IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH THURSDAY, THE 15TH JANUARY 2009 / 25TH POUSHA 1930 WP(C).No. 33241 of 2008(G) -------------------------- PETITIONER(S): --------------- SOUTHERN ISPAT LTD, 19/629(1)-"SREYAS", NEAR YAKKARA SCHOOL BUS STOP, WEST YAKKARA, PALAKKAD-678001.REPRESENTED BY ITS EXECUTIVE OFFICER, SRI.K.K.AGARWALLA. BY ADV. SRI.S.RAMESH BABU RESPONDENT(S): --------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY (TAXES),SECRETARIAT, TRIVANDRUM. 2. THE INTELLIGENCE OFFICER (SPECIAL TEAM), SQAUAD NO.1, ERNAKULAM. 3. THE ASSISTANT COMMISSIONER (SPCIAL CIRCLE)COMMERCIAL TAXES, PALAKKAD,KERALA STATE. 4. THE DEPUTY COMMISSIONER (APPEALS), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER ADV.SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.M. JOSEPH, J. ```````````````````````````````````````````````````` W.P.(C) No. 33241 OF 2008 G ```````````````````````````````````````````````````` Dated this the 15th day of January, 2009 J U D G M E N T Petitioner has filed this writ petition with the following prayers. “ (a) Declare that section 67(1) (b) and (d) to the extent it seeks to levy penalty on the amount of tax evaded or sought to be evaded in circumstances when such penalty is also leviable as per Proviso to section 25(3) is ultravires the Constitution in so far as it is contrary to the guarantee contained in Article 20(2) of the Constitution. (b) Declare the levy of penalty for non maintenance of true and complete accounts or submission of untrue or incorrect return leading to suppressed turnover cannot be made under section 67 of the Kerala Value Added Tax Act except after due assessment of the escaped turnover by the assessing officer under section 25 of the Act. (c) Issue a writ of mandamus commanding the respondents to refrain from levying any penalty or enforcing any penalty order so levied under section 67 except and until an order of assessment by the assessing officer WPC.33241/08 : 2 : is made under section 25 of the Kerala Value Added Tax Act. (d) Issue a writ of certiorari quashing Ext.P2(a) and P2(b), P5(a) and P5(b), P6(a) and P6(b). (e) Issue a writ of certiorari quashing Ext.P10(a) and P10(b) to the extent that it imposes a condition of payment of 40% of the amount claimed as penalty for grant of stay pending consideration of the appeal before the Deputy Commissioner(Appeals). (f) Issue a writ of mandamus commanding the Deputy Commissioner (Appeals) to consider and dispose of Exts.P7(a) and P7(b) appeals pending before him on merits without insisting for deposit of any amount, pending consideration of the same for the purpose of stay. (g) Issue a writ of mandamus commanding the respondents not to take coercive steps to enforce Ext.P2(a) and P2(b), P5(a) and P5(b), P6(a) and P6(b) and P10(a) and P10(b) pending consideration of the appeal before the Deputy Commissioner(Appeals).” 2. By Exts.P5(a) and P5(b), the petitioner has been visited with penalty for the years 2005-06 and 2006-07 by the 2nd respondent Intelligence Officer. The petitioner carried the matter WPC.33241/08 : 3 : in appeals. The petitioner also filed applications for interim relief. They have been disposed of by Exts.P10(a) and P10(b) orders granting stay on condition that the petitioner remits 40% of the amount due and also furnishes adequate security for the balance amount. 3. I heard learned counsel for the petitioner Sri.S.Ramesh Babu and learned Government Pleader. Learned counsel for the petitioner would submit that the penalty orders are vitiated in so far as they have been passed by the 2nd respondent without even there being any assessment under section 25 of the KVAT Act. He points out that section 25(3) provides for the levy of penalty of wilful non disclosure and the words “ wilful non disclosure” employed in section 25(3) clearly relate to clauses (b) and (d) of section 67(1) of the Act. Clauses (b) and (d) read as follows: “ S.67 (1). Notwithstanding anything contained in Section 71 if any authority empowered under this Act is satisfied that any person, - (b) has failed to keep true and complete accounts; or (d) has submitted an untrue or incorrect return.” WPC.33241/08 : 4 : It is submitted that those Clauses are the basis of the penalty orders. Learned counsel for the petitioner contends that there is the issue of double jeopardy. He expands it by contending that penalty is levied under section 67(1) and when assessment is completed under section 25, it will be open to the assessing authority to issue an order imposing penalty under section 25(3) and this will amount to double jeopardy. It is further contended that under the proviso to sub section 1 of section 67, proceedings has to be issued within one year and unless the Deputy Commissioner extends the time. It is barred and that the decision should be communicated to the party which has not been done and, therefore, clearly the penalty order is illegal. Fourthly, it is contended that the defects other than the discrepancy in rising