IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN MONDAY, THE 2ND JUNE 2008 / 12TH JYAISHTA 1930 WA.No. 1390 of 2003() -------------------------------- AGAINST THE JUDGEMENT/ORDER IN OP.18797/2002 Dated 03/12/2002 .................... APPELLANTS: RESPONDENTS --------------------- 1. STATE OF KERALA REP.BY ITS CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 2. SALES TAX OFFICER,IVTH CIRCLE, DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER RESPONDENTS: PETITIONERS IN THE OP ------------------------ 1. KAMADHENU MILK PRODUCTS, ERNAKULAM, KOCHI -16 REP.BY ITS MANAGING PARTNER, GEORGE PAUL. 2. GEORGE PAUL S/O. PAUL MATHEW, KARIATH HOUSE, OUZHAKODE, EDAKKATTUVAYAL, NOW RESIDING AT 153 C, PLOT NO.2, K.V.COLONY, PANAMPALLY NAGAR, ERNAKULAM. 3. GEORGE VETTATH, S/O. GEORGE V.JOHN, VETTATH HOUSE, WARRIAM ROAD, ERNAKULAM. 4. K.M.STEPHEN S/O. MATHEW, KOTTACKAL HOUSE ANGAMALY EAST. BY ADV. SRI.R.MURALEEDHARAN (AROOR) BY GOVERNMENT PLEADER SRI.MOHAMMED RAFIQ THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 02/06/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.B. Koshy & P.N.Ravindran, JJ. -------------------------------------- W.A. No. 1390 of 2003 --------------------------------------- Dated this the 2nd day of June, 2008 Judgment Koshy,J. Writ petitioner is a dealer in pasteurised milk. It claimed sales-tax exemption granted to 'fresh milk'. The activity done by the petitioner was to add skimmed milk powder to fresh milk to achieve the solid non-fat content and main share of their product is fresh milk and milk powder is added only to a limited quantity to achieve the standards for the milk in accordance with Food Adulteration Act. The officer accepted the assessments and return under section 17 (4). Later, in view of the decision of this court in Ernakulam Regional Co-op. Milk Producers Union Ltd. v. State of Kerala ((2001) 9 KTR 459 (Ker.), the assessment was re-opened and assessed an amount of tax of Rs.1,81,03,271/- at the rate of 10% on the milk sold by the petitioner. Petitioner paid the tax due with interest. The question is whether petitioner is entitled to be charged with penalty also. 2. With regard to the non-applicability of exemption, the learned single Judge held that the appellant is not entitled to W.A.No. 1390/2003 2 exemption as claimed, but, at the same time, noticed as follows: ".....This is a case where the Government has granted exemption on toned milk items with effect from 1.1.2000. Further by retrospective amendment the Government has granted exemption to co-operative societies and Kerala Milk Marketing Federation Ltd. Even though this Court has upheld the said notification as not discriminatory, it will be absolutely harsh to levy penalty on the petitioners especially when the Government granted exemption on the item later. The question is whether the petitioner is entitled to exemption or not. The officer himself first accepted the claim of exemption, and later reversed the finding." There is no intended evasion considering the totality of circumstances. The learned single Judge held that penalty should not be issued under section 17 (5A) even though tax liability was upheld. We are of the opinion that no interference is required in the above finding on the facts of this case. The appeal is dismissed. J.B.Koshy Judge P.N.Ravindran Judge vaa W.A.No. 1390/2003 3 W.A.No. 1390/2003 4 J.B. KOSHY AND P.N.RAVINDRAN,JJ. ------------------------------------- W.A. No. 1390 of 2003 ------------------------------------- Judgment Dated:2nd June, 2008