Kerala High Court
K.M.Dasan vs The Intelligence Officer on 26 May, 2003
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON
FRIDAY, THE 10TH DAY OF AUGUST 2012/19TH SRAVANA 1934
WP(C).No. 12883 of 2008 (H)
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PETITIONER(S):
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K.M.DASAN, PROPRIETOR,
M/S.SAHAKARANA TIMBER AND SAW MILLS, CHENGALLOOR,
THRISSUR.
BY ADVS.DR.K.B.MUHAMED KUTTY (SR.)
SRI.K.M.FIROZ
RESPONDENT(S):
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1. THE INTELLIGENCE OFFICER,
INVESTIGATION BRANCH, COMMERCIAL TAX OFFICE,
THRISSUR.
2. THE COMMISSIONER OF COMMERCIAL TAXES,
THIRUVANANTHAPURAM.
3. THE DEPUTY TAHSILDAR (REVENUE RECOVERY),
IRINJALAKUDA.
4. COMMERCIAL TAX OFFICER, IRINJALAKKUDA.
5. THE DEPUTY COMMISSIONER, COMMERCIAL,
TAXES, THRISSUR.
BY ADV. GOVERNMENT PLEADER SRI SHAIJ RAJ T K.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10-08-2012,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
LSN
WP(C).No. 12883 of 2008 (H)
APPENDIX
PETITIONER'S EXHIBITS:
EXT P1: COPY OF THE PENALTY ORDER NO. IBA/263/99-2000 DATED 26.05.2003.
EXT P2: COPY OF THE PENALTY ORDER NO. IBC/201/99-2000 DATED 15.05.2003.
EXT P3: COPY OF THE PENALTY ORDER NO. IBA/260/99-2000 DATED 19.06.2003.
EXT P4: COPY OF THE PENALTY ORDER NO. IBB-65/2002-03 DATED 8.05.2003.
EXT P5: COPY OF THE PENALTY ORDER NO. 194/99-2000 DATED 06.05.2003.
EXT P6: COPY OF THE REVISION ORDER PASSED BY THE FIFTH RESPONDENT IN
STRP NO 275/2003 TO 279/2003 DATED 27.09.2005.
EXT P7: COPY OF THE COMMON REVISION ORDER PASSED BY THE SECOND
RESPONDENT DATED 25-09-2007.
EXT P8: COPY OF THE COMMON FIRST APPELLATE ORDER DATED 23-082004.
EXT P9: COPY OF THE COMMON APPEAL ORDER DATED 20-01-2007 PASSED BY
THE TRIBUNAL.
EXT P10: COPY OF JUDGMENT IN W.P.C. 23838/2007 DATED 10.08.2007 BY THIS
HONOURABLE COURT.
EXT P11: COPY OF JUDGMENT IN W.P.C. 23533/2007 DATED 16-08-2007 BY THIS
HONOURABLE COURT.
RESPONDENT'S EXHIBITS: NIL
//TRUE COPY//
P.A. TO JUDGE
LSN
P.R. RAMACHANDRA MENON J.
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W.P(C) No. 12883 of 2008
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Dated, this the 10th day of August, 2012
JUDGMENT
Correctness and sustainability of the 'penalty' imposed upon the petitioner vide Exts. P1 to P5 and interference declined by the revisional authorities by way of Exts. P6 and P7 are under challenge in this writ petition.
2. The main ground of challenge is that in respect of the very same transactions, the 'assessment' finalized, mulcting huge liability upon the petitioner, who is an agent, and so also on the consignors and consignees, in respect of the interstate sale stands annulled by the first appellate authority vide Ext. P8 and same has been confirmed by the appellate Tribunal vide Ext. P9. The punishment imposed upon the 'consignors' as per Ext. P7 common order has already been intercepted by this Court in the said circumstances, as per Exts. P10/P11 judgments and as such, the petitioner is also entitled to have W.P(C) No. 12883 of 2008 : 2 : the similar relief being the agent, which forms the crux of the contentions.
