2015 (4) TMI 360 - HC - VAT and Sales Tax

Penalty under Section 45A of the Kerala General Sales Tax Act - Held that - Petitioner has already obtained an advantage by getting his penalty reduced to the actual amount of tax, as arrived at in the assessment order. This amount (Rs.1,42,425/-) is much lower than the tax amount that was found due by the 3rd respondent in Ext.P1 order (Rs.2,80,140/-). Thus, although the 1st respondent had reduced the penalty amount to the actual amount of tax involved, he then proceeded to adopt the tax amount, as arrived at by the Assessing Officer and not the tax amount arrived at by the Intelligence Officer in the penalty proceedings, as the basis for computation of the reduced penalty that was payable pursuant to Ext.P5 order dated 15.07.2009. The contention of the petitioner that the penalty amount should now be further reduced and confined to an amount of ₹ 24,288/-, based on the assessment order that was passed after considering materials that were not available before the Intelligence Officer while passing Ext.P1 order, is wholly unjustified and liable to be rejected. - Time period to make the balance payment is granted to the assessee - Decided against assessee.

Summary

Issues:
Penalty proceedings under Section 45A of the Kerala General Sales Tax Act for non-declaration of turnover. Reduction of penalty amount by the 1st respondent based on actual tax amount involved. Contention of petitioner regarding further reduction of penalty amount. Challenge against orders passed in penalty proceedings. Payment of balance amounts due as per the order.

Analysis:
The petitioner, a works contractor, faced penalty proceedings under Section 45A of the KGST Act for non-declaration of turnover. The 3rd respondent confirmed a penalty of Rs. 5,60,280, representing twice the tax amount determined on the undeclared turnover. The petitioner's revision before the 2nd respondent and further revision before the 1st respondent resulted in a reduction of the penalty amount to the actual tax involved, based on the assessing authority's figure. The petitioner contended that the penalty should be further reduced to Rs. 11,110, the tax due on the undeclared turnover. However, the petitioner's request for rectification was rejected, and minor modifications were made in the penalty rate.

In response, the respondents argued that the penalty was imposed based on the tax dues on the undeclared turnover, and the assessing authority's figure was used to determine the penalty amount. They emphasized the independence of assessment and penalty proceedings, stating that figures for assessment could not automatically apply to penalty determination.

Upon hearing both parties, the court noted that the challenge in the writ petition was against the orders passed in penalty proceedings under Section 45A of the KGST Act. The 1st respondent had reduced the penalty to Rs. 1,42,425, the actual tax amount involved as per the assessing authority's figure. The petitioner argued that the penalty should be further reduced to Rs. 24,288, but the court found this contention unjustified. The court upheld the reduction to Rs. 1,42,425, rejecting the petitioner's request for further reduction based on post-assessment considerations.

Consequently, the court found no reason to interfere with the orders passed in the penalty proceedings, and the challenge against those orders failed. The court directed the petitioner to pay the balance amounts due within three months, warning of continued revenue recovery proceedings if the directive was not followed. The writ petition was dismissed, subject to the payment directive.