IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.VINOD CHANDRAN MONDAY, THE 19TH DECEMBER 2011 / 28TH AGRAHAYANA 1933 WP(C).No. 16565 of 2006(V) -------------------------- PETITIONER: ------------------- K.ABDUL AZEES, PROPRIETOR, K.A.TRADERS, PATTAMBI ROAD, EDAPPAL, MALAPPURAM DISTRICT. BY ADVS. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE SRI.K.M.FIROZ RESPONDENTS: ------------------------ 1. THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC BUILDING, MUSEUM JUNCTION, THIRUVANANTHAPURAM-695 033. 2. THE SALES TAX OFFICER, COMMERCIAL TAXES, PONNANI. 3. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, MALAPPURAM. BY GOVERNMENT PLEADER SRI. MANOJ KUNACHAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 16565 of 2006(V) APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF ORIGINAL ASSESSMENT ORDER FOR 1999-2000 UNDER SECTION 17(4) DATED 25.06.2001. P2: TRUE COPY OF COMPOUNDING ORDER NO.IEC 66 OF 2002 DATED 1.7.2002 P3: TRUE COPY OF ESCAPED ASSESSMENT ORDER DATED 17.10.2002. P4: TRUE COPY OF PENALTY ORDER UNDER SECTION 17(5A) DATED 3.2.2002. P5: TRUE COPY OF FIRST REVISION ORDER DATED 28.12.2004. P6: TRUE COPY OF SECOND REVISION ORDER DATED 6.2.2006. P7: TRUE COPY OF APPEAL MEMORANDUM DATED 16.5.2006. P8: TRUE COPY OF PAYMENT RECEIPT DATED 28.3.2005. RESPONDENTS' EXHIBITS: NIL TRUE COPY PA TO JUDGE SCL. K. VINOD CHANDRAN, J. ------------------------------------------ WP(C) NO. 16565 OF 2006 ------------------------------------------ Dated this the 19th day of December, 2011 J U D G M E N T The petitioner challenges the levy of penalty under section 17(5A) of Kerala General Sales Tax Act imposed by Ext.P4 on two grounds. The first ground canvassed by the petitioner is that on the very same offence, the Intelligence Officer, who detected the same, has permitted the petitioner to compound the offences by Ext.P5 and hence there cannot be a further imposition of penalty u/s.17(5A) of the Act. The other contention raised by the counsel for the petitioner is that on the basis of the offence detected, the assessing officer had reopened the assessment by Ext.P3 dated 17.10.2002 and since Sec.17(5A) contemplates imposition of interest and penalty only at the stage of the assessment proceedings; there cannot be an imposition after the assessment proceedings, more so after 2 years. WP(C) NO. 16565 OF 2006 ..2.. 2. I have heard the senior counsel Dr. Mohammedkutty and the learned Govt. Pleader. I have also perused the files before me. The petitioner, an assessee under the KGST Act, filed returns for the year 1999-2000 u/s.17(4) of the KGST Act, being a dealer having dealings only in non taxable points of goods coming in the first, second or fifth schedules. It is pertinent to note that Sec.17(4) as it existed then, did not provide for any limit of turn over for entitling such dealer to file returns u/s.17(4). The scheme of filing returns u/s.17(4) postulates a situation wherein the Assessing Officer automatically accepts the returns filed by the dealer without any scrutiny of the records and hence any discrepancy therein attracts very onerous liability on the dealer by way of liability to pay the difference between the amount of tax already paid by him and that arrived on such fresh assessment together with thrice the amount of such difference as penalty. The courts WP(C) NO. 16565 OF 2006 ..3.. have consistently held that the penalty that is contemplated u/s.17(5A) cannot be equated with the other penalties contemplated under taxing statutes and that the penalty would be automatically attracted on any default being detected resulting in short payment of tax. Subsequent to Sec.17(4) return being accepted by the Assessing Officer, the Investigation branch of the Commercial Tax Department recovered some details of cement sold by the dealer and found the same to be not disclosed in the books of accounts for the year 1999-2000. On the basis of the offence detected, the dealer was heard and proceedings initiated u/s.45(A) of the KGST Act, which the dealer promptly compounded u/s. 47 of the Act by Ext.P2 order. 