IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR WEDNESDAY, THE 6TH FEBRUARY 2008 / 17TH MAGHA 1929 OP.No. 12084 of 2003(L) ----------------------- PETITIONER: ------------------ M/S. KALARIKKAL HOTELS PVT.LTD., WEST NADA, GURUVAYUR, REP.BY ITS DIRECTOR. BY ADV. SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI RESPONDENTS: --------------------- 1. THE ADDITIONAL SALES TAX OFFICER, (WC & LT), OFFICE OF THE DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, THRISSUR. 2. THE INTELLIGENCE OFFICER, SQUAD NO.II, OFFICE OF THE INSPECTING ASSISTANT COMMISSIONER (INTELLIGENCE), DEPARTMENT OF COMMERCIAL TAXES, THEVARA, ERNAKULAM, COCHIN-15. 3. THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES, THRISSUR. 4. STATE OF KERALA, REP.BY SECRETARY TO GOVERNMENT, TAXES DEPARTMENT,SECRETARIAT, TRIVANDRUM. BY GOVERNMENT PLEADER THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 06/02/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP.NO.20784/2003 IN OP.NO.12084/2001-L. DISMISSED. Sd/- C.N.Ramachandran Nair, Judge. 6.2.2008. Sd/- T.R.Ramachandran Nair, Judge. APPENDIX PETITIONER'S EXHIBITS:- P1: Copy of the notice dtd.16.12.2002 issued by the first respondent to the petitioner. P2: Copy of the reply dtd.30.1.2003 submitted by the petitioner to the first respondent. P3: Copy of the notice dtd.10.1.2003 issued by the first respondent to the petitioner. P4: Copy of the explanation dtd.16.1.2003 submitted by the petitioner to the first respondent. P5: Copy of the notice dtd.24.1.2003 issued by the first respondent to the petitioner. P6: Copy of the reply dtd.3.2.2003 filed by the petitioner before the first respondent. P7: Copy of the notice dtd.27.1.2003 issued by the first respondent to the petitioner. P8: Copy of the covering letter dtd.30.1.2003 furnishing the details of contractors. P9: Copy of the proceedings and demand notice dtd. 25.2.2003 of the first respondent issued to the petitioner. P10: Copy of full particulars of contractors engaged by the petitioner in major construction work. P11: Copy of list of other contractors engaged with the construction work furnished by the petitioner. RESPONDENTS' EXHIBITS:- Nil. ( true copy ) P.S. TO JUDGE. kvs/- C .N. RAMACHANDRAN NAIR & T.R. RAMACHANDRAN NAIR, JJ. -------------------------------------------- O.P. No. 12084 OF 2003 -------------------------------------------- Dated this the 6th day of February, 2008 JUDGMENT C.N. Ramachandran Nair,J. The Commissioner of Commercial Taxes, Trivandrum is impleaded as addl.5th respondent. 2. Petitioner is challenging Ext.P9 order whereunder the Sales Tax Officer (WC & LT), Trichur, has levied penalty under Section 45A (g) of the KGST Act for the petitioner's failure to deduct tax on payments made to contractors in terms of Section 7B of the Act. Even though Section 7B is declared invalid by this Court, Section 7C was introduced immediately thereafter. Counsel for the petitioner contended that address of the contractors to whom payments were made were furnished to the first respondent. Government Pleader after taking instructions submitted that the first respondent forwarded the details to the second respondent, who though issued notice to contractors, returned the same to the first respondent. It is not known 2 whether assessment is made in the name of the contractors and if not done, obviously there is lapse on the part of the department officials irrespective of whether petitioner is liable for penalty or not. Since petitioner furnished address of the contractors to whom payments were made, such contractors were assessable to works contract irrespective of whether they co-operated or not. If the first respondent or second respondent has not made assessment leading to loss of revenue to the State, it is for the Commissioner of Commercial Taxes to take disciplinary action against him for lapses causing loss of revenue to the State. In any case, since the details of assessment or penalty orders, if any, issued on contractors to whom petitioner made payments, are not available on record, O.P. is allowed vacating Ext.P9 with direction to the first respondent to reconsider the matter after calling for records pertaining to assessments and payment of tax by contractors and to consider penalty on petitioner as well as on contractors, if they are liable, and issue final orders in the place of Ext.P9 after hearing the petitioner and contractors, within a period of three months from the date of production of a copy of this judgment by the petitioner. There 3 will be direction to the addl. fifth respondent to monitor the revised proceedings and if ultimately tax could not be recovered he will take disciplinary action against the concerned officer who was responsible for the loss to the State. Issue photocopy of this judgment to G.P. also who will forward a copy to the Commissioner of Commercial Taxes for compliance. (C.N.RAMACHANDRAN NAIR) Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk 4