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TMI Blog2018 (10) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... acco products known as Gutkha and Pan Masala. The raw materials used in manufacture of Gutkha are mainly Supari, Tobacco, Kattha, Kimam, Lime, Glycerin, Perfume, Menthol and Cardamom; and packing materials like paper lamination, outer packets and bags. The manufacturing unit was operating with 20 packing machines to manufacture different brands of Gutkha and Pan Masasla namely Star Gutkha, Star Premium Gutha, Star Pan Masala, Singam Gutkha, Star Biggi Pan Masala, Star Biggi Gutkha etc. These finished products are transferred to appellant's Belgaum Depot and from there, it is dispatched to various stockiest and distributors. 4. It is the further case of the appellant that on 30.01.2013, the appellant's manufacturing unit was inspected by the Inspecting Authority-Respondent No.3. On verification, an excess of stock of Star Gutkha in bulk kept in 67 barrels each of 50 KGs are found out, which could not be related to the book figures, produced by the appellant. The total volume of such excess Gutkha was worked out at Rs. 3,350/- KGs., and when converted in to bags, it was worked out 812 bags. The value of such bags was worked out at Rs. 40,60,000/- at MRP value at the rate of Rs. 5,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards VAT Entry Tax and profit of Rs. 10,15,000/-, the net value of 812 bags was arrived at Rs. 30,45,000/- and on the same day, reply statement was filed by the Managing Director of the appellant Company in their own letter head, but without following the required procedure, the Inspecting Authority issued notice under Section 77(2) of the KVAT Act, 2003, proposing levy penalty of Rs. 10,35,300/- for unaccounted stock found in the factory premises, and at the end of the day, the Inspecting Authority forced one of the Directors of the Company on the spot to admit the unaccounted quantity and value of Gutkha at present in the factory premises and collected the fine amount of Rs. 10,35,300/- as penalty. 9. He further contended that, in view of the dictum of this Court in the case of K.M.Puttaswamy (Deceased by Legal Representative) V/s. Commercial Tax Officer (Intelligence), Mysore Circle, Mysore LAWS(KAR) 1986 6 20, STC 1988 68 241, it was held that as per the show cause notice, seven days time should be given to the dealer to furnish his reply and when on the very day of issue of show cause notice, completes the proceedings by the Inspecting Authority is arbitrary and cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is recalled by the Revisional Authority under the provision of Section 64(1) of the KVAT Act, 2003 and therefore, there is no substantial question of law involved in this appeal and sought to dismiss the appeal. 13. We have given our anxious consideration to the arguments advanced by the learned counsel for the parties to the lis and perused the material on record including the original records produced by the learned counsel for the respondents carefully. 14. It is an undisputed fact that the appellant's company is carrying business of the manufacturing of Tobacco products in the name and style of M/s. Ghodawat Pan Masala Products(I) Pvt., Ltd., and on 30.01.2013, the Assistant Commissioner of Commercial Tax (Enforcement) 21, South Zone, Bangalore-47 inspected the appellant's factory premises, on verification of Books of Accounts, the Inspecting Authority have taken physical stock of raw materials and packing materials, semi finished and finished products and the same has been recorded in separate sheets and compared with the stock as per the books of accounts and the Inspecting Authority found out the excess stock of 67 barrels each of 50 KGs, totaling 3350 Kgs, in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made before the Inspecting Authority in writing regarding payment of penalty levied, the appellant filed the appeal before the Appellate Authority under the provisions of Section 62(2) of the KVAT Act, 2003, mainly on the ground that levying penalty under Section 77(2) of KVAT Act, 2003 is not sustainable in law as the Inspecting Authority has wrongly taken the physical stocks without actually weighing nor counting the stocks held and the stock taken was on approximate basis and moreover, the Inspecting Authority without allowing the appellant to submit his explanation/objections, passed the order which was in a preprinted/typed format, wherein the Inspecting Authority put the name and address of the appellant and there was no unaccountable stock found in the factory premises and the appellant maintained all goods dealt by the Company correctly. 16. When the Appellate Authority call for records, absolutely no reference was made about the consideration of records with regard to the statement made by the appellant before the Inspecting Authority and the stock found by the Inspecting Authority was correct and the appellant was also ready and willing to pay the penalty levied witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 31. It says that the prescribed authority may accept from any person who has committed or is reasonably suspected of having committed an offence punishable under the Act, by way of composition of such offence, an amount, in respect of which the parameters are laid down in clauses (a) and (b). The section, therefore, contemplates the composition of an offence whether it has been committed or is reasonably suspected of having been committed an offence may pay, pay, and the prescribed authority, may accept by way of composition for such offence an amount as therein stated. The phraseology used suggests that the offer to compound must come from such person. There is no compulsion upon him to make such offer. He can make it if he is assured of the possibility of being found guilty of the offence and upon satisfying himself that what he offers is within the prescribed parameters and that he to whom he makes the offer is the prescribed authority for the purpose. Once the offer is made it is for the prescribed authority to determine whether the offence should be compounded and, if so, whether it should be compounded for the amount offered. No doubt, it would be open to the prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003 and Sub Section 1(J) of Section 52 of KVAT Act, 2003. 20. The Addl. Commissioner of Commercial Taxes, Bangalore restored the penalty order, dated 30.01.2013, passed by the Inspecting Authority under the provisions of Section 77(2) of the KVAT Act, 2003 and Sub Section 1(J) of Section 52 of KVAT Act, 2003, levying penalty of Rs. 10,35,300/- is in accordance with law and therefore, the appeal is devoid of any merits. 21. In so far as the dictums relied-upon by the learned counsel for the appellant is concerned, we have no quarrel with the Law laid down in the said dictums to the circumstances of the said cases and have no application to the facts and circumstances of the present case. 22. We are aware of the fact that as soon as notice issued under Section 77(2) of KVAT Act, 2003, immediately seven days time has to be given, but in the present case, notice issued under Section 77(2) of KVAT Act, 2003 to the appellant and he did not filed any objection, nor disputed the contents of the notice and the appellant was ready and willing to pay the penalty and accordingly, paid the penalty levied. Therefore, the contention raised by the learned counsel for the appellant that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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