IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY THURSDAY, THE 9TH DECEMBER 2010 / 18TH AGRAHAYANA 1932 ST.Rev..No. 237 of 2010() ------------------------- AGAINST THE ORDER IN TA.588/2009 of S.T.A.T., ADDL.BENCH-II, ERNAKULAM .................... REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE ---------------------------------------------------------- M/S. EMJAY ENGINEERING INDUSTRIES KRISHNASWAMY CROSS ROAD, ERNAKULAM, REPRESENTED BY ITS PROPRIETOR, M.J.JOHNY GEORGE. BY ADV. SRI.K.SRIKUMAR SRI.K.MANOJ CHANDRAN SRI.P.R.AJITHKUMAR SRI.K.J.CHERRY BABU RESPONDENT(S): RESPONDENT/RESPONDENT/REVENUE ---------------------- STATE OF KERALA, REPRESENTED BY THE GOVERNMENT PLEADER, HIGH COURT OF KERALA, KOCHI-682031. MR.MOHAMMED RAFEEQ, GOVERNMENT PLEADER THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 09/12/2010, ALONG WITH STRV NOS. 238 & 239 OF 2010 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. ---------------------------------- S.T.Rev.Nos.237, 238 & 239 of 2010 --------------------------------- Dated, this the 9th day of December, 2010 J U D G M E N T Ramachandran Nair, J. These Sales Tax Revision cases are filed against the orders of the Tribunal declining to extend the benefit of exemption available to the petitioner as a Small Scale Industrial Unit based on certificate of exemption issued by the Department of Industries, for the reason that the Unit has committed violation of notification SRO 295/98. 2. We have heard learned counsel for the petitioner and learned Government Pleader for the respondent. 3. The petitioner is a Small Scale Industrial Unit engaged in manufacture of concrete poles for the Kerala State Electricity Board. The petitioner as an SSI unit has got SSI exemption certificate vide Annexure-5 produced in the revision petitions. The period of exemption is from 15/07/1997 to 14/07/2004. However sales tax exemption within the exempted period i.e. from 1998-99 to 2000- 01 was declined for the reason that during inspection held on 01/08/2000, irregularities including suppression were noticed. S.T.Rev.Nos.237, 238 & 239/2010 -2- However, the petitioner's case is that the penalty levied pursuant to the inspection was partly paid, and thereafter the petitioner contested the liability in revisions. When the Deputy Commissioner in revision set aside the penalty orders and remanded the cases, the lower authority permitted the petitioner to compound the offences by remitting compounding fee along with double the amount of tax. Admittedly, if compounding is permitted and the assessee pays compounding fee and along with it double the amount of tax, the assessee can continue to avail the exemption available under SRO 295/98. The reason why the Tribunal declined to grant the relief is that the petitioner has remitted only compounding fee and along with it the tax amount, and not twice the amount of tax payable on the turnover. However, the petitioner's case was that substantial amount of penalty, which is over `10,00,000/-, has already been paid and the same has become refundable to them. 4. Prayer of the petitioner before the Tribunal was to adjust the penalty refundable to them towards the tax amount and then to grant benefit under notification SRO 295/98. Learned Government Pleader's case is that the petitioner has not raised the claim for S.T.Rev.Nos.237, 238 & 239/2010 -3- adjustment before the lower authorities, and therefore the Tribunal did not consider the same. Learned counsel for the petitioner has submitted that the issue was specifically raised before the Tribunal and it was within the powers of the Tribunal to grant relief. We find force in this contention because when compounding is granted, penalty paid becomes refundable and the same could be adjusted against the tax dues. The petitioner has already remitted the tax amount on the suppressed turn over and has also paid compounding fee. Therefore, what was required to be done is to adjust equal amount of tax from out of the penalty remitted that has become refundable to the petitioner. 5. We, therefore, allow the revision cases by modifying the Tribunal's order as follows:- The Assessing Officer / Intelligence Officer will verify the payment of penalty made by the petitioner that has become refundable after compounding is granted, and then adjust so much of the amount i.e. dues towards tax on suppressed turn over detected, and then only grant refund of balance penalty paid by the petitioner. Once adjustment is made as above, the Assessing Officer will S.T.Rev.Nos.237, 238 & 239/2010 -4- treat the adjustment as sufficient compliance of SRO 295/98 as the petitioner has already remitted equal amount of tax and compounding fee, and then to permit the petitioner to avail exemption for the balance period in terms of the exemption granted to them. It is open to the petitioner to apply for Amnesty benefit for other liabilities and settle the same under the Amnesty Scheme. These Sales Tax Revision cases are allowed as above. (C.N.RAMACHANDRAN NAIR, JUDGE) (BHABANI PRASAD RAY, JUDGE) jg