State of Kerala v. M/S PVS Memorial Hospital Ltd.

O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 1 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** ## **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **OP (TAX).No.8 OF 2019** **AGAINST THE ORDER/JUDGMENT IN TA 77/2014 DATED 31-08-2017 OF KERALA AGRL.INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,ERNAKULAM** ## **PETITIONER:** **STATE OF KERALA REP BY DEPUTY COMMISSIONER(LAW), COMMERCIAL TAXES,ERNAKULAM.** **BY SR.GOVT.PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT:** **M/S.PVS MEMORIAL HOSPITAL LTD. KALOOR,KOCHI-682017.** ## **BY ADV. SRI MILLU DANDAPANI** **THIS OP TAX HAVING BEEN FINALLY HEARD ON 15.06.2020, ALONG WITH OP (TAX).11/2019, OP (TAX).12/2019, OP (TAX).13/2019, OP (TAX).16/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 2 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **OP (TAX).No.11 OF 2019** **AGAINST THE ORDER IN TA 40/2015 DATED 31-08-2017 OF KERALA AGRL.INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,ERNAKULAM** ## **PETITIONER:** **STATE OF KERALA REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **BY SR.GOVT.PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT:** **M/S. PVS MEMORIAL HOSPITAL LTD. KALOOR, KOCHI - 682017.** ## **BY ADV. SRI MILLU DANDAPANI** **THIS OP TAX HAVING BEEN FINALLY HEARD ON 15.06.2020, ALONG WITH OP (TAX).8/2019, OP(TAX).12/2019, OP (TAX).13/2019 & OP (TAX).16/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 3 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **OP (TAX).No.12 OF 2019** **AGAINST THE ORDER/JUDGMENT IN TA 39/2015 DATED 31-08-2017 OF I.T.A.TRIBUNAL,COCHIN BENCH** ## **PETITIONER:** **STATE OF KERALA REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **BY SR.GOVT.PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT:** **PVS MEMORIAL HOSPITAL LIMITED KALOOR, KOCHI - 682 017.** ## **BY ADV. SRI MILLU DANDAPANI** **THIS OP TAX HAVING BEEN FINALLY HEARD ON 15.06.2020, ALONG WITH OP (TAX).8/2019, OP (TAX).11/2019, OP (TAX).13/2019, OP (TAX).16/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 4 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **OP (TAX).No.13 OF 2019** **AGAINST THE ORDER IN TA 41/2015 DATED 31-08-2017 OF KERALA AGRL.INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,ERNAKULAM** ## **PETITIONER:** **STATE OF KERALA REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **BY SR.GOVT.PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT:** **M/S.PVS MEMORIAL HOSPITAL LTD. KALOOR, KOCHI - 682 017.** ## **BY ADV. SRI MILLU DANDAPANI** **THIS OP TAX HAVING BEEN FINALLY HEARD ON 15.06.2020, ALONG WITH OP (TAX).8/2019, OP (TAX).11/2019, OP (TAX).12/2019, OP (TAX).16/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 5 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **MONDAY, THE 15TH DAY OF JUNE 2020 / 25TH JYAISHTA, 1942** **OP (TAX).No.16 OF 2019** **AGAINST THE ORDER IN TA 38/2015 DATED 31-08-2017 OF AGRL.INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH,ERNAKULAM** ## **PETITIONER:** **STATE OF KERALA REP.BY DEPUTY COMMISSIONER(LAW), COMMERCIAL TAXES,ERNAKULAM.** **BY SR.GOVT.PLEADER SRI.MOHAMMED RAFIQ** ## **RESPONDENT:** **PVS MEMORIAL HOSPITAL LTD KALOOR,KOCHI-682017.** ## **BY ADV. SRI MILLU DANDAPANI** **THIS OP TAX HAVING BEEN FINALLY HEARD ON 15.06.2020, ALONG WITH OP (TAX).8/2019, OP (TAX).11/2019, OP (TAX).12/2019, OP (TAX).13/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 6 ## **JUDGMENT** ## **T.R.RAVI, J.