3. Based on the penalty, the assessment was reopened under Ext.P3 and regular assessment concluded by Ext.P3. It was subsequent to this that proceedings were taken u/s.17(5A) of the KGST Act for mulcting the petitioner WP(C) NO. 16565 OF 2006 ..4.. with the penalty at 3 times the short payment of tax computed on fresh assessment being completed. The revisions filed by the petitioner also went in favour of the revenue evidenced by Exts.P5 and P6 orders of the Dy. Commissioner and the Commissioner, Commercial Taxes respectively. The petitioner is before this Court challenging Ext.P4 order as confirmed by the revisional authorities. 4. The first contention urged on behalf of the petitioner is that the order accepting to compound the offence, Ext.P2, would clinch the issue so far as no further penalty can be imposed on the petitioner. However, I am unable to agree with the contention advanced by the petitioner for the reason that the offence of suppression detected and the reopening of assessment contemplated u/s.17(5A) are distinct and separate. The reopening of assessment as contemplated u/s.17(5A) is automatic in so far as an assessee who files a return u/s.17(4) is concerned; WP(C) NO. 16565 OF 2006 ..5.. if subsequent discrepancies are noticed in the return so filed. The compounding of offence cannot absolve the liability of the petitioner from being proceeded with u/s.17(5A). Probably the offer to compound the offence itself was improper and that in any event cannot ennure to the benefit of the petitioner for the simple reason that the said order is not challenged here and also for the reason that the petitioner voluntarily submitted to the offer for compounding. 5. Coming to the second ground of the petitioner that the reopening of the assessment, in cases where return is filed u/s.17(4), has to be simultaneous with the imposition of penalty u/s.17(5A); though on first blush appears to be attractive, cannot be sustained for the following reasons. The reopening of the assessment in a case where returns are filed u/s.17(4) is in accordance with the 3rd proviso of Sec.17(4) and a reading of Sec.17(4) with Sec.17(5A) WP(C) NO. 16565 OF 2006 ..6.. definitely postulates the simultaneous assessment and imposition of penalty. In the above case, the assessment was reopened u/s.17(4) by Ext.P3 and concluded however without imposing the mandatory penalty contemplated u/s.17(5A). Subsequently, after notice dated 28.11.2003 was issued, the penalty u/s.17(5A) was imposed on the assessee by a separate order. In a situation, where the assessment was reopened u/s.17(4) and penalty u/s 17(5A) was omitted to be imposed, necessarily Sec.43 for rectification or Sec.19 for reopening of assessment can be invoked by the Officer; however, within the period of limitation provided under the respective sections. There cannot be a dispute to this proposition. In the instant case, it is seen from Ext.P4 that a notice dated 28.11.2003 was issued to the petitioner and it was after affording reasonable opportunity for hearing that the penalty u/s.17 (5A) was imposed on him. The notice dated 28.11.2003 can definitely be deemed to be a notice u/s.19 or u/s.43, though WP(C) NO. 16565 OF 2006 ..7.. no specific provision has been quoted in the said notice. The position being such, the imposition of penalty u/s.17 (5A) cannot be faulted merely for the reason that the same was not simultaneous to the assessment proceedings being reopened and concluded. However, it goes without saying that the differential tax due as per Sec.17(5A), has already been imposed by Ext.P3 and there cannot be a further imposition of the same amount, i.e., Rs. 32,460/- (Rupees thirty two thousand four hundred and sixty only) by Ext.P4. If the demand to that extent in Ext.P4 is allowed to be sustained, then the same would lead to double taxation on the same transaction. In the circumstances, the above writ petition is dismissed upholding Ext.P4 order, as confirmed by Exts.P5 and P6 revisional orders, but however, canceling the demand of the balance tax due for 1999-2000 coming to Rs. 32,460/- (Rupees thirty two thousand four hundred and sixty only) as per Ext.P4. Ext.P4 is sustained only to the extent of the penalty imposed by the Assessing Officer. The WP(C) NO. 16565 OF 2006 ..8.. counsel for the petitioner would also submit that Ext.P3 is pending in Ext.P7 appeal and there is no information as to the finality of the same. Needless to say that the demand as per Exts.P3 and P4 would depend on the orders passed in the statutory appeal. In the circumstance, the above writ petition is dismissed with the observations made above. No order as to costs. K. VINOD CHANDRAN, JUDGE bka/-