1993 (1) TMI 269 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Liability for penalty under Section 45A of the Kerala General Sales Tax Act, 1963.
2. Opportunity to cross-examine the dealers from whom inter-State purchases were allegedly made.

Issue-wise Detailed Analysis:

1. Liability for Penalty Under Section 45A of the Kerala General Sales Tax Act, 1963:

The petitioner, a registered dealer under the Kerala General Sales Tax Act, 1963, faced a penalty of Rs. 4,000 for omitting certain inter-State purchases in the accounts. The petitioner denied these transactions and objected to the penalty. The Deputy Commissioner confirmed the penalty but reduced it to Rs. 3,000. The petitioner challenged these orders in a writ petition.

Explanation I to Section 45A of the Act places the burden of proving non-liability for the penalty on the person penalized. The Division Bench of the Court in Sudhi v. Intelligence Officer upheld this provision, stating that there should be a rational connection between the fact proved and the ultimate fact presumed, and the inference should not be arbitrary.

The basis for the penalty was the declaration forms available at the check-post, which are mandatory under Section 29(2) and Rule 35(2) of the Kerala General Sales Tax Rules, 1963. These forms regulate inter-State trade and commerce and have significant evidentiary value. The petitioner failed to rebut the presumption of clandestine transactions created by these forms, as mere assertions without proof are insufficient in law.

2. Opportunity to Cross-Examine the Dealers:

The petitioner contended that he was not granted an opportunity to cross-examine the dealers from whom the inter-State purchases were allegedly made. Section 45A(2) mandates that no penalty shall be imposed without giving the person an opportunity of being heard, embodying the rule of "audi alteram partem."

The Supreme Court in Vasantlal and Co. v. Commissioner of Income-tax and other cases emphasized the necessity of providing the assessee an opportunity to cross-examine witnesses whose statements are used against them. The Kerala High Court in Appukutty v. State of Kerala and Narayanan Nair v. Sales Tax Officer held that assessments cannot be based on third-party entries without giving the assessee an opportunity for cross-examination.

However, in the present case, the petitioner did not request the opportunity to cross-examine the dealers in his reply to the notice or during the penalty proceedings. The first respondent noted this lack of request in the final order. Thus, the petitioner's contention was rejected.

Quantum of Penalty:

The petitioner did not contest the quantum of the penalty. The Deputy Commissioner reduced the penalty to Rs. 3,000 to meet the ends of justice, which was deemed reasonable and rational. The petitioner also did not exhaust the remedy of revision before the Board of Revenue.

Conclusion:

The writ petition was dismissed, and the impugned orders were upheld as they were within the jurisdiction of the authorities concerned. No order as to costs was made.