1987 (9) TMI 397 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against orders passed by Intelligence Officer, Deputy Commissioner, and Board of Revenue regarding penalty under section 28(8) of the Kerala General Sales Tax Act for unaccounted stock of copra and coconut oil.

Analysis:

1. The petitioner, an assessee to sales tax, challenged the penalty levied on unaccounted stock of copra and coconut oil for the assessment year 1977-78. The Intelligence Officer initially levied a penalty of Rs. 16,040, which was later reduced by the Deputy Commissioner to Rs. 14,455. However, the Board of Revenue reinstated the original penalty through a separate order. The challenge was against the orders of the Intelligence Officer, Deputy Commissioner, and Board of Revenue.

2. The court considered the contention that there was no proper physical weighment of the stock during inspection. The Deputy Commissioner found that the stock was physically weighed and recorded, with the Managing Partner present during the inspection. The court upheld this finding, stating that the petitioner cannot dispute the physical verification in penalty proceedings under Article 226 of the Constitution.

3. The petitioner argued that the Intelligence Officer did not apply his mind while levying the penalty, mechanically imposing the maximum penalty of 50% of the unaccounted stock value. The court agreed with this argument, emphasizing that the officer must act judicially, fairly, and in accordance with natural justice principles. The discretion to levy the penalty is permissive, requiring a proper application of mind to determine the quantum of penalty.

4. The court highlighted that the penalty proceedings are quasi-criminal in nature, requiring the officer to consider the gravity of the offense and the attending facts and circumstances. The officer must exercise judicial discretion rather than mechanically imposing the maximum penalty. The court referred to previous judgments emphasizing the need for a reasoned decision in penalty imposition.

5. Consequently, the court quashed the orders passed by the Intelligence Officer, Deputy Commissioner, and Board of Revenue regarding the penalty for unaccounted stock of copra and coconut oil. The order of the Board of Revenue dated 1st April, 1980, was also set aside. The original petition and the miscellaneous first appeal were allowed, disposing of the case.