** The above original petitions have been filed by the Revenue against the orders of the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal. All the cases relate to the very same respondent assessee, which is a hospital. The assessee did not remit luxury tax under the Kerala Tax on Luxuries Act, 1976, for the period November, 2013 to April, 2014. A notice proposing to impose penalty under Section 17A of the Kerala Tax on Luxuries Act was issued to the assessee. On receipt of the notice, the assessee filed the returns and requested to waive the proposal to impose penalty of double the amount of tax due for each of the months. The Intelligence Officer confirmed the proposal to impose penalty and issued orders imposing penalty at double the tax for the period. In appeal before the Deputy Commissioner (Appeals), the orders of the Intelligence Officer were modified by reducing the penalty for each month to O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 7 Rs.10,000/-. The Revenue challenged the orders of the Appellate Authority before the Appellate Tribunal. By order dated 31.8.2017, the Appellate Tribunal confirmed the order of the Appellate Authority. The Appellate Authority as well as the Tribunal have relied on the decision of this Court in **T.R.Ramachandran v. Sales Tax Officer, III Circle, Thrissur** **and others** reported in **[1997 (106) STC 413 (Kerala)]** , to say that it was not a case where the assessee had sought to evade tax, but only a case of delay in complying with the provisions of the Act. 2. Heard Sri Mohammed Rafiq, Senior Government Pleader on behalf of the petitioners and Sri Millu Dandapani on behalf of the respondent assessee. 3. The learned Government Pleader relied on the decision of this Court in **Little Flower Hospital Trust v. State of Kerala,** reported in **[2019 (3) KLT 242]** to submit that under Section 17A, there is no requirement of mens rea on the part of the assessee, for imposing penalty. We are in complete agreement with the above proposition. Section 17A reads thus; O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 8 ## 17A. **Imposition of penalties by assessing authority:** -If an assessing authority is satisfied that any person- (a) liable to pay tax under this Act,- (i) has failed to keep true and complete accounts; or (ii) has failed to submit any return as required by provisions of this act or the rules made thereunder or has submitted an untrue or incorrect return; or (b) has failed to comply with all or any of the terms of any notice issued to him by or under the provisions of this act or the rule made thereunder or (c) has prevented or obstructed inspection, entry, search or seizure by any officer; or (d) has acted in contravention of the provisions of this act or any rule made thereunder, for the contravention of which no express provision or payment of penalty or punishment is made by this Act; such authority may direct that such person shall pay, by way of penalty an amount not exceeding twice the amount of luxury tax or other amount sought to be evaded where it is practicable to qualify such evasion, or, an amount not exceeding five thousand rupees in any other case. **Explanation** - The burden of proving that any person is not liable to the penalty under the section shall be on such person. “ A reading of the above Section clearly shows that all that is required is the satisfaction of the assessing authority regarding O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 9 failure to submit returns as required by the provisions of the Act or Rules, for the purpose of imposing penalty. Wherever there is a requirement of mens rea as an essential element, Statutes give indication of the same by using words like knowingly, falsely, intentionally, fraudulently, wilfully, etc. as observed by this Court ## in **Little Flower Hospital** (supra). 