A. KAMARUDEEN Vs. ASSISTANT COMMISSIONER (ASSMT.) AND ORS.

JUDGEMENT

(1.) THE matter arises in proceedings under Section 45A of the Kerala General Sales Tax Act, 1963 (for short, "the Act"). The first respondent, on the basis of a statement dated January 5,1990 given by the petitioner to the Enforcement Directorate on an inspection conducted in the petitioner's premises issued a notice under Section 45A of the Act on January 25, 1997 to the petitioner proposing to impose a penalty of Rs. 30,938 for the assessment year 1987 -88 and another sum of Rs. 93,688 for the assessment year 1988 -89. According to the petitioner he had not effected any transactions which are exigible to tax under the Act. It is the case of the petitioner that the statement was given by him to the enforcement officials only under threat and coercion. The petitioner in his objection has also stated that the petitioner had obtained raw cashewnut rejections from various factories in Kollam and he supplied the same to a Bombay party as their agent, that the sale proceeds were received by way of telegraphic transfers which were encashed through the petitioner's savings bank account and the said sale proceeds were handed over to various factories from where he had procured the raw cashewnuts. It is further stated that the petitioner had received only a sum of Rs. 1,500 by way of monthly remuneration. This explanation of the petitioner was not accepted since the petitioner has not adduced any materials in that regard. The assessing authority took the view that in view of the categoric admission that the amounts shown in the pass book represented the sales proceeds of cashewnuts, petitioner will come squarely within the definition of "dealer" in Section 2(viii) of the Act and therefore the petitioner was bound to take out registration under the Act, to file monthly returns and to pay the tax due thereon. Since the petitioner had not done any of these matters, proceedings under Section 45A of the Act were taken and penalty proposed for the aforesaid two years was imposed.

(2.) THE petitioner filed revisions against the penalty orders (exhibits P1 and P2). The first revisional authority found that there are materials for imposition of penalty under Section 45A of the Act. However, the quantum of penalty to be imposed (twice the tax sought to be evaded) was reduced to an amount equal to the tax sought to be evaded. This was confirmed in further revision by the second respondent.

(3.) COUNSEL for the petitioner submits that the petitioner was not at all liable to be proceeded under the Act since the petitioner had never entered into any transaction exigible to tax under the Act. It is further stated that even assuming that the petitioner had entered into transactions as stated in the statement given to the Enforcement Directorate, it is still evident that the transactions represented by the amounts received by way of telegraphic transfers from the Bombay party can never be treated as transactions falling under the Act. In other words, the contention of the counsel is that the transactions in question can be treated only as inter -State transactions in respect of which penalty proceedings, if any, have to be taken under Section 10A of the Central Sales Tax Act, 1956. Counsel further submits that in this case even though the Enforcement Directorate had obtained the statement as early as in 1990, proceedings under Section 45A of the Act was initiated only after a long lapse of seven years and that too without making a proper enquiry by the assessing authority which is evident from the order of the first revisional authority. Counsel accordingly submitted that this is not a case for imposing penalty under the Act and that at any rate, having regard to the fact that no assessment proceedings were initiated based on the statement, the penalty sustained by the first revisional authority is illegal, arbitrary and excessive.