IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 27TH JANUARY 2011 / 7TH MAGHA 1932 WP(C).No. 2184 of 2011(W) -------------------------------------- PETITIONER(S): ----------------------- C.R.SANAL, PROPRIETOR, M/S.AMMA TRADERS, TC 22/418,KOLLAMPUZHA P.O., ATTINGAL, THIRUVANANTHAPURAM BY ADV. SMT.S.K.DEVI SRI.SANTHOSH P.ABRAHAM RESPONDENT(S): 1 ----------------------------- 1. THE INTELLIGENCE OFFICER SQUAD NO.II,COMMERCIAL TAXES, THIRUVANANTHAPURAM AT ATTINGAL, LMS JN, ATTINGAL P.O.,695 201 2. THE DEPUTY COMMISSIONER (APPEALS) COMMERCIAL TAXES, PUBLIC OFFICE BLDG, VIKAS BAVAN P.O.,THIRUVANANTHAPURAM-695 001 R1 & R2 BY GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27/01/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.2184 of 2011 ------------------------------------------- Dated this the 27th day of January, 2011 J U D G M E N T ---------------------- Penalty was imposed on the petitioner under Section 44(10) of the Kerala Value Added Tax Act, 2003 (KVAT Act), through Ext.P2 order, on the basis of an allegation that during inspection conducted on 4.8.2010 it was detected that the petitioner was keeping goods unauthorisedly at a place which was not declared to the assessing authority. 2. Aggrieved by Ext.P2 the petitioner had preferred Ext.P3 appeal before the 2nd respondent. Ext.P4 is the order issued by the appellate authority on a stay petition filed along with the appeal. Through Ext.P4, recovery of the penalty the amount was stayed subject to condition of the petitioner remitting 40% of the amount and on furnishing security for the balance amount. 3. According to the petitioner, the condition imposed by the 2nd respondent is totally unsustainable in view of the fact that such a condition was imposed without proper application of mind and without proper advertence to the grounds raised in the appeal. It is pointed out that eventhough the appellate authority had elaborately illustrated the contentions as well as W.P.(C).2184/11 -2- the findings in the impugned order, none of the grounds were analysed by the appellate authority and no independent opinion was formed with respect to the contentions raised. On the other hand, what was observed by the appellate authority is that a final decision could be arrived only after a thorough analysis of the case. Facts being so it was highly improper on the appellate authority to insist upon 40% of the amount, is the contention. 4. In this regard the petitioner points out a Division Bench decision of this court to which I was also a party, T.B. Sajeev Vs. Intelligence Officer ((2010) 32 VST 518 (Ker)). Analysing the deeming provision under Section 44(10) read with 44(8), this court held that the maximum penalty at half the value of goods found in undeclared godown need not be insisted in every case. On the other hand, Section 44(8) gives discretion to the officer to limit the penalty, inspite of the presumption available under Section 44(10), and the quantum of penalty is a matter of discretion left to the officer. It is held therein that, it will be always left open to the dealer to explain the circumstances that led to storage of goods in the undeclared godown, with proof of such goods properly accounted, so that he does not suffer maximum penalty. It is also pointed out that in a recent amendment introduced through Finance Act 2010 the rigour of the deeming provision was diluted adding the words, W.P.(C).2184/11 -3- “unless proved otherwise”. It is contended by learned counsel appearing for the petitioner that, while insisting the condition for payment of 40% amount, the appellate authority had omitted to take note of the above aspects. 5. On a perusal of Ext.P4, I do not find that there is no independent evaluation of merits of the contentions raised, despite the detailed illustration and narration of the grounds. Further I notice that nothing is stated in the order towards any reasoning for insisting payment of 40% of the amount, which goes against the principles laid by this court through a recent decision in Supreme Electrical Engg. (P) Ltd. Vs. Commercial Tax Officer (2008 (3) KLT 805). 6. Under the above circumstances, I am of the opinion that the impugned order is unsustainable in the eye of law. However, instead of remitting the matter back for passing fresh orders, I am of the opinion that, interest of justice will be served if the appellate authority is directed to dispose of the appeal itself on an early date and till then to restrain the recovery, subject to imposition of a less rigorous condition. 7. In the result, the writ petition is allowed. Ext.P4 is hereby quashed. The 2nd respondent is directed to consider and dispose of Ext.P3 appeal as early as possible, after affording an opportunity of hearing to the petitioner, at any rate within a W.P.(C).2184/11 -4- period of two months from the date of receipt of a copy of this judgment. 8. Till such time the appeal is disposed of by the 2nd respondent, recovery of amounts covered under Ext.P2 shall be kept in abeyance, provided the petitioner remits a sum of Rs.1,00,000/- (Rupees One lakh only) within two weeks from the date of receipt of a copy of this Judgment and furnishes Security Bond in the form prescribed under the KVAT Rules, without sureties, for the balance amount. C.K.ABDUL REHIM, JUDGE. okb