P. ABOOBACKER Vs. COMMISSIONER

JUDGEMENT

(1.) The connected sales tax appeal and writ petition arise from the common orders of the Commissioner of Commercial Taxes dismissing the second revision filed by the appellant/petitioner against penalty order and revising a remand order issued by the Deputy Commissioner in first revision against the very same penalty order. We have heard Sri S.P. Chaly appearing for the appellant/petitioner and Government Pleader for the respondent.

(2.) The main grievance of the assessee is that the Commissioner had no jurisdiction to interfere with a remand order issued by the Deputy Commissioner in exercise of revisional power under Sec. 45A(3) of the Kerala General Sales Tax Act. According to him the Commissioner is entitled to interfere with only "orders prejudicial to the interests of the Revenue" as referred to in Sec. 37 of the Act and an order of remand in first revision by the Deputy Commissioner is not an order prejudicial to the interests of the Revenue. Counsel also relied on the decision of this Court in Bismillah Trading Co. v/s. Intelligence Officer, Squad No. II, Agricultural Income Tax and Sales Tax : [2000] 119 STC 558 : [2001] 248 ITR 292 : [2000] 2 KLT 73, and the decision of the Supreme Court in Malabar Industrial Co. Ltd. v/s. Commissioner of Income Tax, Kerala : [2000] 243 ITR 83 : [2000] 2 JT 15 (SC). The Government Pleader on the other hand relied on the Full Bench decision of this Court in S.T. Rev. 133 of 2006 (Alukkas Jewellery v/s. State of Kerala, [2009] 26 VST 584) whereunder this Court has explained the scope of "orders prejudicial to the interests of the Revenue". The facts that led to the penalty on the assessee in this case are the following.

(3.) A truck transporting a load of rubber from Kerala to Tamil Nadu without sales tax records was seized alleging attempt at smuggling of goods under Sec. 30C of the Act. The driver of the truck gave a statement that the rubber so transported belonged to the assessee herein and that he had occasion to transport five loads of tread rubber for the very same assessee in the very same truck outside Kerala, and that one such truck load was seized by the Karnataka sales tax authorities and they imposed fine of above Rs. 19,000. Based on the information furnished by the driver, the Deputy Commissioner authorised a search in the premises of the assessee which led to recovery of business slips, note books, bill books, etc. On analysing the entries in these records, the Intelligence Officer of Sales Tax noticed that the driver's statement pertaining to purchase and transport of rubber by the assessee outside Kerala was corroborated and established. Based on the records obtained on search, penalty was proposed on the assessee. The assessee's case is that even though the assessee was heard both in the smuggling case booked at the time of seizure of the truck and in the penalty proceedings, he was not given an opportunity to cross -examine the driver. Counsel highlighted before us the violation of natural justice inasmuch as the assessee was not given an opportunity to cross -examine the driver. He has also relied on the decision of this Court in Jose Pallissery v/s. Additional Sales Tax Officer, [1993] 89 STC 165 :, [1993] 1 KLT 401, and contended that denial of opportunity to cross -examine affects the validity of the proceedings. The Government Pleader on the other hand contended that the assessee has not been prejudiced in this case because the penalty is levied not based on the driver's statement, but based on the records pertaining to unaccounted business transactions seized from the assessee's business premises.