Mc Dowell v. Sales Tax Officer

1. Petitioner is challenging Exts. P1(a), P1(b), P1(c) and P1(d) and P5 and P6, which are orders passed under S. 29A of the Kerala General Sales Tax Act and the consequent orders on the revision petitions filed by the petitioner. Petitioner is a manufacturer and dealer in liquor and is an assessee on the file of the Commissioner (Assessment) Special Circle, Alleppey. In the year 1980-81 the petitioner obtained an order from the Board of Revenue, Trivandrum for purchase of 3 lakhs litres of spirit from M/s. Western Maharashtra Development Corporation, Ahmednagar, which is a Maharashtra Government concern. Petitioner was given permits by the Assistant Excise Commissioner, Alleppey to import 30 consignments of spirit, each consignment of 10,000 litres, on or before 30-11-1980. Petitioner brought 1.60 lakhs litres of spirit by 16 consignments, before the validity period. But the Check Post officials detained the goods in four consignments even though the records which accompanied the consignments were all in conformity with the records of the 12 consignments allowed to be brought through the same Check Post As the goods were urgently required by the petitioner for manufacture of liquor in the distillery at Cherthala, the petitioner got release of the goods in the four consignments oh payment of security of Rs. 1,320/- each as demanded by the Check Post officials.

2. Subsequently the 1st respondent called upon the petitioner to produce documents in support of the purchase relating to four consignments. Petitioner produced copy of sale bill sent by the selling firm for the goods brought in four lorries as also certificates and permit dated 23-10-1980 without which excisable goods like spirit could not be transferred. In spite of production of the documents by the petitioner, the 1st respondent by his orders dated 29-10-1982, 30-10-1982, 20-11-1982 and 30-10-1982 imposed a penalty of Rs. 1,320/- each, making a total of Rs. 5,280/-. The security amount paid by the petitioner was appropriated towards the penalty. The true copies of the above orders are produced as Exts. P1(a), P1(b), P1(c) and P1(d).

3. Petitioner could not file appeals in time as the records were misplaced in the office and accordingly the petitioner filed four revision petitions before the Deputy Commissioner, Agricultural Income-tax & Salestax, Cannanore (2nd respondent) on 12-5-1986 under S. 35 of the Kerala General Sales Tax Act for suo motu revision; copy of one of the revision petitions is filed as Ext. P2. The 2nd respondent by Ext. P3 communication dated 6-6-1986 informed the petitioner to prefer appeals before the Appellate Assistant Commissioner under S. 34 of the Act with a request to condone the delay.

4. Thereafter, the petitioner filed appeals against Exts. P1(a), P1(b), P1(c) and P1(d) orders before the 3rd respondent with petitions for condonation of delay. By order dated 23-7-1986 the 3rd respondent rejected the application for condoning the delay and accordingly by Ext. P4 order rejected the appeals.

5. In reply to Ext. P3 communication from the 2nd respondent, petitioner sent a reply dated 13-6-1986 stating that the orders of the 1st respondent were misplaced. But by Ext. P5 order dated 6-10-1986 the 2nd respondent rejected the revision petitions on the ground that the orders are appelable and that no sufficient explanation is given for failure of the same. Against Ext. P5 order the petitioner filed revision petitions before the Board of Revenue which were also dismissed on the ground that no revision would lie from an appealable order. The above order is produced as Ext. P6 dated 5-8-1988. Petitioner is challenging the orders of penalty as also the revisional orders, alleging that no grounds are made out for imposing a penalty under S. 29A as there is no finding that there was any evasion of tax or any attempt to evade tax. It was further contended by the petitioner that the view taken by the 2nd respondent that the revisions are not maintainable on the ground that there is a right of appeal under S. 34 is erroneous and that he has not exercised the jurisdiction vested in him.

6. I heard counsel for the petitioner as also Sri. T. Karunakaran Nambiar, Special Government Pleader (Taxes). At the outset the Spl. Govt. Pleader (Taxes) raised an objection that the petitioner having filed appeals against Exts. P1(a), P1(b), P1(c) and P1(d) orders, the revisions filed under, S. 35 before the 2nd respondent are not maintainable. He further contended that the petitioner having availed of the remedy of appeal under S. 34, no revision would lie under S. 35 of the Act. On the other hand, counsel for the petitioner contended that under S. 35 of the Kerala General Sales Tax Act a revision would lie as the original order was not the subject of a valid appeal. It is pertinent to quote S. 35 of the Kerala General Sales Tax Act, 1963 which is to the following effect:—

“35. Powers of revision of the Deputy Commissioner suo motu:— (1) The Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under this Act by any officer or authority subordinate to him other than an Appellate Assistant Commissioner and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such order thereon as he thinks fit.

