2009 (3) TMI 962 - HC - VAT and Sales Tax

Jurisdiction of Commissioner to interfere with a remand order issued by the Deputy Commissioner in exercise of revisional power under section 45A(3) of the Kerala General Sales Tax Act questioned Held that - In this case as already found that the alleged violation of natural justice has not caused prejudice to the assessee which is the view taken by the Commissioner as well in his order issued under section 37 of the Act. We therefore uphold the order issued by the Commissioner rejecting the revision filed by the assessee and restoring the penalty order under section 37 after setting aside the order of the first revisional authority. Find some force in contention of counsel for the assessee that the Commissioner has not considered the assessee s request for reduction of penalty because for both the years maximum penalty is imposed and there is nothing to indicate that the assessee was involved in any offences previously. Besides this it is seen that at least in respect of one truck load of rubber transported outside Kerala the assessee had to pay penalty in the State of Karnataka thus taking all these into account we reduce the penalty to equal amount of tax for both the years.

Summary

Issues:
Jurisdiction of Commissioner to interfere with remand order issued by Deputy Commissioner under section 45A(3) of Kerala General Sales Tax Act. Violation of natural justice due to denial of opportunity to cross-examine the driver. Justification of Commissioner's interference with first revisional order. Consideration of assessee's request for reduction of penalty.

Analysis:
The judgment dealt with the appeal and writ petition arising from the Commissioner of Commercial Taxes' orders. The main issue was the jurisdiction of the Commissioner to interfere with a remand order issued by the Deputy Commissioner under section 45A(3) of the Kerala General Sales Tax Act. The appellant argued that the Commissioner could only interfere with orders prejudicial to the interests of the Revenue, as per section 37 of the Act, and that a remand order by the Deputy Commissioner was not prejudicial. The Government Pleader relied on a Full Bench decision to explain the scope of such orders. The penalty on the assessee was based on evidence collected during a search at the business premises, triggered by information from a truck driver. The appellant contended a violation of natural justice due to denial of the opportunity to cross-examine the driver, while the Government Pleader argued that the penalty was based on seized records, not the driver's statement.

The Court agreed with the Government Pleader, stating that the search and recovery of records were not in question. The denial of the opportunity to cross-examine the driver did not affect the proceedings since the penalty was not based on his statement. The Court then examined whether the Commissioner was justified in interfering with the first revisional order. Section 37(1) empowered the Commissioner to interfere with orders prejudicial to Revenue. The Court found that the remand order by the Deputy Commissioner was prejudicial as it could lead to restoration of the original penalty order. The Commissioner was entitled to interfere if the grounds for setting aside the penalty order were not tenable.

The Court upheld the Commissioner's order rejecting the revision and restoring the penalty order. The appellant's request for a reduction in penalty was considered. The Court noted that the penalty was reduced by half for both years, considering the circumstances and the assessee's payment within one month was required. Finally, both the Sales Tax Appeal and Writ Petition were disposed of accordingly.