IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 14TH JANUARY 2009 / 24TH POUSHA 1930 OP.No. 19611 of 1998(I) ----------------------- PETITIONER(S): ----------------- K.PRABHAKARAN, PROPRIETOR, PRABHAKARA CEMENT & GRILLS, KOYA ROAD, CALICUT. BY ADV. SRI.V.JAYAKUMAR SRI.A.V.MURALEEDHARAN RESPONDENTS: ----------------- 1. THE SALES TAX OFFICER, III CIRCLE, KOZHIKODE. 2. THE DEPUTY COMMISSIONER, AGRL. INCOME TAX & SALES TAX, KOZHIKODE. 3. THE BOARD OF REVENUE (TAXES), THIRUVANANTHAPURAM. ADV. GOVT.PLEADER SRI.K.J.MOHAMMED ANZAR, THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 14/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P.No.19611.1998 2 ORDER ON C.M.P.No.34489/1998 IN OP No.19611/1998 CLOSED. Sd/- S.SIRI JAGAN, JUDGE 14/01/2009 APPENDIX PETITIONERS EXHIBITS: EXT.P1: NOTICE DTD. 19.10.84, ISSUED BY THE 1ST RESPONDENT. EXT.P2: REPLY DTD. 12.11.84, SENT BY THE PETITIONER. EXT.P3: PROCEEDINGS AND ORDER OF PENALTY DTD. 15.11.84, ISSUED BY THE 1ST RESPONDENT. EXT.P4: COPY OF THE ASSESSMENT ORDER (81-82) DTD,4,4,84, ISSUED BY THE 1ST RESPONDENT. EXT.P5: COPY OF THE ASSESSMENT ORDER (82-83) DTD.2.4.84 ISSUED BY THE 1ST RESPONDENT. EXT.P6: COPY OF DEMAND NOTICE (81-82) DTD.4.12.89, ISSUED BY THE 1ST RESPONDENT. EXT.P6(a): ENGLISH TRANSLATION OF EXT.P6. EXT.P7: COPY OF DEMAND NOTICE (82-83) DTD,4.12.89, ISSUED BY THE 1ST RESPONDENT. EXT.P7(a): ENGLISH TRANSLATION OF EXT.P7. EXT.P8: COPY OF SUMMONS DTD. 6.8.84 ISSUED BY THE 1ST RESPONDENT. EXT.P9: COPY OF SUMMONS DTD.14.4.84 ISSUED BY THE 1ST RESPONDENT. EXT.P10: COPY OF PROCEEDINGS AND ORDER DTD. NIL, RECEIVED ON 20.12.89 ISSUED BY 1ST RESPONDENT. EXT.P11: COPY OF NOTICE OF PROVISIONAL DEMAND DTD.29.10.83, ISSUED BY THE 1ST RESPONDENT. EXT.P12: COPY OF DEMAND NOTICE FOR PENALTY, DTD.29.10.83, ISSUED BY THE 1ST RESPONDENT. EXT.P12(a): ENGLISH TRANSLATION OF EXT.P12. EXT.P13: COPY OF LETTER SENT BY THE PETITIONER DT. 13.1.90. EXT.P14: COPY OF PROCEEDINGS DTD.23.8.93 ISSUED BY THE 2ND RESPONDENT. EXT.P15: COPY OF PROCEEDINGS DT.17.3.08, ISSUED BY THE 3RD RESPONDENT. TRUE COPY P.A. TO JUDGE S.SIRI JAGAN, J - - - - - - - - - - - - - - - - - - - - - - - O.P. No. 19611 of 1998 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 14th day of January, 2009 J U D G M E N T In respect of non-inclusion of certain amounts realised for sale of cement and other materials to the Kerala State Housing Board in his return under the Kerala General Sales Tax Act, the petitioner was proceeded against for imposition of penalty under Section 45 A of the Act. Ext.P1 notice was issued to the petitioner. Ext.P2 reply was submitted by the petitioner contending inter alia that the tax for the turnover which was not included in the petitioner's return, had already been deducted at source by Kerala State Housing Board and the TDS certificate was submitted along with the explanation. Despite the explanation, Ext.P3 order was passed by the original authority, imposing on the petitioner penality of Rs. 16,782/- being twice the tax due on the alleged suppressed turnover. The petitioner filed a revision before the revisional authority, which was dismissed by Ext.P14 order. The petitioner filed a second revision, in which the penalty was reduced to Rs. 8,391/-. The petitioner is challenging Exts.P3, P14 and P15 orders, in this writ petition. The contention raised by the petitioner is that the fact that he had no intention to evade tax is clear from the fact O.P. No. 19611 of 1998 - 2 - that the tax due on the alleged suppressed turnover had already been deducted at source paid to the department by the Kerala State Housing Board. In so far as the imposition of penalty is a quasi criminal proceedings, the authority who seeks to impose penalty was bound to consider whether there was any contumacious conduct on the part of the petitioner and whether there was any deliberate attempt to evade tax, which has not been considered by any of the authorities is the submission of the petitioner. The petitioner therefore submits that the impugned orders are patently unsustainable. 2. I have considered the rival contentions in detail. 3. No counter affidavit has been filed in this case. In Ext.P2 reply to Ext.P1 show cause notice, the petitioner has specifically stated thus: “However, in order to avoid any further legal tangles I have included there the cost of materials and labour in my turnover as is evidenced by the revised return in fort 8 submitted to you and the tax due on the said turnover has already been deducted at source by the Kerala State Housing Board and paid to the department in time as is evidenced by the tax deducted at source certificate submitted to you.” 4. Ext.P3 which is the original order imposing penalty refers to the reply filed by the petitioner as follows: “A notice containing the above facts were issued to the dealer. In reply to the notice, Sri. K. Prabhakaran has stated as follows:- Penalty can be imposed if there was a wilful non-disclosure of assessable turnover. The statement before the Intelligence Officer was not of his. The amount received are only cost of labour.” O.P. No. 19611 of 1998 - 3 - 5. In one of the impugned orders is there even any mention about the said contention raised by the petitioner in the reply which is quoted above. I am of opinion that, the tax having been deducted at source whether there was any attempt on the part of the petitioner to evade tax is a very relevant consideration in the matter of imposition of penalty, which has not been adverted to. That being so, the authority considering the penalty proceedings ought to have considered that contention of the petitioner in the orders passed pursuant to Ext.P1 notice and Ext.P2 reply. Obviously such an exercise has not been undertaken by the 1st respondent in Ext.P3 order or in Exts.P14 or P15. I am of opinion that the matter should therefore be reconsidered by the original authority namely the 1st respondent. For this purpose, I quash the impugned orders. The 1st respondent shall pass fresh orders in the matter, in the light of the above findings, as expeditiously as possible, at any rate, within three months, from the date of receipt of a copy of this judgment, after affording an opportunity of being heard to the petitioner. The original petition is disposed of as above. S.SIRI JAGAN, JUDGE rhs