from the consumption of the electricity in arriving at production were duly explained and for the large part it was accepted also. Fifthly, it is contended that the reliance placed on the norms of the KSIDC is unsustainable. In this context, he drew my attention to the so called norms which the petitioner received by filing an application under the Right to Information Act. It is contended that it is undated and unsigned. He further points out that this is a WPC.33241/08 : 5 : case where the petitioner has cross examined the officer as is revealed from Ext.P4. It is also pointed out that this is a case where the unit itself has been closed. It is further contended that the petitioner had paid nearly 10 crores by way of excise duty and 2 crores by way of sales tax. 4. Per contra, learned Government Pleader submits that as far as petitioner's submission that the power under section 67 is available to the officer authorized under section 71 to levy penalty even without there being an assessment is concerned, there is no merit in the contention. As far as the limitation is concerned, it is pointed out that the Deputy Commissioner has taken a decision in the matter to extend the time. He further contends that the petitioner has no definite case to as the exact quantum of units of electricity required for the production and even if the number of units is taken as 1000, there will be discrepancy. The KSIDC has taken 800 units as required for production of one tonne. 5. As far as the contention based on section 25 is concerned, I do not see much merit in the contention. Section 67 empowers the officer authorized under section 71 to impose penalty. It takes in filing of incorrect return under clause (b) as WPC.33241/08 : 6 : also failure to maintain proper accounts under clause (d). Section 25(3) provides for assessment and it also provides that the officer may levy penalty. It may be true that in a case where assessment is taken up under section 25, the assessing authority may upon passing order of assessment, is empowered to levy penalty under section 67. It may also be true that non disclosure may relatable to clauses (b) and (d) of section 67. But that is a far cry from saying that the officer empowered under section 67 cannot in the appropriate case undertake the task on exercising its discretion and levying penalty if the circumstances so warrant under section 67. Section 25(3) only makes it clear that in the case of non disclosure upon assessment being completed under section 25, there is power to levy penalty with the assessing officer. But having regard to the scheme of things, I do not see any reason to think that power of the officer authorized under section 71 is in any way confined in point of time after the assessment order is passed under section 25 merely because of the power vested with the assessing officer under section 25(3). 6. As far as the question of double jeopardy is concerned, I would think that the question of double jeopardy can arise only if WPC.33241/08 : 7 : any penalty is proposed or a penal action is proposed. In my view, the contention itself is premature as the petitioner is not faced with any proceedings as of now. There is only one proceeding namely the penalty under section 67(1) and no further proceeding is pointed out to even consider the argument based on double jeopardy. 7. The 3rd argument, of course, is a matter which is best left to be considered to the appellate authority as I feel that the question as to whether the Deputy Commissioner has granted exemption, whether it has to be communicated, whether it has been communicated, when it was communicated are all matters which need not detain me further. It may be true that the petitioner has made his stand clear in regard to the defects pointed out. I remind myself the appellate authority has granted a direction to pay 40% of the demand. The petitioner has produced KSIDC norms and the cross examination. The petitioner has also pointed out that the petitioner has closed down the unit. In such circumstances, I would think that some modifications are necessary in the conditions in Exts.P10(a) and P10(b). Accordingly, I feel that the interest of justice would be met in all if WPC.33241/08 : 8 : the petitioner is called to pay Rs.82 lakhs in place of 40% in regard to Exts.P10(a) and P10(b) and if the petitioner is to furnish security for the balance amount. Accordingly, Exts.P10(a) and P10(b) are modified and the petitioner need pay only Rs.82 lakhs in place of 40% for both the years and subject to the further condition that the petitioner must furnish security for the balance amount. The petitioner is given two weeks time to comply with the conditions. If the aforesaid conditions are complied with by the petitioner, the appeals will be taken up by the appellate authority and a decision will be taken thereon within two months from the date of receipt of a copy of this judgment. Writ petition is disposed of as above. (K.M.JOSEPH, JUDGE) aks