3. With regard to the fact in detail, it is to be noted that the petitioner allegedly had stood as an agent for some interstate sale of timber procured from the State of Tamil Nadu and sold to the consignees in Kerala, on the strength of 'C' forms. According to the petitioner, the procurement was arranged by him, pursuant to the request made by the consignees and the payment was effected accordingly, in turn effecting the delivery as well. However, on coming across the various insinuating circumstances attributable to some clandestine deals, proceedings were pursued against the consignors and consignees and also the agents like the petitioner. This was pursuant to the information gathered as to the bogus deals, even by creating/forging/fabricating 'C' forms, which made the check post authorities to detain the goods. The registered dealers whose 'C' forms were stated as used for transporting the timber, appeared and disowned the W.P(C) No. 12883 of 2008 : 3 : transaction. It was in the said circumstances, that proceedings were initiated, pursued and finalized under Section 19C, r/w Sections 30B (4) and 45A of the KGST Act, against the consignors, consignees and agents jointly.
4. After considering the facts and circumstances, the first respondent passed Exts. P1 to P5 orders imposing penalty upon the petitioner, which were challenged by filing a revision petition before the 5th respondent under Section 45A (3), wherein interference was declined and the revision petitions were dismissed as per Ext. P6. In the meanwhile, the assessment proceedings were challenged by filing appeal before the appellate authority, who arrived at a positive finding that there was no ground to sustain the assessment against the consignors and agents, for the fact that the version of the consignees disowning the transaction was not acceptable and accordingly, the assessment was set aside in toto. Though the Revenue preferred an appeal before the Tribunal, interference was declined and the appeals were W.P(C) No. 12883 of 2008 : 4 : dismissed vide Ext. P9 order dated 20.01.2007. As per Ext. P9, it was held that the version of the consignees, that they did not effect any purchase of timber; that they have not done business during the year 1999 - 2000; that they have no timber yard; that they have lost 'C' forms while shifting the residence; that they have no financial background etc., would not be valid grounds for making the assessment on the 'consignors' and 'agents'. According to the petitioner, a copy of the said order was placed for consideration before the second respondent, in the second revision against the penalty orders, but the same was not properly considered and the revision petition was dismissed as per Ext. P7, holding that, the penalty proceedings were separate from assessment proceedings, which in turn is sought to be intercepted in this writ petition.
5. The first respondent has filed a counter affidavit seeking to sustain the impugned proceedings. The sequence of events has been explained in detail, which reveals the W.P(C) No. 12883 of 2008 : 5 : admission made by the petitioner as well as the consignors, that the petitioner had acted as an agent of the consignees and consignors and that he himself had issued purchase orders and effected payments against the purchases from the consignors outside the State of Kerala. The particulars of the enquiry conducted and the materials collected therefrom have also been discussed, apart from stating that, the State in fact had preferred Tax Revision Petitions under Section 41 of the KGST Act, challenging Ext. P9, but the same happened to be dismissed, on the ground of delay and not on merit, as evident from the orders passed in S.T. Rev. Nos. 245, 246, 248, 249, 255, 257, 258, 264, 270, 271, 272, 273, 274, 277, 285 of 2008 and 193 of 2008.
6. It has been asserted in paragraph 6 of the counter affidavit that the petitioner, while admitting his involvement as 'agent' placing the purchase orders and effecting payments through cash/cheque/demand draft, has not proved his innocence and failed in establishing the identity of the person, W.P(C) No. 12883 of 2008 : 6 : who actually took delivery of the goods and such other vital particulars. It is also stated that the consignors in all the cases admitted that they effected interstate sale only through the writ petitioner and the payments and 'C' forms were received from the petitioner himself.
7. Reliance is also sought to be placed by the respondents on the decision rendered by the Division Bench of this Court reported in 2009(3) ILR (Ker.) 653 (Latha R Vs. Commissioner of Commercial Taxes and another), whereby it is held that the assessment and penalty are separate proceedings and that the failure of the department to file revision petitions against the order of the Tribunal in assessment cases will not bar the statutory authority from levying the penalty, if there are sufficient materials justifying the same. It is also stated that, as per judgment dated 07.04.2008 in W.P.(C) Nos. 9560 of 2008 and connected cases (filed by the consignors of these transactions), this Court had arrived at a finding on merit in the allegations W.P(C) No. 12883 of 2008 : 7 : raised by the department against the writ petitioner. It was accordingly directed to conduct a detailed enquiry by the Commissioner of Commercial Taxes, with the assistance of a Police Investigation Team; to investigate about the transactions, particularly, the role of the Brokers, namely Shri. K.M. Dasan and Shri. M.C. Jacob; to trace out the records; to collect the evidence required to prove actual transactions; to identify the real purchasers, who made payments etc. It is further stated that, based on the fresh enquiry conducted as per judgment in W.P.(C) 23838 of 2007, notices were issued proposing to assess the turn over under the KGST Act at the hands of the consignors and to levy penalty against them. The writ petition filed challenging the said notices issued to the consignors, proposing fresh assessment proceedings were in fact dismissed by this Court, in spite of the finding already arrived at as per Exts. P10 and P11 judgments in the cases filed by the consignors earlier, in respect of 'penalty'. W.P(C) No. 12883 of 2008 : 8 :
8. The petitioner has filed a reply affidavit seeking to reiterate the contentions in the writ petition (also producing copies of Exts. P10 and P11 judgments, whereby the 'penalty' imposed upon the consignors in respect of the same transaction was set aside).
9. Dr. K. B. Muhamedkutty, the learned senior counsel appearing for the petitioner submits that there is already a positive finding by the Tribunal in Ext. P9, in respect of the transaction, that the version of the consignees pleading ignorance of the transaction is not acceptable and that, it was for the concerned department to pursue appropriate proceedings against them, for which the consignors or agents cannot be found fault with; thus confirming the order passed by the lower authority setting aside the assessment orders. Since the penalty is in respect of very same set of proceedings and transactions, there cannot be any different turn, more so, when the penalty imposed upon the consignors has been intercepted by this Court as per Exts. P10 and P11 judgments; W.P(C) No. 12883 of 2008 : 9 : submits the learned counsel for the petitioner.
10. The learned Government Pleader appearing on behalf of the respondents submits that Exts. P10 and P11 judgments cannot advance the case of the petitioner in any manner, in view of the specific observations made by the Division Bench of this Court in 2009(3) ILR (Ker.) 653 (cited supra) and the judgment passed by the very same learned Judge while declining interference in W.P.(C) No. 9560 of 2008 and connected cases filed by the very same consignors (in favour of whom, Exts. P10 and P11 judgments were passed with respect to the penalty), thus sustaining the steps being pursued by the Department on the basis of the 'fresh materials' collected in the course of investigation.
11. It is settled law, that the assessment and penalty proceedings are entirely different from each other and one does not depend upon the outcome of the other; which can exist independently. The observation made by the Division Bench in 2009(3) ILR (Ker.) 653 (cited supra) is very W.P(C) No. 12883 of 2008 : 10 : much relevant, which is extracted below (as reproduced in paragraph 7 of the counter affidavit) "The first contention raised by counsel appearing for the petitioner is that Tribunal's order pertaining to assessment are binding on the Commissioner as well as lower authorities while considering penalty and they have no authority to come to any finding different from what the Tribunal has held. Government Pleader on the other hand contended that both assessment and penalty proceedings are entirely different and the Tribunal's findings in assessment are not binding on the departmental authorities dealing with penalty case. He further pointed out that the department has not accepted the finding of the Tribunal and there was only an omission in filing Revision Petitions before the High Court against orders of the Tribunal. Counsel for the petitioner has relied on decision of the Supreme Court in K.C. Builders Vs Assistant Commissioner of Income Tax reported in 2004 (1) KLT 596 and contended that once assessment is cancelled, subsequent orders on penalty and prosecution based on such assessment also are not tenable. On the face of it the argument of the counsel for the petitioner is correct because if final fact finding authority like the Tribunal has rendered finding on facts and the department has accepted W.P(C) No. 12883 of 2008 : 11 : the same, then they cannot take a different stand in penalty proceedings pertaining to the same issue. However, the question to be considered is whether the failure of the department to file revision petitions against the order of the Tribunal in assessment cases will bar the statutory authority from levying penalty, if there are sufficient materials justifying it. The Tribunal has no jurisdiction in penalty matters and the final statutory authority so far penalty under Section 45 A is considered, is the Commissioner of Commercial Taxes, who is the second revisional authority enjoying also suo moto revisional power to correct order of the first revisional authority. This Court has in large number of cases held that penalty proceedings under Section 45A of the Act are independent proceeding and the same can be proceeded with even without waiting for completion of assessments. We are of the view that the failure of the department to file revision against order of the tribunal will not stand in the way of statutory authorities considering penalty proceeding independently and if there is sufficient material to sustain the order, this Court has no authority to vacate such order merely because Tribunal in parallel proceedings gave finding which if challenged would not have been sustained by this Court"
In view of the law declared as above, the challenge raised W.P(C) No. 12883 of 2008 : 12 : against the penalty proceedings (referring to the setting aside of assessment, as confirmed by the appellate Tribunal vide Ext. P9) is of no merit or consequence.
12. The petitioner has a case that, it is with reference to the same set of facts and events as contained in the assessment proceedings, that the penalty has also been imposed, which in fact has been added in the bottom of the assessment/penalty orders passed by the first respondent. There cannot be any dispute, by virtue of the relevant provisions of law, that the Intelligence Officer also comes within the definition of the term 'assessing officer' and this fact is fairly conceded by the learned senior counsel appearing for the petitioner. But considering the question whether the petitioner is eligible to have similar benefit as given to the consignors, exonerating them from the liability as ordered by this Court vide Exts. P10 and P11 verdicts, it has to be borne in mind that the petitioner stands on a different pedestal, admittedly he being an 'agent' and in view of the limited W.P(C) No. 12883 of 2008 : 13 : extent of involvement of the consignees. The materials on record reveal that there was an admission on the part of the petitioner and the consignors that the purchase orders were given by the petitioner himself to the consignors in Tamil Nadu; that the payments were effected by the petitioner himself either by way of cash or by way of cheque/DD and that the 'C' forms were also made available by the petitioner, to facilitate the transaction. This being the position, the burden was very heavy upon the shoulders of the petitioner to have substantiated the subsequent turn of events; more so, when the consignment was disputed by the consignees. The petitioner has not produced any material to show that there was any purchase order from the consignees or as to how the payment/consideration came to the hands of the petitioner, when he admits or does not dispute that the payment was effected to the consignors by himself.
W.P(C) No. 12883 of 2008 : 14 :
13. That apart, as far as the consignees are concerned, they have no place of business in Tamil Nadu and their liability is only to satisfy the tax in terms of the CST Act in respect of the transaction in question, unless incriminating circumstances to the contrary are established. It is after considering the merit involved, in the light of then available materials on record, that this Court intercepted the penalty inflicted upon the consignors as per Exts. P10/P11 judgments. The general observation made by the Tribunal in Ext. P9 order, while confirming the setting aside of the assessment order that the explanation offered by the consignors were rather flimsy, and hence cannot be a good ground to mulct the liability upon the consignors or agent does not make any positive declaration that the petitioner herein is innocent. Pursuant to the enquiry ordered by this Court, it is borne out by the records, that fresh notices were issued by the department proposing assessment and penalty upon the consignors, who challenged the said notices by filing W.P.(C) Nos. 9560 of 2008 and W.P(C) No. 12883 of 2008 : 15 : connected cases. In spite of having passed Exts. P10 and P11 judgments earlier in favour of such consignors, this Court found that, there was no merit in the subsequent challenge raised by the consignors in view of the changed circumstances (particularly in view of the observation made in last paragraph of Ext. P10, that the judgment would not bar the further investigation/further proceedings against petitioners/ consignors/agents) and accordingly interference was declined and all the writ petitions were dismissed.
14. Going by the materials on record, the various insinuating circumstances have been discussed in detail by the first respondent in Exts. P1 to P5 orders, to justify the imposition of penalty, which in turn has been confirmed by the 5th respondent in Ext. P6 and by the second respondent vide Ext. P7. It is also brought to the notice of this Court, during the course of hearing, as put forth by the learned Government Pleader, that the petitioner has been booked as the 'kingpin' in respect of the bogus 'C' forms, by registering a crime, as W.P(C) No. 12883 of 2008 : 16 : Crime No. 708 of 2004 of the concerned police station, in respect of offences under Section 468, 471 and 420 of IPC and on completion of the investigation, charge sheet has been submitted and the trial is going on. It is further brought to the notice of this Court that, in the course of further proceedings, the petitioner sought to avail the benefit of the 'Amnesty Scheme' declared by the Government and the liability to the Government has been satisfied accordingly.
15. In the above facts and circumstances, this Court finds that, the challenge raised by the petitioner against Exts. P1 to P5, Ext. P6 and P7 is not successfully established. There is no reason to interfere with the impugned proceedings. The Writ Petition fails and the same is dismissed accordingly.
sd/-
P. R. RAMACHANDRA MENON, (JUDGE) kmd