IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON TUESDAY, THE 2ND MARCH 2010 / 11TH PHALGUNA 1931 WP(C).No. 6540 of 2010(N) ------------------------- PETITIONER: -------------- M/S. NAIR COAL SERVICES LTD., MUNICIPAL SHOPPING COMPLEX, PALAKKAD, HAVING HEAD OFFICE AT SYRIA BHAVAN, NAIR SONS, RAMNAGAR, NAGPUR, REPRESENTED BY ITS SENIOR MANAGER, U.KALADHARAN. BY ADV. SRI.N.MURALEEDHARAN NAIR SRI.T.G.ABHILASH RESPONDENTS: ----------------- 1. INTELLIGENCE OFFICER, SQUAD NO.IV, DEPARTMENT OF COMMERCIAL TAXES, PALAKKAD. 2. DEPUTY COMMISSIONER (APPEALS), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM. BY GOVT. PLEADER, SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.Ramachandra Menon, J. ------------------------------------------ W.P.(C) No.6540 of 2010 ------------------------------------------ Dated this the 2nd day of March, 2010 JUDGMENT The petitioner is challenging Exts.P2 and P3 orders imposing penalty in respect of the assessment year 2006-07 and also 2007-08 through the appeals Exts.P4 and P5 filed before the second respondent along with Exts.P6 and P7 petitions for stay. After considering the grievance projected in the petition, Ext.P8 order was passed by the second respondent whereby the coercive steps were intercepted subject to the condition that the petitioner satisfied fifty percent of the liability and also furnished security for the balance amount to the satisfaction of the assessing authority within thirty days which in turn is the subject matter of challenge in this writ petition. 2. The learned counsel for the petitioner submits that the reasoning given by the second respondent in Ext.P8 order is W.P.(C) No.6540 of 2010 - 2 - not correct or sustainable. It is contended that the entire supply of coal was effected to the Malabar Cements Limited and that no interstate sale has been effected under any circumstance and this by itself will reveal that the petitioner is not liable for payment of any tax. Further, the learned counsel submits that the petitioner could not import coal from Indonasia as originally proposed, because of the consequences emanated from Tsunami and hence to honour the commitment, the petitioner had to effect local purchases within the State, but for few interstate purchases from Chennai, and in such circumstances there is no rationale in fixing huge liability upon the petitioner by way of penalty as ordered by Exts.P2 and P3. This has not been properly adverted to or analysed by the second respondent/appellate authority while imposing the condition to satisfy fifty percent of the liability, which by itself will come to more than Rs.75 lakhs, submits the learned counsel. 3. The learned Government Pleader referring to the W.P.(C) No.6540 of 2010 - 3 - contents of Ext.P8 interim order passed by the second respondent submits that the petitioner had not disclosed any turnover in the monthly returns filed as discussed in the third paragraph of the impugned order. Further, it is observed therein that the petitioner had supplied coal to the Malabar Cements Limited by effecting necessary import on two occasions. It is also stated therein that some of the contentions now raised by the petitioner were never raised either before the Intelligence Officer or before the assessing authority and it is in the said circumstance, that the appellate authority thought it fit to impose the condition making the petitioner to satisfy fifty per cent of the disputed liability while passing Ext.P8 order. 4. After considering the facts and circumstances and also the submissions made by both the sides, this Court finds that Ext.P8 order passed by the second respondent is not liable to be declared as a non speaking order and it cannot also be said that there is no proper application of mind. However, taking W.P.(C) No.6540 of 2010 - 4 - note of the fact that the entire sale has been effected by the petitioner to the Malabar Cements Limited and that most of the supply has been effected pursuant to the local sales and also by virtue of the interstate sales suffering the tax liability, the actual liability, if any, is likely to be scaled down on finalization of the proceedings in the appeal now pending before the second respondent. This being the position, this Court finds that the extent of liability now cast upon the petitioner by Ext.P8 is slightly on the higher side. 5. In the said circumstances, this Court finds that interests of justice would be met if the petitioner is directed to deposit a sum of Rupees ten lakhs and furnish security for the balance amount as a condition to avail the benefit of the interim stay granted by Ext.P8 during the pendency of the statutory appeals. Accordingly, the petitioner is directed to deposit Rupees ten lakhs within two weeks and on production of proof, the second respondent shall consider and pass appropriate orders W.P.(C) No.6540 of 2010 - 5 - on Exts.P4 and P5 appeals as expeditiously as possible, at any rate, within a period of one month thereafter. Subject to this, the recovery proceedings, if any, being pursued against the petitioner shall be kept in abeyance. But for the modification of Ext.P8 order as above, no interference is called for with regard to the merits involved in the matter and the second respondent is at liberty to finalize the matter in accordance with law untrammelled by any of the observations made by this Court in the judgment. Writ petition is disposed of accordingly. P.R.Ramachandra Menon, Judge vns