COCHIN BLUE METAL INDUSTRIES (P) LTD. Vs. THE INTELLIGENCE OFFICER, DEPARTMENT OF COMMERCIAL TAXES AND ORS.

JUDGEMENT

(1.) The petitioner is a registered dealer under the KVAT Act, engaged in the business of production of granite metal and M- sand. In connection with the said business, the petitioner had installed at his unit primary as well as secondary crushers. Over and above the said machinery, the petitioner had also installed an Auto Sand Machine for the purposes of producing M-sand. For the purposes of assessment under the KVAT Act, the petitioner opted for payment of tax on compounded basis in terms of S.8 of the KVAT Act, and the revenue authorities accepted his application for the same. The petitioner accordingly filed returns and paid tax as contemplated under S. 8 of the KVAT Act.

(2.) Pursuant to an inspection conducted at his unit by the revenue authorities, the petitioner was served with Ext.P1 notice by the 1st respondent proposing to impose a penalty on the petitioner for suppressing the actual production of granite metal and M-sand produced in the unit. The basis for the said notice was the allegation that the petitioner had not, in his application for compounding, and while declaring the machinery used for the purposes of his business, declared the Auto Sand Machine that was used for producing M-sand. It was the stand of the 1st respondent that the non-declaration of the said machine nullified the option exercised by the petitioner for payment of tax at compounded rates. The proposal in the notice was to impose a penalty of Rs.7,58,62,458/- on the petitioner.

(3.) Faced with Ext.P1 proposal for the imposition of a huge penalty, the petitioner approached the 1st respondent with a proposal for compounding the offence in terms of S. 74 of the KVAT Act, the provisions of which read as follows: