IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH MONDAY, THE 3RD MARCH 2008 / 13TH PHALGUNA 1929 WA.No. 433 of 2008 -------------------- AGAINST THE JUDGEMENT IN OP.21523/2001dtd. 16.3.2007. .................... APPELLANT/PETITIONER: ------------------------------------- M/S. SONIC ELECTROCHEM (P) LTD., 38, PATEL NAGAR, INDOR-452001, REPRESENTED BY ITS DIRECTOR-SHAILESH SHAH. BY ADVS. SRI.K.I.MAYANKUTTY MATHER SMT.S.LAKSHMY RESPONDENTS/RESPONDENTS: --------------------------------------------- 1. THE ASSISTANT COMMISSIONER (ASSESSMENT), SPECIAL CIRCLE II, ERNAKULAM. 2. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM. 3. THE COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM. BY SR. GOVT. PLEADER SRI. MUHAMMED RAFIQ. THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L. DATTU, CJ. & K.M. JOSEPH, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - WRIT APPEAL No.433 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3rd day of March, 2008. JUDGMENT H.L.DATTU, CJ, The assessee is a dealer, registered both under the provisions of Kerala General Sales Tax Act ('the KGST Act' for short) and Central Sales Tax Act ('the CST Act' for short). He is engaged in the manufacture and sale of Mosquito Repellent Mats and liquid. 2. The assessee is before us being aggrieved by the orders passed by the learned Single Judge in O.P. No.21523 of 2001 dated 16th March, 2007. The learned Single Judge has disposed of the writ petition and thereby, for the assessment year 1992-93, has confirmed the orders passed by the respondent authorities, but for the assessment year 1993-94 has reduced the penalty levied by one-third. Not being satisfied with the orders so passed by the learned Single Judge, the assessee is before us in this Writ Appeal. 3. The question before us is whether the assessing authority was justified in initiating proceedings under Section 45A of the KGST Act and levy penalty for the assessment year 1992-93 and 1993-94. 4. At the outset, we should notice the fact that, prior to 1992-93 and 1993-94 there was no specific entry with regard to the mosquito repellent mats and liquid. Therefore, this court had taken the view that mosquito repellent mats and liquid are “insecticides”. 5. After completion of the assessment proceedings for the years 1992-93 and 1993-94 the assessing authority had initiated proceedings under Section 45A (1)(d) of the KGST Act. According to the assessing authority the W.A. 433/2008. 2 returns filed by the assessee classifying mosquito repellent mats and liquid as insecticides is not only untrue but incorrect returns, and therefore had issued notice to the assessee directing him to show cause, why penalty proceedings should not be completed and penalty should not be levied under Section 45A of the Act. The assessee had filed his objection before the assessing authority. In that the primary contention that was taken is that Entry 85 of the First Schedule to the KGST Act would not apply to the petitioner's case and further the returns were filed on the basis of the advice given by the tax consultant and the tax was being accepted by the assessing authority. 6. After adverting to the objection so filed, the assessing authority has proceeded to levy penalty under Section 45A of the Act on the ground that after 1.4.1992 there is a specific entry, i.e. Entry 85 to the First Schedule to the KGST Act, which speaks of mosquito repellents including electric or electronic mosquito repellents, gadgets and insect repellents. 7. The order so passed by the assessing authority was carried in revision before the first revisional authority, who in turn has modified the levy of penalty by reducing it from Rs.58,143/- to Rs.10,000/- for the assessment year 1992-93 and for the assessment year 1993-94, the first revisional authority has not interfered with the order passed by the assessing authority in levying penalty under Section 45A of the Act. 8. Aggrieved by the orders so passed by the first revisional authority, the petitioner went before the second revisional authority. The second revisional authority also has confirmed the orders passed by the first revisional authority. 9. Aggrieved by these orders, the assessee was before this court in O.P. No.21523 of 2001. 10. Before the learned Single Judge, the assessee had canvassed that a W.A. 433/2008. 3 Division Bench of this court in the case of Transelektra Domestic Products Pvt. Ltd. v. State of Kerala (2000) 8 KTR 556 (Ker.)) has observed that the mosquito repellent mats are nothing but insecticides and, therefore, the rate of tax payable by a dealer of mosquito repellent mats and liquids requires to be classified as “insecticides” and the rate of tax that is payable is 2.5% and, therefore, it was stated that the assessing authority and the Commissioner of Commercial Taxes were not justified in levying penalty under Section 45A of the Act. After the disposal of the writ petition, the petitioner had also filed a review petition before the learned Single Judge bringing to the notice of the learned Single Judge the orders passed by the Tribunal for the assessment years 1992-93 and 1993-94 in T.A. No. 455 of 1995 and T.A. No.703 of 1995. 11. The question for our consideration, as we have already noticed, is that whether the assessing authority was justified in initiating proceedings under Section 45A of the KGST Act, and levying penalty on the ground that the assessee has filed untrue and incorrect returns for the assessment years in question. 12. The undisputed facts are: Prior to the introduction of Entry 85 in the First Schedule to the KGST Act with effect from 1.4.1992 there was no specific entry with regard to mosquito repellent. Prior to the assessment years in question the revisional authorities as well as this court were of the view that mosquito repellents including electric or electronic mosquito repellents are insecticides for the simple reason that mosquito repellent has one of its constituents 'd-Allethrin', which is an insecticide. 13. For the assessment years in question there is a specific entry namely mosquito repellents including electric or electronic mosquito repellents, gadgets and insect repellents and the rate of tax is 7%. While filing the returns for the assessment years in question, the assessee ought to have been guided by the specific entry provided under the Schedule to the Act. For the previous years the assessee as well as W.A. 433/2008. 4 the assessing authority is justified in treating the mosquito repellent mats and liquids as “insecticides” as there was no specific entry as such. In spite of a specific entry in the First Schedule to the Act, the assessee could not have submitted a return for the assessment years in question treating the mosquito repellent mats as insecticides. The assessing authority has noticed this aspect of the matter and has come to the conclusion that the return filed by the assessee is an untrue and incorrect return and having come to that conclusion has proceeded to levy penalty. The penalty so levied has been altered by the first revisional authority and also by this court. 14. Having gone through the earlier orders passed by this court and also the orders passed by the assessing authority as well as the first and second revisional authorities, we are of the firm opinion that neither the learned Single Judge nor the first and second revisional authorities have committed any error which would call for our interference. Accordingly, the writ appeal requires to be rejected and it is rejected. Ordered accordingly. H.L. DATTU, CHIEF JUSTICE K.M. JOSEPH, JUDGE sb/DK.