Rinujith Christian Sahayadas vs. The State Tax Officer - Kerala High Court, 24 June 2019

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI MONDAY, THE 24TH DAY OF JUNE 2019 / 3RD ASHADHA, 1941 WA.No.1474 of 2019 AGAINST THE JUDGMENT IN WP(C) 7690/2019 of HIGHCOURT APPELLANT/APPELLANTS: RINUJITH CHRISTIAN SAHAYADAS, AGED 37 YEARS PROPRIETOR, MATHA AUTOMOBILES, SR COMPLEX, PERINGAMMALA, KALLIYOOR P.O.THIRUVANANTHAPURAM- 695 042. BY ADV. SRI.V.DEVANANDA NARASIMHAM RESPONDENT/RESPONDENTS: 1 THE STATE TAX OFFICER, SQUAD NO VII, STATE GST DEPARTMENT, THIRUVANANTHAPURAM AT NEYYATTINKARA-695 121. 2 THE STATE TAX OFFICER, STATE GST DEPARTMENT, SECOND CIRCLE, TAX TOWER, KARAMANA P.O.THIRUVANANTHAPURAM-695 002. 3 THE STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM-695 001. SR.GP-SRI.V.K.SHAMSUDHEEN THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 24.06.2019, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

WA.No.1474 of 2019 2 C.K. ABDUL REHIM

& R. NARAYANA PISHARADI, JJ. -------------------------------------------- W.A No.1474 of 2019 ----------------------------------------------- Dated this the 24th day of June, 2019 JUDGMENT Abdul Rehim,J

The petitioner in WP(C) No. 7690/2019 is the appellant herein, challenging the judgment of the Single Judge dismissing the writ petition. The respondents herein are the respondents in the writ petition.

Exts.P5, P5(a) and P5(b) orders imposing penalty under Section 67(1) of the Kerala Value Added Tax Act ('the KVAT Act' for short) with respect to the years 2011-12,2012-13 and 2013-14 were under challenge in the writ petition. The learned Single Judge found that the main argument of the appellant was that, he was not given an opportunity to raise any objections and to produce the documents, after issuance of the proposal for imposing penalty; and that the orders imposing penalty were issued in violation of the principles of natural justice. But on an evaluation of the impugned order, the learned Single Judge had found that, several opportunities were given

WA.No.1474 of 2019 3 to the petitioner, stretching within a period of three months.

Therefore it was found that the petitioner has got an alternate remedy by way of statutory appeal. Therefore the writ petition was dismissed by reserving liberty of the petitioner to avail the remedy of appeal.

Learned counsel for the appellant raised vehement contention that, the appellant could not submit reply to the proposal notice and substantiate his case by producing necessary documents, because proper opportunity was not afforded by the authority who had imposed penalty. In order to appreciate the contentions raised, we have perused the records of the writ petition. It is evident that business place of the assessee was inspected by the Intelligence Squad on 06.06.2015. Physical verification of the stock and assets of the assessee was done through proper identification and counting, in the presence of the assessee. A branch of the business place at Balaramapuram was also inspected on the same day by another squad and similar verifications were also conducted. Pursuant to the inspections, copies of the 'Shop Inspection Reports' were also furnished to the assessee. The assessee was issued with a notice calling upon him to produce the books of accounts and documents in connection with the business activity. He was also afforded with an opportunity of personal hearing on 15.06.2015, it is stated in the

