IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR TUESDAY, THE 7TH OCTOBER 2008 / 15TH ASWINA 1930 WP(C).No. 5045 of 2004(A) ------------------------- PETITIONER(S): --------------- SAIDALAVI, S/O. K. MUHAMMED, AGED 43 YEARS, KOTTERI HOUSE, MATTATHOOR, MALAPPURAM DISTRICT BY ADV. SRI.BABU S. NAIR SRI.JIJO PAUL RESPONDENT(S): --------------- 1. THE COMMISSIONER, COMMERCIAL TAXES, TRIVANDRUM. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, MALAPPURAM. 3. THE ADDITIONAL SALES TAX OFFICER, THIROORANGADI, MALAPPURAM DISTRICT. 4. THE DEPUTY TAHSILDAR (ARREARS COLLECTION) THIROORANGADI, MALAPPURAM DISTRICT. GOVERNMENT PLEADER SRI.V.TEKCHAND FOR R1 TO 4 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WPC 5045/2004 APPENDIX PETITIONER'S EXTS. EXT.P1 - TRUE COPY OF THE R.R. NOTICE ISSUED TO THE PETITIONER DATED 24.11.2003. EXT.P2 - TRUE COPY OF THE ORDER NO.S.T.R.P.NO.129/03 DATED 2.8.2003 OF THE FIRST RESPONDENT. EXT.P3 - TRUE COPY OF THE ORDER OF THE THIRD RESPONDENT AS ORDER NO.3213.1578/99-00 DATED 28.8.2002. EXT.P4 - TRUE COPY OF THE ORDER OF THE SECOND RESPONDENT AS ORDER NO.M6.430/03 (R.P.2/03) DATED 19.2.2003. EXT.P5 - TRUE COPY OF THE REVISION MEMORANDUM SUBMITTED BY THE PETITIONER BEFORE THE FIRST RESPONDENT DATED 7.5.2003. /TRUE COPY/ K.BALAKRISHNAN NAIR, J. ----------------------------------------- W.P.(C) NO. 5045 OF 2004-A ----------------------------------------- JUDGMENT The petitioner is a registered dealer under the Kerala General Sales Tax Act (hereinafter referred to as “the Act”). He opted to submit the return for the year 1999-2000 under Section 17(4) of the Act. Later, on inspection, it was found that the petitioner had suppressed certain purchases made and therefore, the assessment was reopened and a fresh assessment was passed. While passing the fresh assessment, mandatory penalty provided under Section 17(5A) was also imposed, which will come to three times the tax additionally found due. The statutory remedies invoked by the petitioner against the imposition of penalty did not succeed and therefore, finally, the authorities took steps under the Revenue Recovery Act, to recover the amount of penalty, as per Ext.P1 notice. This writ petition was filed, challenging Ext.P1 as also Exts.P2 to P4 orders, as per which the challenge against the penalty under Section 17(5A) was repelled. 2. The learned counsel for the petitioner only argued one point WPC 5045/2004 2 before me. He submitted that the petitioner has chosen to compound the offence of suppression of turnover for the relevant year under Section 47 of the Act. Therefore, further imposition of penalty under Section 17(5A) is impermissible, in view of the decision of this Court in Varkey v. The Sales Tax Officer [1999(2) I.L.R.Kerala 620]. It was a case where the penalty was imposed under Section 45A of the Act. Since the petitioner therein compounded the offence of suppression of turnover under Section 47, it was contended that imposition of further penalty under Section 45A was unjustified. The said contention was upheld by this Court, holding that Section 47 covers not only offences stricto senso, but also adverse action under Section 45A. 3. The respondents have filed a counter affidavit. They submit that the penalty imposed under Section 17(5A) is a special penalty. The assessing authority accepted the return filed by the assessee under Section 17(4) and without scrutiny, completed the assessment. If such an assessee is found to have suppressed the turnover, a special provision is made as sub-section (5A) to Section 17, which provides WPC 5045/2004 3 for mandatory imposition of penalty, which will come to three times the amount of tax evaded. So, an order passed under Section 47 will not affect an order passed under Section 17(5A), it is submitted. Therefore, the respondents pray for dismissal of the writ petition. 4. Section 47 of the K.G.S.T. Act reads as follows: “47. Composition of offences:--(1) The assessing authority or other officer or authority authorised by the Government in this behalf may accept from any person who has committed or is reasonably suspected of having committed an offence against this Act, by way of composition of such offence. (a) Where the offence consists of the evasion of any tax payable under this Act, in addition to the tax so payable, a sum of money equal to the amount of tax so payable subject to a minimum of rupees one hundred and maximum of rupees two lakh; and (b) in other cases, a sum of money not exceeding ten thousand rupees; Provided that the Board of Revenue may by order authorise any officer to compound he offence under this Section on payment of a reduced amount.” The suppression of certain purchases of timber made by the petitioner is an offence punishable under Section 46(1)(f) of the Act. He could have been prosecuted before the competent Magistrate's court for the said offence. But, by compounding the offence under Section 47, he WPC 5045/2004 4 escaped from facing prosecution. This Court by the decision in Varkey's case (supra) has stretched the words of Section 47, to take in within its fold the imposition of penalty under Section 45A also. But, Section 45A is only an enabling provision, which enables imposition of penalty in appropriate cases, having regard to the suppression noticed. Section 17(5A) provides for mandatory imposition of penalty, if the return filed under Section 17(4) is found to suffer from suppression of turnover etc. So, I think, it is not proper to extend the protection of a compounding under Section 47 to a penalty imposed under Section 17 (5A) also. The mandatory provisions of Section 17(5A) cannot be got over by interpreting the general words of Section 47. Therefore, the decision of this Court, relied on by the learned counsel for the petitioner, will not apply to the facts of this case. I find nothing illegal in imposing a penalty under Section 17(5A), even in the face of compounding of the offence by the petitioner, invoking the beneficial provisions under Section 47 of the Act. WPC 5045/2004 5 In the result, the Writ Petition fails and it is accordingly, dismissed. 7th October, 2008. K.BALAKRISHNAN NAIR, JUDGE. Nm/