2008 (1) TMI 845 - HC - VAT and Sales Tax

Whether the penalty provided under section 30B(3) of the KGST Act also applies to the proceedings under section 30B(4) of the Act? Held that - The person against whom tax is assessed under clause (4) of section 30B can be subjected to penalty in the same manner it is provided under clause (3). Therefore, find that the Deputy Commissioner committed an error in holding that penalty cannot be levied in proceedings under section 30B(4) and the Commissioner rightly reversed the order in suo motu proceedings. Even though the counsel for the petitioner requested remand of the matter for consideration of quantum of penalty by the Commissioner, having regard to the penalty amount we do not think it is a fit case for that purpose. We therefore reject the plea.

Summary

Issues:
1. Interpretation of penalty provisions under section 30B(4) of the Kerala General Sales Tax Act, 1963.

Analysis:
The case involved an appeal by a business concern from Tamil Nadu against a penalty order issued under section 30B(4) of the KGST Act. The appellant was found to have made sales of jaggery from Tamil Nadu to dealers in Kerala, but the purchasers in Kerala denied the transactions. The appellant failed to provide evidence regarding payments received or receipts issued, leading to the imposition of a penalty under section 30B(4). The Deputy Commissioner initially canceled the penalty, but the Commissioner of Commercial Taxes reversed this decision, citing that penalties under section 30B(3) also apply to section 30B(4) proceedings. The appellant challenged this decision in appeal.

The main issue was whether penalty could be levied along with tax or independently under section 30B(4) of the KGST Act. The petitioner argued that in the absence of a specific provision for penalty under section 30B(4), it cannot be levied in tax proceedings under that section. On the other hand, the Government Pleader contended that section 30B(3) allows for the levy of penalty along with tax, thus justifying penalties on dealers assessed under section 30B(4). Sub-section (2) of section 30B establishes a presumption of goods delivered within the State for sale if the transit pass is not delivered, while clause (3) provides for tax and penalty on the owner or driver in such cases.

The Court held that penalty under section 30B(4) is not only a procedural provision but also a substantive one authorizing the levy and recovery of tax and penalty. The discretion on penalty quantum lies with the officer, with the maximum being twice the tax amount. Both clauses (2) and (4) of section 30B establish liability based on presumptions, with the procedure for assessment and penalty levy outlined. The Court concluded that the Deputy Commissioner erred in holding that penalty cannot be levied under section 30B(4), and the Commissioner was correct in reversing this decision. The appeal was dismissed, with no remand for reconsideration of penalty quantum deemed necessary.

In summary, the judgment clarified the applicability of penalty provisions under section 30B(4) of the KGST Act, emphasizing the substantive nature of the penalty and its alignment with tax assessment procedures outlined in the Act. The Court upheld the Commissioner's decision to restore the penalty on the appellant, rejecting the appeal and dismissing the case.