(2) The Deputy Commissioner shall not pass any order under sub-section (1) if,—

(a) the time for appeal against the order has not expired;

(b) the order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court; or

(c) more than four years have expired after the passing of the order referred to therein.

(2A) notwithstanding anything contained in sub-section (2), the Deputy Commissioner may pass an order under sub-section (1) on any point which has not been decided in an appeal or revision referred to in clause (b) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or revision or before the expiry of the period of four years referred to in clause (c) of that sub-section, whichever is later.

(3) No order under this section adversely affecting a person shall be passed unless that person has had a reasonable opportunity of being heard.”

7. Sub-section (1) provides that the Deputy Commissioner may, of his own motion, call for and examine any order passed or proceedings recorded under the Act. Sub-section (2) provides in what circumstances the Deputy Commissioner shall not exercise the power of revision. Clause (a) of sub-section (2) provides that he shall not pass any order in revision if the time for appeal against the order has not expired. That clause is not applicable to the facts of this case, for admittedly the revisions were filed long after the time for appeal had expired. Clause (b) of the above sub-section provides that if the impugned order has been made the subject of an appeal to the Appellate Assistant Commissioner or the Appellate Tribunal or of a revision in the High Court, the Deputy Commissioner shall not pass any order in revision. The question to be considered is as to what is the meaning of the words ‘subject of an appeal’. On a reading of the Section I am clear in my mind that the prohibition will apply only if the original order is made the subject of a valid appeal. A time-barred appeal cannot be said to be an effective appeal. In this case the petitioner filed the appeals long after the period of limitation and they were rejected on the ground that there are no grounds for excusing the delay. In these circumstances, it cannot be said that the orders Exts. p1(a) to P1(d) were made the subject of an appeal. The same view has been taken by the Madras High Court in Erode Yarn Stores v. State of Madras (14 STC 724) and Ramesh & Co. v. Commissioner of Land Revenue and Commercial Taxes (48 STC 41).

8. Even otherwise, under S. 35(2A), the revisions filed by the petitioner were maintainable before the 2nd respondent. Sub-section (2A) provides that the Deputy Commissioner may pass an order in revision on any point which has not been decided in an appeal or revision referred to in clause (b) of sub-section (2) within a particular period. Admittedly, in this case, the appeals filed by the petitioner were rejected on the ground of limitation. The appeals were not considered on merits at all. So no question on merits of the case was decided by the appellate authority and in that view of the matter also the revision petitions filed by the petitioner before the 2nd respondent are maintainable. It is admitted on all sides that the revisions were filed within the period mentioned in S. 35(2A).

9. In the light of what is stated above, I overrule the objection raised by Sri. Karunakaran Nambiar, Special Government Pleader (Taxes) and hold that the revisions filed by the petitioner were maintainable.

10. Coming to the merits of the case, under S. 29A(4) of the Act a penalty can be imposed by the authorised officer only if there was an attempt to evade the tax due under the Act. The orders imposing penalty are passed solely on the finding that the petitioner did not produce the necessary documents at the time the vehicles were stopped. He further held that the mere production of the documents on a later date would not be sufficient. I am not inclined to agree. The petitioner produced the necessary documents at the enquiry and there is no finding by the 1st respondent that the petitioner was not possessed of all the relevant and necessary documents. If there is no attempt to evade the tax, no penalty can be imposed under S. 29A. A reading of S. 29A as a whole would clearly indicate that it is enough if a person satisfies the authorities at the enquiry under sub-section (4) that there was no attempted evasion of tax. The fact that the officer can release the goods on furnishing security also indicate the same. As there is no finding by the 1st respondent that there was any attempt to evade the tax, the orders of penalty passed under S. 29A are without jurisdiction and are liable to be quashed. In the result, I allow this Original Petition and quash Exts. P1(a), P1(b), P1(c) and P1(d) and P5 and P6.1 further direct the 1st respondent to refund the security deposit made by the petitioner making a total of Rs. 5280/- as expeditiously as possible. There will be no order as to costs.

11. Allowed