Baby Mathew @ May Rosily v. State of Kerala & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **FRIDAY, THE 2ND DAY OF MARCH 2012/12TH PHALGUNA 1933** ## **WP(C).No. 3655 of 2006 (I) --------------------------** **PETITIONER:** ## **-------------** **BABY MATHEW @ MAY ROSILY, PROPRIETRIX, THRIPPUNITHURA TOURIST HOME THRIPPUNITHURA.** **BY ADVS.SRI.N.MANOJ KUMAR** **SRI.BINOI GEORGE (CHERUKARA) SRI.M.RISHIKESH SHENOY** **RESPONDENTS:** **--------------** **1. STATE OF KERALA, REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT, SECRETARIAT THIRUVANANTHAPURAM.** **2. THE COMMISSIONER, COMMERCIAL TAXES, THIRUVANANTHAPURAM.** **3. THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, ERNAKULAM.** **4. THE SALES TAX OFFICER, IST CIRCLE, THRIPUNITHURA.** **5. THE DEPUTY TAHASILDAR (RR), KANAYANNUR TALUK, ERNAKULAM.** **BY GOVERNMENT PLEADER SRI. S. SUDHISH KUMAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 3655 of 2006 (I)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** |**EXT.P1**|**:**|**TRUE COPY OF ORDER DATED 27.3.2004**| |---|---|---| |**EXT.P2**|**:**|**TRUE COPY OF NOTICE OF DEMAND DT.27.3.2004 ISSUED BY**| |||**THE 4TH RESPONDENT**| |**EXT.P3**|**:**|**TRUE COPY OF THE REVENUE RECOVERY NOTICE**| |||**DT.19.11.2004 ISSUED BY THE 4TH RESPONDENT**| |**EXT.P4**|**:**|**TRUE COPY OF THE ORDER STRP 169/04 DATED 2.8.2005**| |**EXT.P5**|**:**|**TRUE COPY OF THE REVISION PETITION DT. 31.8.2005**| |**EXT.P6**|**:**|**TRUE COPY OF THE ARGUMENT NOTES DT. 19.12.2005**| |**EXT.P7**|**:**|**TRUE COPY OF THE ORDER DT.9.1.2006 OF THE SECOND**| |||**RESPONDENT**| |**EXT.P8**|**:**|**TRUE COPY OF THE NOTICE NO.23161793/01.02 DT 1.2.2005**| ## **RESPONDENTS' ANNEXURES: NIL** ## **//TRUE COPY//** ## **P.A. TO JUDGE** **jma** **K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 3655 OF 2006** **- - - - - - - - - - - - - - - - - - - - - - - - - - - -** **Dated this the 2[nd] day of March, 2012** ## **J U D G M E N T** The petitioner is running a bar attached hotel having transferred the licence in the name of her husband; in her name. The petitioner's husband had been running the bar attached hotel in the assessment year 2001-02 when the monthly returns were filed regularly before the 4[th] respondent. The total turn over disclosed as per the monthly returns for the year was `2,94,60,792/-. However, after the closing of the year it was detected by the auditor on 28.10.2002 that as per the audited statement the total turnover of IMFL during the whole year comes to `3,23,85,575/-. The difference in turnover for the whole year thus came to `29,24,783/-. The difference in turnover having been noticed, the assessee filed revised return conceding the actual turnover before the assessing authority and the tax as well as the interest due were paid. 2. Subsequently, based on the verification of the books of accounts as well as the revised returns for the year, a notice WPC.3655 of 2006 : 2 : under Section 45A of the KGST Act was issued on 6.3.2004. The reply of the assessee dated 6.3.2004, contending that the difference was due to the accountant having filed the monthly returns without noticing the turnover for the last day of each month; was rejected by the 4[th] respondent. In such circumstances, the petitioner was imposed with a maximum penalty under Section 45A of the KGST Act by Ext.P1. The revisions filed before the 3[rd] respondent and the second respondent concluded with Exts.P4 and P7 orders. The second revisional authority by Ext.P7 though found imposition of penalty to be proper; modified the same and reduced it to equal amount of tax by Ext.P7. The petitioner challenges the penalty order as confirmed but modified by the revisional authority and the consequent demand made by Ext.P8. The petitioner would contend that there is no contumacious act on the assessee's part and no mens rea can be attached to the conduct of the assessee, especially in the circumstances of the assessee having filed revised return and having paid the entire tax with interest as per the KGST Act. 3. The learned Government Pleader however, would WPC.3655 of 2006 : 3 : point out that though the defect was detected on 28.10.2002 the revised return was filed only on 18.7.2003 after about one year. The attempt of the assessee to put the entire blame on the accountant is also seriously contested and it is submitted that the imposition of penalty as modified by Ext.P7 order is fit and proper. 4. Admittedly, the assessee had filed the monthly returns before the Assessing Officer and the entire turnover was also duly accounted in the regular books of accounts as is evidenced even from Ext.P7. The Assessing Officer has not at any point of time detected the said defect, nor has any notice been issued to the assessee to cure the under accounting in the monthly turnover. The petitioner's counsel would also invite me to the judgment of a Division Bench of this Court reported in **2002(2)KLT Short Note Case No.137 in Victor Fernadaz v. State of Kerala** . The Division Bench had held in the said case that the provision for penalty under Section 45, for non filing of true and correct returns can be attracted only if the assessee has failed to keep true and complete accounts. The deliberate and intentional attempt to file an untrue return WPC.3655 of 2006 : 4 : and thus attempt to evade tax necessarily cannot be inferred when the turnover has been disclosed in the books of accounts, which the assessing authority is entitled and empowered to call for and verify at any time for the purpose of assessment or otherwise. The challenge of the petitioner is further fortified by the decision of the Supreme Court in **Sreek Krishna Electricals v. State of Tamil Nadu 2009** **(23)VST 249(SC).** In the said case on the claim of the assessee that he is selling parts of wet grinder and not grinder as such, having been rejected, the Assessing Officer imposed tax and penalty. While upholding the assessment the Supreme Court set aside the penalty on the ground that though the turnover was not disclosed for the purpose of assessment, on the basis of a claim of exemption; the same was however incorporated in the account books. 5. The contention of the Government Pleader that the petitioner admittedly has collected the tax and retained the tax with them till the revised return has been filed cannot again be considered to be a contumacious act since the mistake has been explained by the petitioner and the assessee WPC.3655 of 2006 : 5 : had voluntarily come forward to remit the tax and the interest. The payment of interest in accordance with the KGST Act for the delayed payment of tax is adequate compensation to the Government as required by the KGST Act. On facts there cannot be any finding of illegal retention of tax. In the circumstances explained above, I am of the opinion that the proceedings initiated under Section 45 A against the petitioner cannot be sustained. For the reasons stated above, I set aside Ext.P1 order confirmed by Ext.P5 and modified by Ext.P7. Even before the writ petition was filed, when revenue recovery proceedings were initiated, the petitioner had paid an amount of Rs.2 lakhs as is evidenced by Ext.P8 notice of demand. The penalty orders having been set aside, the petitioner is entitled to refund of the said amount, however, subject to adjustments if any to be made by the Assessing Officer with respect to any pending dues of the petitioner. The petitioner shall make available a certified copy of this judgment before the 4[th] respondent within a period of two weeks from the date of receipt of the same and refund if any shall be made within a WPC.3655 of 2006 : 6 : period of three months from that date. # Sd/- **(K. VINOD CHANDRAN, JUDGE)** jma **//TRUE COPY//** **P.A. TO JUDGE**