WA.No.1474 of 2019 4 proposal notice that the assessee requested for an adjournment and the same was allowed. But they failed to turn up. Therefore the Officer, who had imposed penalty, made verification of the complete materials recovered at the time of inspection and arrived at a prima facie conclusion that the assessee had failed to maintain complete books of accounts in the regular course of business and the turnover disclosed was not true and complete. Alleging that the assessee had violated the statutory provisions of the KVAT Act in failing to maintain complete and correct books of accounts and attempted to deflate the sales turnover with malafide intention to evade payment of tax, the penalty was proposed. In Ext.P2 proposal notice, the assessee was directed to file objection if any against the proposal, within 15 days of receipt of the notice. He was also given an opportunity of personal hearing at 11.00 a.m on 23.04.2018. According to the appellant, he submitted Ext.P3 objection to the proposal notice. Evidently the assessee made a request to invoke the provisions relating the compounding of the offence. It is also evident that the assessee made a further request to the authority concerned to make a proper verification of the books of accounts along with the impounded documents in order to avoid duplication or doubling of the entries. In the objection, the assessee has raised complaint that the impound

WA.No.1474 of 2019 5 recoveries made, which covers 43 documents running to 2500 pages, were verified by the authority without any participation of the assessee. However, it is admitted in the objections that, on receipt of the proposal the assessee had approached the authority and obtained copies of the impound recoveries. But the assessee had not stated anything on merits with respect to the specific allegations contained in the proposal notice.

On a perusal of the orders imposing penalty it is clearly mentioned that, after conducting the shop inspection, an opportunity was afforded to the appellant by calling upon him to produce the books of accounts and also afforded an opportunity of personal hearing on 15.06.2015. But the dealer had failed to produce any documents despite two adjournments granted in that respect. It is mentioned in the said order that, after receipt of the proposal notice issued under Section 67(1) of the KVAT Act, the appellant had requested to issue copies of all the recoveries and also requested two weeks time. It is also mentioned that the appellant had obtained all the necessary copies of the recoveries, during May 2018 itself. With respect to the opportunities afforded to the appellant, detailed

discussion was made by the original authority in paragraph 13 of the order imposing penalty, which is extracted hereunder:

WA.No.1474 of 2019 6 “The reply furnished by the dealer is analysed meticulously. Notice U/s 67(1) of KVAT Act was served to the dealer on 13.04.2018. The dealer requested to issue the copies of all recoveries vide letter dated 28.04.2018 and requested two weeks time. The request was considered and the date of hearing was adjourned to 18.05.2018. Considering the request the date was again adjourned to 18.06.2018. Instead of furnishing documents or availing the opportunity for personal hearing the dealer again requested adjournment vide letter dated 06.06.2018. The request was again considered and the date was postponed to 18.07.2018. On 18.07.2018 the authorised representative of the dealer requested two weeks time. This request is also considered and the date was adjourned to 25.07.2018. This request is not considered and the dealer furnished the reply dated 03.08.2018 on 07.08.2018. The dealer has also obtained all the necessary copies of recoveries during May 2018. Thus it is evident that sufficient time and opportunities were provided for producing the books of accounts and for personal hearing to the dealer. But the dealer has not availed these opportunities. Hence the argument of the dealer about the composition of offences is not sustaining.”

Under the above mentioned circumstances, we do not think that there occurred any denial of opportunity from the side of the authority concerned. Prima facie we are not satisfied that there occurred any violation of the principles of natural justice.

WA.No.1474 of 2019 7

However, we make it clear that the appellant has got an effective remedy to challenge the impugned order in statutory appeal. The powers vested on the Appellate Authority is co-extensive with that of the original authority. It will be left open to the appellant to produce whatever objections available against the orders imposing penalty, before the Appellate Authority. If the appellant chooses to avail the remedy of the appeal, it is needless to observe that, the Appellate Authority shall consider all the objections, untrammelled by any of the observations contained in this judgment herein above.

Since we do not find any illegality, error or impropriety in the judgment of the learned Single Judge, the writ appeal fails. Consequently, the same is hereby dismissed. If the appellant chooses to avail the remedy of the appeal, the Appellate Authority shall take into consideration of the time spent by the appellant in prosecuting the writ petition as well as the writ appeal, while considering the question of limitation. C.K.ABDUL REHIM, JUDGE R.NARAYANA PISHARADI, JUDGE lsn