IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 17TH SEPTEMBER 2009 / 26TH BHADRA 1931 WP(C).No. 23271 of 2009(D) -------------------------- PETITIONER(S): --------------- E.J.DAVIS, PROPRIETOR, M/S.KALAMASSERRY TOURIST HOME, KALAMASSERRY, (BRANCH OF MODERN RICE MILL ANGAMALY), ERNAKULAM DISTRICT. BY ADV. SRI.BOBBY JOHN SRI.TOMSON T.EMMANUEL RESPONDENT(S): --------------- 1. THE INTELLIGENCE OFFICER, COMMERCIAL TAXES, SQUAD NO.II, MATTANCHERRY AT KARUKUTTY. 2. THE COMMERCIAL TAX OFFICER, ANGAMALY. 3. THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI.C.K.GOVINDAN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17/09/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.K.ABDUL REHIM,J ---------------------- W.P.(c) No.23271 of 2009 ---------------------------------------- Dated this the 17th day of September 2009 J U D G M E N T 1. Challenge in this writ petition is against Ext.P5 order issued under Section 47 of the Kerala General Sales Tax Act 1963 (KGST Act) by the 1st respondent, whereby offence committed by the petitioner is compounded by accepting compounding fee of Rs.2,00,000/-. Pursuant to a shop inspection conducted at the business place of the petitioner on 26/3/2007, notice was issued by the 1st respondent intimating the proposal to take penal action as provided under Section 46 of the KGST Act. The petitioner thereupon applied to the 1st respondent in Ext.P4 admitting the offence and praying for departmental compounding of the offence. In Ext.P4, the petitioner had admitted that he is prepared to pay Turnover Tax computing the gross profit at 30% as revealed from the Sale Bills recovered. It is further admitted that there was failure to keep proper Books of Accounts for the year 2006-07 and requested to settle the case through departmental compounding. Acting on the basis of Ext.P4, the 1st respondent arrived at a calculation that the turn W.P.(c) No.23271/09 2 over for the year 2006-07 will come to Rs.3,92,81,915.82/- as against the declared turn over of Rs.3,62,58,305/- and therefore the turn over suppressed by the dealer is Rs.30,23,610.82/- with a tax effect of Rs.3,05,849/-. Accordingly the compounding was accepted collecting Rs.2,00,000/- under Section 47 of the KGST Act as per Ext.P5 order and Rs.1,000/- under Section 74 of the KVAT Act 2003. 2. Grievance of the petitioner against Ext.P5 is that the estimation of turn over on the basis of recalculation made for the entire assessment year of 2006-07 by the 1st respondent was beyond his jurisdiction and it was totally unwarranted. According to the petitioner the 1st respondent had gone beyond the scope of what has been admitted in the compounding application. The first respondent was not expected to make assessment in the compounding proceedings. The 1st respondent was expected to fix the compounding fee only on the actual suppression found and he was not expected to fix the same on the basis of the estimated suppression. The estimation of suppression if any can be alleged only by the assessing authority in the process of assessment, is the contention. W.P.(c) No.23271/09 3 3. The learned Government Pleader, on the other hand, pointed out that after opting for a compounding, the petitioner is not entitled to challenge the order of compounding. Further he points out that in Ext.P4 letter itself the petitioner had conceded that gross profit at 30% has to be added on the entire turn over of the assessment year 2006-07. The learned Government Pleader points out the decision of this court in Carbo Chemicals Agencies v. Deputy Commissioner of Sales Tax [1996 (2) KLT 208] wherein this court held that once a dealer has agreed for composition and compounding fee is accordingly paid, the composition of offence is complete and after composition of the offence, the dealer is not entitled to challenge the same. 3. After considering the rival contentions, it is revealed that the only apprehension of the petitioner is that on the basis of the observations contained in Ext.P5 order he will be fetched with liability for assessment on the total turn over calculated with 30% gross profit, for the entire year of 2006-07, and his opportunity to object such an estimation, before the assessing authority will remain foreclosed. W.P.(c) No.23271/09 4 4. Having considered the rival contentions, I am of the opinion that the apprehension expressed by the petitioner can be redressed by keeping his liberty to raise all contentions against the proposed assessment open, and by directing the assessing authority to consider such contentions independently. 5. Under the above mentioned circumstances the writ petition is disposed of with a clarification to the effect that the petitioner will be at liberty to raise all contentions relating to correctness of the estimation of turn over for the purpose of assessment before the assessing authority and if any such contentions are raised, the assessing authority shall consider the same untrammeled by the observations contained in Ext.P5. (C.K.ABDUL REHIM, JUDGE) jsr