IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 30TH MARCH 2009 / 9TH CHAITHRA 1931 ST.Appl..No. 8 of 2007 ------------------------------- ORDER.R2-56020//2005 OF COMMISSIONER OF COMMERCIAL TAXES, TRIVANDRUM .................... APPELLANT: ------------------- MATHEW POTHEN, PROPRIETOR, ANSWARA COLOUR LAB, CHANGANACHERRY. BY DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE, MR.K.M.FIROZ. RESPONDENT: ---------------------- THE COMMISSIONER OF COMMERCIAL TAXES, PUBLIC OFFICE BUILDING, MUSEUM JUNCTION, THIRUVANANTHAPURAM-695 033. BY GOVERNMENT PLEADER MR. V.K. SHAMSUDEEN. THIS SALES TAX APPEAL HAVING BEEN FINALLY HEARD ON 30/03/2009, ALONG WITH S.T.A. NOS. 9/2007 & 10/2007 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------------------------------------------------ S.T.Appeal Nos: 8, 9, & 10 OF 2007 ----------------------------------------------------------------------------------- Dated this the 30th March, 2009. JUDGMENT RAMACHANDRAN NAIR, J. Three connected sales tax appeals are filed against orders of the Commissioner issued under Section 37 of the KGST Act restoring equal amount of penalty for the evasion of tax for the assessment years 2000-01, 2001-02, 2002-03. Appellant was engaged in development and printing of colour photographs which attract sales tax on works contract. The activity is taxable by virtue of decision of this Court in Bavens v. Union of India and others (97 STC 161). However, tax was not paid because of the then decision of the Supreme Court in Rainbow Colour Lab and another v. State of Madhya Pradesh and others (118 STC 9). The Supreme Court later in Associated Cement Companies Ltd. v. Commissioner of Customs (124 STC 59) declared their earlier judgment in Rainbow Clour Lab's case as not good law. Consequent upon the settlement of law by the Supreme Court appellant has paid the tax. In fact in parallel assessment proceedings the original assessments completed were revised and along with the tax three S.T.A.8/07 etc. 2 times penalty was levied under Section 17(5A) of the KGST Act. Even though first appellate authority cancelled the penalty levied under Section 17 (5A) for two years, the department filed further appeals against the same and assessee filed appeal for one year before the Tribunal. The Tribunal in a consolidated order in T.A.Nos: 251/06, 25, 26 & 27/07 dated 18.8.2008 held that since no tax is payable, appellant is not liable to pay penalty under Section 17(5A) or interest under Section 23(3) of the KGST Act. 2. Govt. Pleader submitted that department is waiting for the decision in these appeals to decide whether revision should be filed against the orders of the Tribunal cancelling the penalty. 3. After hearing senior counsel appearing for the appellant and Govt. Pleader and after going through the orders we find that the liability for payment of tax is no longer in dispute. Of course there was confusion on account of conflicting judgment of the Hon'ble Supreme Court and the matter has now got finally settled by decision of the Supreme Court in Associated Cement Companies Case above referred. Govt. Pleader pointed out that appellant has besides inter state purchase local purchases as well and so much so there was deliberate attempt to evade payment of tax. His further case is that interest is payable under Section 23(3A) and S.T.A.8/07 etc. 3 Tribunal was not justified in considering the interest as one payable under Section 23(3) to cancel the same. The penalty sustained by the Commissioner is equal amount of tax for all the years. Considering the delay in payment of tax and for the sake of finality we feel the orders issued by the Commissioner can be confirmed on condition that State will not challenge the orders of the Tribunal cancelling penalty under Section 17(5A) and interest payable under Section 23(3) or 23(3A) of the KGST Act. The appeals are accordingly dismissed confirming the orders of the Commissioner on the basis that Tribunal's orders shall be treated as final by the State and no revision will be filed against the same. C.N. RAMACHANDRAN NAIR Judge K. SURENDRA MOHAN Judge jj K.K.DENESAN & V. RAMKUMAR, JJ. ---------------------------------------------------- M.F.A.NO: ----------------------------------------------------- JUDGMENT Dated: