C. HAREENDRAN Vs. SALES TAX OFFICER
HIGH COURT OF KERALA
SALES TAX OFFICER
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P.SHANMUGAM, J. -
(1.)PETITIONER is the proprietor of the business carried on in the
name and style of "Reliance Oil Industries" and he is running an oil and
flour mill. He is a registered dealer in the office of the Sales Tax
Officer, II Circle, Tellicherry. The O.P. is filed praying for the issue
of a writ of certiorari to set aside the proceedings of the Sales Tax
Officer (Reserve) dated October 30, 1985 imposing a penalty under section
45A of the Kerala General Sales Tax Act, 1963 confirmed in exhibit P6 by the proceedings of the Deputy Commissioner of Agricultural Income -tax and
Sales Tax, Cannanore. The only question that arises for consideration is
whether the authorities have independently evaluated and appraised before
levying the penalty.
(2.)ACCORDING to the petitioner the authorities have mechanically passed the order imposing the penalty without applying their mind. The
learned counsel appearing on behalf of the petitioner submits that
ultimately pursuant to the order of the Sales Tax Appellate Tribunal the
assessment for 1983 -84 was re -done and the disputed tax liability of Rs.
35,384.25 as per the original order dated December 28, 1985 was reduced to Rs. 8,373. The petitioner has also marked copies of original
assessment orders as additional exhibits P8 and P9 respectively.
We have gone through the records carefully. It has been held in
Intelligence Officer, Central Intelligence Squad v. Hotel Ambassador
 45 STC 425 (Ker) that section 45A of the Kerala General Sales Tax
Act is a separate and independent section and irrespective of whether the
assessment of an assessee has been completed or not, it is open to the
requisite authority to take action under that section provided the
conditions for action are satisfied.
In P. D. Sudhi v. Intelligence Officer, Agricultural Income -tax and Sales Tax  85 STC 337 a Division Bench of this Court while
upholding the constitutional validity of section 45A approved the view of
the earlier Division Bench in  68 STC 360 (Ker) (St. Michael's Oil
Mills v. State of Kerala) holding that the quantum of penalty should
depend upon the gravity of the offence. It was further held that the
officer should exercise judicial discretion vested in him according to
Considering the orders passed in exhibits P4 and P6 in the light
of the decisions cited above, we find that the authorities have
independently evaluated and appraised taking note of the gravity of
offence before imposing the penalty. Exhibit P4 order was passed after
giving sufficient notice and getting explanation from the assessee. The
Agricultural Income -tax and Sales Tax Officer (Reserve) has stated that
the discrepancies noticed and the mode of suppressions resorted to by the
assessee clearly indicated that there was deliberate attempt on the part
of the assessee to evade payment of tax, and in those circumstances the
order imposing the penalty was passed. In the revision before the Deputy
Commissioner of Agricultural Income -tax and Sales Tax (exhibit P6) the
said authority also has considered the question of imposing the penalty
in the following words:
"The physical stock of goods recorded in the S.I.Rs. was verified
with reference to the regular accounts of the petitioner and it was found
that there was huge difference in the stock of copra, coconut oil and
coconut oil -cake. So it was clearly proved that the accounts maintained
by the petitioner for the assessment year 1983 -84 was not true and
correct. All the arguments raised against the veracity of the stock
recorded at the time of two inspections are only frivolous and therefore
not sustainable. Therefore the Agricultural Income -tax and Sales Tax
Officer (Reserve) is perfectly right in imposing penalty under section
45A(1)(b) of the Act as the petitioner had failed to keep true and correct accounts of his business.
Tax which was sought to be evaded in this case was estimated by
the Agricultural Income -tax and Sales Tax Officer (Reserve) at Rs.
17,655.86. The quantum of penalty imposed upon the petitioner is Rs. 35,310. Considering the nature of business and the tax sought to be evaded I am of the view that the quantum of penalty which is just double
the amount of tax sought to be evaded is not excessive.
In the circumstances, I do not find any reason to interfere with
the order of the Agricultural Income -tax and Sales Tax Officer (Reserve).
The revision petition fails and accordingly it is dismissed."
The order passed by the Deputy Commissioner has become final and
the assessee has not filed any further revision before the Board of
Revenue. The fact that the petitioner had failed to keep true and
complete accounts has not been disputed. The petitioner has also not
established as to how he is not liable for the penalty under section 45A.
We find that the authorities have exercised their discretion properly. In
that view of the matter we do not find any ground to interfere with the
orders passed by the authorities. Accordingly we dismiss the original
petition as devoid of any merit. However, no order as to cost.
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