IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 1ST FEBRUARY 2011 / 12TH MAGHA 1932 WP(C).No. 212 of 2011(B) -------------------------------------- PETITIONER(S): ----------------------- DENNY C.I., MECHANO MOTORS, N.H.BY-PASS ROAD, MANAPPULLYKAVU, PALAKKAD, PIN-678 013. BY ADV. SRI.R.SUDHAKARA MENON RESPONDENT(S): ---------------------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY, FINANCE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001. 2. INTELLIGENCE OFFICER, SQUAD NO.II, DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD, PIN-678 001. 3. THE COMMERCIAL TAX OFFICER, COMMERCIAL TAX OFFICE, II CIRCLE, PALAKKAD, PIN-678 001. R1 TO R3 BY SR. GOVERNMENT PLEADER SRI. C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss C.K.ABDUL REHIM,J. ------------------------------- WP(C).NO. 212 of 2011 --------------------------------- Dated this the 1st day of February, 2011 JUDGMENT Through Ext.P1 order, penalty under section 67 of the KVAT Act was imposed against the petitioner to the tune of Rs.8,67,798/-, on the basis of an allegation that the petitioner had failed in keeping proper books of accounts and other documents. It is evident that the business place of the petitioner was inspected by the Intelligence Squad on 20.2.2010 and certain business slips were recovered from the premises, which revealed undisclosed business transactions. Hence stock verification was conducted and on the basis of the recoveries estimation of the turn over was made and double the amount of tax due on such turn over was imposed as penalty. 2. Normally the petitioner has to resort to the statutory remedy of appeal against Ext.P1 order imposing penalty. But the petitioner contends that an order itself is per se illegal and unsustainable, since penalty proceedings was finalised in violation of the provisions of the statute and also in violation of the principles of natural justice. WP(C).212/2011 2 It is the specific case of the petitioner that, on receipt of the notice proposing penalty, the petitioner submitted objections wherein he had mentioned that it is not clear as to what are the slips recovered during the inspection, and that without mentioning item-wise details he is not in a position to submit proper explanations. Therefore the petitioner had made a request, either for return of the originals of the recovered documents or to supply copies thereof. But in the impugned order of penalty the said request was declined without assigning any reason. Under the above circumstances contention of the petitioner is that penalty was imposed without affording any reasonable opportunity to the petitioner to explain the facts and figures and also without giving effective opportunity to object the proposal for imposing penalty. 3. In a statement filed on behalf of the 2nd respondent it is contended that the request for return of the originals of the recovered documents or for supply of copies thereof, was rejected since there is possibility to prepare and submit crooked up accounts. It is the contention of the petitioner that all the books of accounts have already been produced for verification before the authority and the authority had counter signed all WP(C).212/2011 3 such documents. Therefore there is no chance for submitting crooked up accounts. However denial to supply copies of the recovered documents had precluded the petitioner from effectively contesting the matter is the submission. Considering the facts and circumstances, I am of the view that denial to supply either the recovered documents or its copies, is not legal and justifiable. Even going by the relevant provisions in the statute, the authority is at an obligation to return the recovered documents within a specified time, if it is not required for any purpose of prosecution. However, it is evident that without even supplying a copy of the documents, it could not be said that the petitioner was given an effective chance to explain the allegations levelled against him, which is the basis for imposition of penalty. The denial of such an opportunity will defeat the proceedings. Further, it is noticed that, even in the order of penalty no specific reason is stated for denying such request . Under the above circumstance the impugned order of penalty (Ext.P1) is not sustainable in the eye of law. 4. In the result, the writ petition is allowed and Ext.P1 is hereby quashed. The 2nd respondent is hereby directed to WP(C).212/2011 4 reconsider the matter and to pass fresh orders either after returning of original records seized or after supplying with copies of such records on usual terms. Needless to say that after furnishing such records an opportunity shall be given to the petitioner to file detailed objection. It is made clear that the petitioner will be at liberty to produce any records or documents in support of the objection Fresh orders in this regard shall be issued, after affording an opportunity of personal hearing to the petitioner. A decision in this regard shall be taken by the 2nd respondent as early as possible at any rate within 6(six) weeks from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM,JUDGE pmn/ WP(C).212/2011 5