INTELLIGENCE OFFICER, SQAD NO. II DEPARTMENT OF COMMERCIAL TAXES AND OTHERS Vs. COCHIN BLUE METAL INDUSTRIES (P) LTD AND OTHERS

JUDGEMENT

(1.) The two appeals, one by the assesee and the other by the State, raise the very same questions. Before we go into the issue, we have to first look at the facts in W.A. No.2695 of 2015. The impugned judgment in W.A. No.2695 of 2015 was not followed by another learned Single Judge in the judgment impugned in W.A. No.202 of 2017; hence the said appeal.

(2.) The respondent in W.A. No.2695 of 2015 is a metal crusher unit having two machines, one primary and the other secondary, on which permission for compounding was granted. An inspection was conducted by the Intelligence Officer on 19.09.2013. Two Auto Sand Machines were found in the premises, which were not included in the compounding application. Hence penalty proceedings were proposed. The respondents then sought for compounding of offence under Section 74 of the Kerala Value Added Tax Act, 2003 [for brevity, the Act]. The respondent also paid Rs. 8 lakhs. The permission for compounding of offence was allowed under Section 74 of the Act. The respondent also paid tax of around Rs. 16 lakhs, of which Rs. 8 lakhs was adjusted towards compounding fees, under Section 74 of the Act. The respondent also paid the balance tax dues.

(3.) The respondent was then before this Court, challenging the imposition of Rs. 8 lakhs, since according to the respondent, the maximum compounding fee in cases where an offence is repeated and spread over other return periods, in one assessment year, would only be Rs. 2 lakhs. The first contention taken by the learned Senior Counsel is that there is no reason for including the two additional machines under the compounding scheme of Section 8 under the Act. The learned Single Judge found that the assessee having obtained the statutory benefit flowing from the composition of offence cannot turn around and question the very proposal for imposition of penalty. We, agree with the reasoning and at the outset, refuse to consider the issue, since on initiation of penalty proceedings, the respondent/assessee had voluntarily offered to compound the offence under Section 74 of the Act. There could be no contention raised with respect to the machines not being included for the purpose of penalty proceedings. However if such a challenge is made in assessment the same could be independently considered dehors the fact that the crime file was compounded.