P. Krishna Achary & Praveen Jewellery, Nedumangad v. State of Kerala and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN MONDAY, THE 1ST SEPTEMBER 2008 / 10TH BHADRA 1930 OP.No. 9898 of 2000(C) ---------------------- PETITIONER: ----------------- P. KRISHNA ACHARY, PRAVEEN JEWELLERY, NEDUMANGAD. BY ADV. SRI.E.K.NANDAKUMAR SMT.PRIYA MANJOORAN RESPONDENTS: ---------------------- 1. STATE OF KERALA, REPRESENTD BY THE CHIEF SECRETARY, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE SALES TAX OFFICER, NEDUMANGAD. 3. THE APPELLATE ASSISTANT COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. 4. THE DEPUTY TAHSILDAR, REVENUE RECOVERY, NEDUMANGAD. BY GOVERNMENT PLEADER SRI MATHEW VADAKKEL THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 01/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP.NO.16457/2000 IN O.P.NO.9898/2000 ------------- ## DISMISSED 1/9/2008 Sd/P.R.RAMAN, JUDGE. ## APPENDIX ## PETITIONER'S EXTS: EXT.P1 TRUE COPY OF THE CERTIFICATE DATED 6/5/1998. EXT.P2 TRUE COPY OF THE NOTICE DTD. 15/6/99 BY THE 2ND RESPONDENT. EXT.P3 TRUE COPY OF THE OBJECTION BY THE PETITIONER TO THE COMMERCIAL TAX OFFICER, NEDUMANGAD DTD. 3/7/99. EXT.P4 TRUE COPY OF THE ASSESSMENT ORDER DTD. 2/8/99 BY THE 2ND RESPONDENT. EXT.P5 TRUE COPY OF THE DECLARATION OF VOLUNTARY DISCLOSURE BY THE PETITONER DTD. 18/12/1997. EXT.P6 TRUE COPY OF THE VALUATION REPORT DTD. 15/12/1977. EXT.P7 TRUE COPY OF THE AFFIDAVIT OF THE PETITIONER FILED BEFORE THE COMMISSIONE3R OF INCOME TAX, TRIVANDRUM. EXT.P8 TRUE COPY OF THE ENTRY MADE IN THE JOURNAL. EXT.P9 TRUE COPY OF THE ORDER DTD. 10/1/2000 BY THE 3RD RESPONDENT. EXT.P10 TRUE COPY OF THE DEMAND NOTICE BY THE 4TH RESPONDENT. EXT.P11 TRUE COPY OF THE RECEIPT ISSUED BY THE 4TH RESPONDENT. ## **P.R.RAMAN, J. --------------------------O.P.NO.9898 OF 2000 ---------------------------DATED THIS IST DAY OF SEPTEMBER,2008** ## **JUDGMENT** Petitioner is an assessee both under the Income Tax Act and Kerala General Sales Tax Act. He was carrying on business of jewellery under the name and style of “Praveen Jewellery”. He challenged Ext.P2 notice issued by the Sales Tax Officer under Section 17(3) of the KGST Act calling upon him to file his objections within 7 days of receipt of the notice. Among other things it is stated that during the year in question he had shown the purchases under the caption “own gold” 2011-200 gms. valued at Rs.4,22,352/-. At the time of check of accounts he admitted that this gold was kept in his possession undisclosed and it was disclosed before the Income Tax Authorities under the voluntary disclosure scheme. No evidence to prove that the gold so disclosed have been produced before the Officer for verification. Therefore, it was evident from the above that 2011.200 gms. of gold kept **-2-** ## **O.P.No.9898/2000** underclosed at the beginning of the year and subsequently disclosed before the Income Tax Authorities and included in the books of accounts and trading profit and loss account will add to the opening stock of the assessee. So also, the same is treated as excess. It is contended that by virtue of the provisions contained in the Voluntary Disclosure of Income Scheme, 1977 as per Finance Act, 1997 and more particularly Section 71 of the Act, the declaration made under the scheme shall not be admissible in evidence against the declarant for the purpose of any proceeding relating to imposition of penalty or for the purposes of prosecution under the Income Tax Act or the Wealth Tax Act or the Foreign Exchange Regulation Act, 1973 or the Companies Act. As per Section 72 of the Act, all particulars contained in the declaration made under Sub section 1 of Section 64 shall be treated as confidential and, notwithstanding anything contained in any law for the time being in force, no court or any other authority shall be entitled to require any public servant or the declarant to produce before it any such declaration or any part **-3-** ## **O.P.No.9898/2000** thereof or to give any evidence before it in respect thereof. It is contended in such circumstances that the proposal made as noticed above is contrary to Sections 71 and 72 of the Finance Act, which has got an overriding effect on other laws. Hence, it is without jurisdiction and is liable to be dismissed. 2. The learned Government Pleader appearing on behalf of the State on the other hand would submit that the question as to the applicability of Section 90(1) and (3) of the Kar Vivad Samadhan Scheme, 1998, with reference to the State laws came up for consideration before the Apex Court in **Master Cables (P) Ltd. v. State of Kerala (2007 5 SCC 416)** and the Apex Court held that the provisions will not come within the purview of the State laws. The terms “direct tax enactment” or indirect tax enactment” or “any other law for the time being in force” refer only to those statutes under which the order has been passed. ## 3. Heard both sides. 4. The first contention that the present notice is contrary to Section 71 has only to be rejected. As per Section 71 of the **-4-** ## **O.P.No.9898/2000** Finance Act, it only says that the declaration made under sub section 1 of Section 64 shall not be admissible in evidence of the declarant in relation to any proceeding for imposition of penalty or for the purpose of prosecution under the Income Tax Act or Wealth Tax Act or Foreign Exchange Regulation Act. All the 3 are central enactment. No reference is made to the State enactment. As such Section 71 has no application. 5. Section 72 only says that the declaration made under Section 64(1) shall be treated as confidential and notwithstanding anything contained in any law for the time being in force, no court or authority shall be entitled to require the declarant to produce before it any such declaration or any part thereof or to give any evidence in respect thereof. Notice now issued and impugned in this case has not required the declarant to produce before it the declaration or any part thereof nor was it compelled him to give evidence in respect thereof. If the authority is not entitled to draw the presumption as proposed, it is always open to the petitioner to approach such authority by filing objections **-5-** ## **O.P.No.9898/2000** and in case such objections are overruled, he has got further remedies by way of appeal, second appeal and ultimately to approach this Court. The correctness or otherwise of the presumption proposed to be made in Ext.P2 is not liable to be considered in a proceeding under Article 226 of the Constitution of India. In so far as the notice proposed is not contrary to any provisions of law, whether the income disclosed by him before the Kar Vivad Samadhan Scheme consists of income from business or otherwise, is not a matter to be considered at this stage. It is open to the petitioner to file his objections before the authority, if not already filed, within three weeks, whereupon the authority will consider the same and pass appropriate orders. I find no reason to interfere with the original petition. Dismissed. **P.R.RAMAN, Judge.** **kcv.** **-6-** ## **O.P.No.9898/2000**