IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 29TH MARCH 2010 / 8TH CHAITHRA 1932 WP(C).No. 10325 of 2010(M) --------------------------------------- PETITIONER: ------------------- T.M.BABY, PROPRIETOR, M/S.CREATIVE MARKETING SERVICES, THEKKANETH BUILDING, NEAR SOUTH OVER BRIDGE, KOCHI-36. BY ADVS. SRI.V.P.SUKUMAR, SRI.KURYAN THOMAS. RESPONDENTS: ------------------------ 1. THE INTELLIGENCE OFFICER, SQUAD NO.II, COMMERCIAL TAXES, ERNAKULAM. 2. K V A T APPELLATE TRIBUNAL, ERNAKULAM. 3. THE INSPECTING ASSISTANT COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM, KOCHI-30. R1 TO R3 BY GOVT. PLEADER SRI. C.K. GOVINDAN. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 29/03/2010, ALONG WITH W.P.(C). NO. 10326/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: prv. P.R.RAMACHANDRA MENON, J ---------------------------------- W.P(C) Nos. 10325/2010 & 10326/2010 --------------------------------- Dated this the 29th day of March, 2010. J U D G M E N T The issue involved in both these cases is rather similar. Penalty was imposed upon the petitioners as per Ext.P1 orders, under Section 44(8), r/w Section 44(10) of the KVAT Act 2003, considering the extent of goods kept in the 'undeclared go-down', which was liable to be treated as unaccounted, warranting imposition of penalty as provided under the above provisions. The above orders were subjected to challenge by filing appeals before the first appellate authority, which led to Ext.P4 orders, which were passed pursuant to the direction given by this Court as per Ext.P3 judgment, to have the appeals considered and finalized in accordance with law. Being still aggrieved of Ext.P4, the petitioners filed second appeals before the second respondent/Tribunal, with interlocutory applications for stay. After considering the facts and circumstances, Ext.P7 orders have been passed by the Tribunal imposing a condition upon the petitioners to satisfy a portion of the liability, so as to avail the benefit of interim stay, which in turn are W.P(C) Nos. 10325/2010 & 10326/2010 2 under challenge in these Writ Petitions. 2. The learned counsel for the petitioners submits that the goods stored in the 'undeclared go-down' were very much accounted properly, stating that the building itself was taken on lease only on 21.5.2009 and that the go-down could not be declared because of the fact that the inauguration was proposed to be held only in August 2009, while the inspection was conducted on 20.7.2009. Reliance is also placed on the decision rendered by the Division Bench of this Court in Sajeev V. Intelligence Officer (2009 (4) KLT 601) to contend that, when the goods are properly accounted, imposition of the maximum penalty is not automatic. 3. Heard the learned Government Pleader as well. 4. On going through the judgment cited supra, it is seen observed in para 4 as follows: “As already stated, even though penalty under S.44(8) read with S.44(10) is mandatory, by virtue of the abovereferred discretionary powers conferred on the officer, a dealer is given opportunity to state emergency which led to his keeping the goods in undeclared godown without prior intimation and if he proves it and if such goods were found accounted, then the same should certainly be taken into account by the Inspecting Officer while levying penalty. In other words, by applying the fiction alone under S.44(10), the officer cannot levy maximum penalty at half the value of the goods under S.44(8), if the dealer proves the extreme circumstances that led to his storage of goods in undeclared W.P(C) Nos. 10325/2010 & 10326/2010 3 godown and that the goods are accounted.” From the above observation, it is very much clear that the petitioners will be entitled to get the benefit, only if the goods are accounted and also that the 'emergency' to store the goods in the 'undeclared go-down' without prior intimation is substantiated to the satisfaction of the authorities concerned. 5. In the instant case, it is conceded that the building was taken on lease in May 2009 and goods were being stored therein, which was brought to light in the course of the inspection conducted on 20.7.2009. The only reason offered from the part of the petitioner for not declaring the said go-down is that inauguration of the building was scheduled in August 2009. This however does not appear to be a palatable reason, so as to substantiate the 'emergency' to have the go-down taken on lease in May 2009, used for storing the materials before having the same declared before the authorities even on 20.7.2009-the date of inspection. Scope of the above judgment has very much been looked into and discussed by the first appellate authority, who passed Ext.P4 order declining interference. The order was challenged by way of second appeal before the second W.P(C) Nos. 10325/2010 & 10326/2010 4 respondent/Tribunal and it was after considering the said position and also other materials on record, that Ext.P7 order was passed by the second respondent granting interim stay, on condition that the petitioner deposited a portion of the liability as aforesaid. 6. In the above circumstances, this Court finds that the challenge raised by the petitioners against Ext.P7 order is devoid of any merit. The condition has been imposed with proper application of mind and no interference is warranted. The Writ Petition is dismissed. However, taking note of the fact that the time to satisfy the condition is already over, the petitioners are given a further period of ten days, from the date of receipt of a copy of this judgment to satisfy the same. Sd /- P.R.RAMACHANDRA MENON JUDGE //True Copy// P.A to Judge ab W.P(C) Nos. 10325/2010 & 10326/2010 5