SHEIK RAWTHER SONS Vs. SECRETARY TAXES

JUDGEMENT

(1.) THE recalcitrant or contumacious assessee, if caught, should pay through his nose. That is what happened in this case. THE petitioner in O. P. No. 5367 of 1988 is the appellant. It is a firm dealing in stationery articles. It is an assessee under the Kerala General Sales Tax Act. It effects sales in the shop as also sales to retail merchants by employing a salesman and taking its goods in its tempo van KLG 6233. THE said vehicle was checked on 21-10-1983 by the Sales Tax Officer. It was found that the goods transported were not covered by a proper or genuine document. Besides the goods belonging to the assessee, goods belonging to another firm M/s. Shaik Rowther & company were also seen transported in the said van. THE permit produced by the salesman was issued to the assessee-firm for the year 1981-82. THE Sales-tax officer suspected that there was an attempt to evade payment of tax. As directed by the Sales Tax Officer, the driver of the vehicle parked the vehicle in front of the Sales Tax Office, Alathur. THE officer ordered detention of the goods. He issued notice under S. 29a (2) of the K. G. S. T. Act read with S. 35a of the k. G. S. T. Rules demanding a security deposit of Rs. 5527. 15 for allowing transport of the goods. THE notice was served on the salesman Mr. V. M. Ismail. THE direction was not complied with. On the other hand, in defiance of the order, the vehicle was driven away. Thus there was violation of the provisions of the K. G. S. T. Act and the Rules. THE Sales Tax Officer took proceeding to enforce the order passed by him under S. 29a (2) of the K. G. S. T. Act read with rule 35a of the Rules. A notice was issued to the assessee directing it to comply with the order of detention of the goods. It was not complied with. It resulted the Sales Tax Officer invoking S. 45a of the K. G. S. T. Act in taking steps for violation of S. 29a of the Act read with rule 35a of the K. G. S. T. Rules. After due notice, the Sales Tax Officer imposed a penalty of Rs. 11,054/- on the assessee firm. This is evidenced by Ext. P8 order dated 22-11-1983. Ext. PS was affirmed in revision by the Deputy Commissioner of Sales tax, Palghat as per Ext. P11 dated 30-6-1986. Both the said orders were affirmed in the second revision by the Board of Revenue (Taxes) by Ext. P14 order dated 7-4-1988. Ext. P8, P11 and P14 were challenged by the assessee-firm in O. P. No. 5367 of 1988. K. A. Nayarj. by his judgment dated 1-2-1990 dismissed the O. P. THE petitioner-firm (assessee) has come up in writ appeal.

(2.) WE heard counsel for the appellant, mr. K. C. Balagangadharan, as also counsel for the respondent-Revenue, mr. N. N. D. Pillai. Counsel for the appellant put forward two points: (1) The appellant was issued a permit under S. 15 of the Act. In violation of S. 15 of the Act read- with rule 7 of the K. G. S. T. Rules, proceedings under s. 29acannotbe initiated. In other words, the provisions of S. 15 and 29a of the act are mutually exclusive. Even if the proceedings initiated by the assessing authority is legal, the penalty imposed - 4 times the tax evaded - is not permissible. It is against S. 29a (4) read with S. 35a of the Act. Counsel for the Revenue sought to sustian Exts. P5, P11 and P14 orders for the various reasons contained in the said proceedings.

(3.) THE second and more important question canvassed before us is the legality or eligibility of the quantum of penalty levied in this case in the sum of R. 11,054/ -. THE penalty is levied under S. 45a (1) (e) and (g) of the Act. It should be remembered that the Sales Tax Officer ordered detention of the goods and issued a notice under S. 29a (2) of the Act and Rule 35a of the Rules demanding a security deposit of Rs. 5527. 14 for allowing transport of the goods. Notice was served on the salesman Mr. Ismail. This was not complied with. THE vehicle was driven away. THE assessee has violated the provisions in the Act and the Rules. It is to enforce this order passed by the sales Tax Officer under S. 29a2 of the Act read with Rule 35 A of the K. G. S. T. Rules that further proceedings were initiated under S. 45a of the Act. S. 45a (1)clearly provides that if the assessing authority is satisfied that any person has failed to comply with all or any of the terms of the notice issued by an officer under the provisions of this Act or the rules made there under, or has acted otherwise in contravention of any of the provisions of the Act or any rule made there under, the concerned officer may direct such person to pay by way of penalty an amount not exceeding twice the amount of sales tax or other amount evaded or sought to be evaded. In this case what was evaded or sought to be evaded is not any amount due by way of sales tax but other amount. THE other amount is the 'demand of security deposit' of Rs. 5527. 14. THE Sales Tax Officer was authorized to levy by way of penalty an amount not exceeding twice the amount evaded or sought to be evaded. In this case the penalty imposed by ext. P5 for evading the security deposit of Rs. 5527. 14 is Rs. 11, 054/ -. It is authorized and eligible under S. 45a (1) of the Act. In this perspective Ext. P8, ext. P11 and Ext. P14 are not open to any objection. THEy are valid and legal.