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TMI Blog2016 (11) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... afiq, learned Senior Government Pleader appearing on behalf of the appellants and Sri.Harisankar V.Menon, learned counsel appearing on behalf of the respondent. 5. The issue as to whether in all cases where evasion of tax has been established the maximum penalty stipulated under the Statute has to be imposed is a matter that has been considered by this Court in various judgments settled position is, as we will presently state, that the power to impose penalty being quasi judicial in its effect and ambit, will, therefore, have to be exercised with great circumspection and that the quantum of penalty imposed should depend upon the gravity of the offence. 6. The learned counsel for the respondent placed before us the decision of this Court in Sudhi v. Intelligence Officer, Agricultural Income-tax and Sales Tax ((1992) 85 STC 337 (Ker)) and invited our attention to certain findings in the said judgment, which are extracted as under: "From the various shades of meaning given in the above dictionaries for the word 'evasion', it is clear that it is not the mere default that is made the foundation for the liability (penalty); it is a contumacious or fraudulent or other blame-wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding should also be disclosed. The law laid down by the Court in Sudhi's case (1992) 85 STC 337, is, therefore, applicable to the present case also though the phrase used in section 29A(4) is slightly different from the phrase used in section 45A which came up for consideration in that case." 8. From the touch stone of the law as laid down above, the learned single Judge, as we can see indubitably from the impugned judgment, assessed all the relevant factors and came to a definite finding that there were sufficient mitigating circumstances favouring the assessee, which would then warrant reduction of penalty that has been imposed to a much lower one. We are essentially called upon by the appellants to answer whether such a course of action was available to the learned single Judge. We will examine that in the event there are sufficient reasons to show that the Assessing Officer and the other authorities had not considered the relevant materials and have not considered all the issues that are imperative for consideration in the facts and circumstances of the case and if the respondent was able to establish that his conduct was not fraudulent and that his omissions are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Squad, headed by the Intelligence Inspector, Squad No.V, Commercial Taxes, Palakkad on 01.07.2013 at Eruthanpatty at about 6.30 A.M. on the allegation that the vehicle did not have the requisite documents under Section 46 of the Kerala Value Added Tax Act (referred to as 'the Act' for brevity). A notice under Section 17A of the Act was issued to the driver of the vehicle demanding a security deposit of Rs. 7,08,470/-, being double the amount of tax on the invoice value of the vehicle. It appears that on receipt of the notice, the respondent approached this Court by filing W.P.(C)No.17123/2013, which was disposed of with a direction to the competent authority under the Act to dispose of the adjudication proceedings within a period of ten days under Section 47 (2) of the Act. 13. Thereafter, the order dated 25.07.2013 was passed by the Intelligence Officer imposing a penalty of Rs. 7,08.470/-, being double the amount of tax that is alleged to be evaded under Section 47(6) of the Act. The respondent carried this order in appeal before the Assistant Commissioner (Appeals), Palakkad, who confirmed the order and dismissed the appeal. The respondent, thereafter, filed a furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the remedy available under the Act, was challenged by the respondent herein by filing the above writ petition. 15. At the time when the writ petition was admitted on 03.09.2014, this Court had granted an interim stay not to sell the vehicle pursuant to the order of penalty and the matter was finally heard by the learned single Judge on 22.06.2016. 16. It appears that in the writ petition the State had taken a contention that the conduct of the respondent in filing a writ petition without invoking and seeking the effective and efficacious alternative remedy available under the Statute shall not be countenanced. The State also contended that the penalty was imposed without valid reasons and that it requires further modification. 17. The learned single Judge, however, proceeded to hear and dispose of the writ petition taking note of the fact that the matter was admitted and pending before this Court for more than two years and that, therefore, at this distance of time, it was not appropriate to relegate the petitioner to seek the alternative remedies available to him under the Statute. We are in complete agreement with this rationale and we are of the view that this Court, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have any documents in support of this claim. However, this obvious lacuna was sought to be explained by the respondent by trying to establish that there was indeed a contract for excavating laterite soil using the vehicle in question on the basis of an agreement that he had produced before the competent authority under Section 47(5) of the Act. However, even though the agreement was dated 25.06.2013, the Officer found from the stamp paper that in fact it was purchased on 03.07.2013, i.e., two days after the interception. We agree that this circumstance in isolation would certainly give rise to a legitimate suspicion that the agreement so produced was created only for the purpose of creating a defence against the proceedings and that the same would not give rise to the evidence to the claim of the respondent. However, various other attendant circumstances, namely, the quarrying permit dated 17.12.2012 favouring Mr.Kumar and the fact that the vehicle was absolutely brand new, would mitigate the suspicion to a large extent. It is true that the agreement has been entered into in a stamp paper that was purchased after the interception. Further, the learned single Judge took the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een fully proved. It is, therefore, that the levy of penalty was upheld since in normal circumstances, if there was no culpability on the part of the respondent, no penalty ought to have been imposed. 21. We have also examined all the documents on record and the statements given by the respondent and Mr.Kumar before the assessing authority. We see that the case of the respondent that he brought the vehicle to Kerala for executing a work under a contract/agreement with Mr.Kumar appears to be probable. However, his conduct in creating a document, in support of his contention, on a stamp paper that was purchased subsequent to the interception would not give the benefit of exculpation. In such view of the matter, it is, therefore, necessary that he be mulcted with penalty, since he was only enjoying the benefit of doubt based on attendant circumstances. We see that it is in such circumstances the learned single Judge has also upheld the order of penalty, but reduced it to Rs. 1,00,000/- based on the reasons and rationale recorded in the judgment, which, we are of the view, are totally justifiable and with sufficient reason and cause. In the above circumstances, we obtain no reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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