R LATHA Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) The Writ Appeal is filed against judgment of the learned Single Judge declining to interfere with challenge against penalty orders issued under S.45A of the KGST Act for the reason that petitioner has effective statutory remedy by way of revision before the higher authority. Even though we do not find anything wrong with the view taken by the learned Single Judge, we do not think we are justified in dismissing the Writ Appeal on the same ground at this distance of time because this Court admitted Writ Appeal and granted stay against recovery of penalty. Besides this, this is the second round of litigation after one round of remand by this Court in the same matter. We have heard counsel for the appellant and Government Pleader on the merits of the case and we, therefore, proceed to decide the dispute i.e. appellant's challenge against Exts. P15 to P18 orders issued by the Intelligence Officer of Sales Tax levying penalty on the appellant for the assessment years 1991-92 to 1994-95.

(2.) The appellant is a dealer in ready made garments at Trichur. During the assessment years 1991-92 to 1994-95 returns filed were accepted and assessments were completed. However, the Deputy Commissioner based on details collected from the Branches of Dhanalakshmi Bank and South Indian Bank located near petitioner's shop noticed that petitioner was engaged in unaccounted purchase of goods namely, ready made garments, from outside Kerala by purchasing Demand Drafts in the name of her employee by name Achuthan. He, therefore, set aside the assessments and remanded for revision of the same based on information collected about unaccounted purchase of goods through Demand Drafts taken in the name of an employee. However, the said orders were challenged in appeal and the Tribunal cancelled the orders. Even though the department did not file Revisions to this Court against Tribunal's orders, the Intelligence Officer (Investigation Branch) initiated penalty proceedings for evasion of tax under S.45A of the KGST Act which led to levy of penalty at double the amount of tax. When these orders were challenged in first revision before the Deputy Commissioner, he confirmed the penalty orders but reduced the penalty to one and a half times the tax evaded. In second revision, the Commissioner confirmed the orders of the first revisional authority. The appellant challenged the said orders of the Commissioner before this Court on the ground that Tribunal's orders relating to assessments were in favour of the appellant. Based on the contentions raised by the appellant, this Court vide Ext. P13 judgment cancelled the orders of the Commissioner and remanded the matter for fresh consideration. Pursuant to the judgment, the Commissioner issued Ext. P14 order whereunder he remanded the matter to the Intelligence Officer for reconsideration after taking into account petitioner's contentions based on the Tribunal's order. Even after remand, the Intelligence Officer issued Exts. P15 to P18 orders confirming penalty for evasion of tax under S.45A of the KGST Act against which WP (C) No. 29765/2007 was filed. Even though learned Single Judge did not decide the case on merits, both sides argued the case on merit before us and we, therefore, consider the sustainability of Exts. P15 to P18 penalty orders.

(3.) The first contention raised by counsel appearing for the petitioner is that Tribunal's orders pertaining to assessment are binding on the Commissioner as well as lower authorities while considering penalty and they have no authority to come to any finding different from what the Tribunal has held. Government Pleader on the other hand contended that both assessment and penalty proceedings are entirely different and the Tribunal's findings in assessment are not binding on the departmental authorities dealing with penalty case. He further pointed out that the department has not accepted the findings of the Tribunal and there was only an omission in filing revision petitions before the High Court against orders of the Tribunal. Counsel for the petitioner has relied on decision of the Supreme Court in K. C. Builders v. Asst. Commissioner of Income Tax reported in 2004 KHC 89 : 2004 (1) KLT 596 : 2004 (2) SCC 731 and contended that once assessment is cancelled, subsequent orders on penalty and prosecution based on such assessments also are not tenable. On the face of it, the argument of the counsel for the petitioner is correct because if final fact finding authority like the Tribunal has rendered findings on facts and the department has accepted the same, then they cannot take a different stand in penalty proceedings pertaining to the same issue. However, the question to be considered is whether the failure of the department to file revision petitions against the orders of the Tribunal in assessment cases will bar the statutory authority from levying penalty, if there are sufficient materials justifying it. The Tribunal has no jurisdiction in penalty matters and the final statutory authority so far as penalty under S.45A is considered, is the Commissioner of Commercial Taxes who is the second revisional authority enjoying also suo moto revisional powers to correct orders of the first revisional authority. This Court has in large number of cases held that penalty proceedings under S.45A of the Act are independent proceedings and the same can be proceeded with even without waiting for completion of assessments. We are of the view that the failure of the department to file revisions against orders of the Tribunal will not stand in the way of statutory authorities considering penalty proceeding independently and if there is sufficient material to sustain the orders, this Court has no authority to vacate such orders merely because Tribunal in parallel proceedings gave findings which if challenged, would not have been sustained by this Court. Therefore, we have to necessarily consider whether Exts. P15 to P18 orders are sustainable based on the facts found therein or whether the findings entered by the Intelligence Officer are unsustainable because of the findings of the Tribunal in the appellate orders, copy of which is produced as Exts. P10 and P11 in writ proceedings. As already stated, the only material based on which assessment was revised and penalty levied is the evidence collected by the department about purchase of D.Ds. by one of the employees of the appellant by name Achuthan in favour of outside suppliers of garments from local Branches of two Banks near to place of business of the appellant. The entire details of the D.Ds. purchased by appellant's employee in the name of outside Kerala suppliers of ready made garments are available in penalty orders and in the orders of assessment and orders of the Tribunal relied on by the appellant herself. Government Pleader read over the entire statements furnished by the employee who purchased the D.Ds. in the name of suppliers of ready made garments located outside Kerala. The inescapable conclusions from the evidence collected by the department and relied on by them in the assessment and penalty orders are the following: