to the petitioner, the books of accounts were produced on 23.11.2006 and the 1st respondent had conducted verification of the same. It is stated that the 1st 2 W.P.(C).No.5651 of 2011 respondent has not found any irregularity in the accounts and no penal action was pursued. Contention of the petitioner is that, after a lapse of nearly 4 years, notice proposing penalty was issued on 12.8.2010. The petitioner filed Ext.P5 reply specifically contending that the action is not sustainable as barred by the limitation period prescribed. But discarding such objections, penalty was imposed through Ext.P1 order. Even though the proposal for imposition of penalty was to the tune of Rs.1,03,218/-, the amount of penalty was reduced to Rs.2,728/- in Ext.P1 order. 3. It is pointed out by the petitioner that, inspite of specific objections raised regarding the question of limitation, the 1st respondent, while passing Ext.P1 order has not considered such an objection, nor any reasoning was given in Ext.P1 as to why such a contention is not sustainable. 4. Learned Government Pleader appearing on behalf 3 W.P.(C).No.5651 of 2011 of respondents pointed that on 23.11.2006 the petitioner has not produced the entire books of accounts and inspite of various summons issued thereafter, the petitioner failed to produce proper books of accounts. Hence, the 1st respondent was not in a position to verify correctness of the accounts and to arrive at a conclusion that there was suppression of any taxable turn over. It is further contended that, it is only during October 2010 the authority became convinced about commission of the offence, and hence Ext.P4 proposal was issued. Since the limitation prescribed under the proviso to section 67(1) is for a period of 3 years from the date of detection of the offence, it is not barred by limitation. The offence was detected only at the time when the proposal was made, after verification of the available records, is the contention. 5. However, I noticed that, inspite of specific objections raised in Ext.P5 regarding unsustainability of 4 W.P.(C).No.5651 of 2011 the proceedings on the basis of the question of limitation, the 1st respondent had failed to consider such contention. In Ext.P1, there is lack of consideration of such a contention. Therefore, I am of the view that sustainability of the proceedings, which was challenged on the basis of the question of limitation has to be considered by the 1st respondent, at the first instance. 6. It is made clear that, I am not expressing any view on the merits of the contentions regarding the question of limitation. Ends of justice will be achieved if the matter is remitted to the 1st respondent for passing fresh orders taking note of the contentions raised by the petitioner regarding the question of limitation. 7. Accordingly, the writ petition is allowed and Ext.P1 order is hereby quashed. The 1st respondent is directed to consider the matter afresh and to pass fresh orders, after affording an opportunity of hearing to the petitioner and after adverting to all the contentions raised 5 W.P.(C).No.5651 of 2011 in Ext.P5 objections. Fresh order in this regard shall be issued within one month from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, Judge ami/