4. Even though we are of the view that mens rea on the part of the assessee is not an essential element to be proved for imposing penalty under Section 17A, we do not think that the petitioner is entitled to any relief in these original petitions. The First Appellate Authority as well as the Tribunal have found that the imposition of penalty was warranted. However, the above authorities held that only a sum of Rs.10,000/- for each month during which the returns were not filed, need to be imposed as penalty, instead of double the amount of tax due. Section 17A clearly says that the authority may impose as penalty, “an amount not exceeding twice the amount of luxury tax or other amount sought to be evaded where it is practicable to quantify such evasion, or an amount not exceeding five thousand rupees O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 10 in any other case.” Since there is sufficient discretion available to the authorities regarding the amount of penalty to be imposed, and since two authorities had found that imposition of Rs.10,000/- for each of the five months, during which there has been failure to file returns, is sufficient, we do not think it would be proper for us to exercise our jurisdiction under Article 227 of the Constitution of India and restore the penalty imposed by the assessing officer or make any enhancement. The original petitions are dismissed. In the circumstances of the case, there will be no order as to costs. **Sd/K. VINOD CHANDRAN JUDGE** **Sd/T.R. RAVI JUDGE** dsn O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 11 ## **APPENDIX OF OP (TAX) 8/2019** **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER OF PENALTY ISSUED BY THE INTELLIGENCE OFFICER(IB) ERNAKULAM,OFFICE OF THE DEPUTY COMMISSIONER(INTELLIGENCE),DEPARTMENT OF COMMERCIAL TAXES,ERNAKULAM DATED 16.05.2014.** **EXHIBIT P2 A TRUE COPY OF THE ORDER ISSUED BY THE DEPUTY COMMISSIONER(APPEALS)II,COMMERCIAL TAXES,ERNAKULAM DATED 27.08.2014.** **EXHIBIT P3 A CERTIFIED COPY OF THE ORDER PASSED BY THE KERALA AGRICULTURAL TAX AND SALES TAX APPELLATE TRIBUNAL DATED 31.08.2017.** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 12 ## **APPENDIX OF OP (TAX) 11/2019** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER OF PENALTY ISSUED BY THE INTELLIGENCE OFFICER (IB) ERNAKULAM, OFFICE OF THE DEPUTY COMMISSIONER (INTELLIGENCE), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM DATED 16.05.2014.** **EXHIBIT P2 A TRUE COPY OF THE ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS) II, COMMERCIAL TAXES, ERNAKULAM DATED 27.08.2014.** **EXHIBIT P3 A TRUE COPY OF THE ORDER PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL DATED 31.08.2017.** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 13 ## **APPENDIX OF OP (TAX) 12/2019** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER OF PENALTY ISSUED BY THE INTELLIGENCE OFFICER (IB) ERNAKULAM, OFFICE OF THE DEPUTY COMMISSIONER (INTELLIGENCE), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULM DATED 16.05.2014.** **EXHIBIT P2 A TRUE COPY OF THE ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS) II, COMMERCIAL TAXES, ERNAKULAM DATED 27.08.2014.** **EXHIBIT P3 A TRUE COPY OF THE ORDER PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL DATED 31.08.2017.** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 14 ## **APPENDIX OF OP (TAX) 13/2019** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER OF PENALTY ISSUED BY THE INTELLIGENCE OFFICER (IB), ERNAKULAM, OFFICER OF THE DEPUTY COMMISSIONER (INTELLIGENCE), DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM DATED 16.05.2014.** **EXHIBIT P2 A TRUE COPY OF THE ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS) II, COMMERCIAL TAXES, ERNAKULAM DATED 27.08.2014.** **EXHIBIT P3 A TRUE COPY OF THE ORDER PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL DATED 31.08.2017.** O.P.(Tax) Nos.8,11,12,13 and 16 of 2019 15 ## **APPENDIX OF OP (TAX) 16/2019** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER OF PENALY ISSUED BY THE INTELLIGENCE (IB)ERNAKULAM,OFFICE OF THE DEPUTY COMMISSIONER (INTELLIGENCE),DEPARTMENT OF COMMERCIAL TAXES,ERNAKULAM DATED 16.05.2014.** - **EXHIBIT P2 A TRUE COPY OF THE ORDER ISSUED BY THE DEPUTY COMMISSIONER(APPEALS)II,COMMERCIAL TAXES,ERNAKULAM DATED 27.08.2014.** - **EXHIBIT P3 A TRUE COPY OF THE ORDER PASSED BY THE KERALA AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL DATED 31.08.2017.**