TMI Blog2017 (3) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... and penalty, neither of which is fee. Viewed alternatively, we may, before parting with the matter, observe that the appellant has not made out any positive case that the nomenclature notwithstanding, what is being collected is penalty rather than fee. The compounding fee as prevailing at the time of the assessee’s deciding to pay it shall alone apply - appeal dismissed - decided against appellant. - W.A.No.1978 of 2014 - - - Dated:- 25-7-2016 - Antony Dominic and Dama Seshadri Naidu, JJ. Harisankar V. Menon, Smt. Meera V. Menon and Mahesh V. Menon for the petitioner Shoba Annamma Eappen, Senior Government Pleader, for the respondents JUDGMENT Facts in Brief: The appellant, a jeweler, is an assessee under the Kerala Value Added Tax Act ( KVAT Act ). In the inspection carried out by the departmental authorities at the appellant's premises on 17.1.2009, they detected certain tax evasion. Next, the authorities issued Exts.P2 and P3 notices to the appellant proposing to levy a penalty for the year 2008-2009 as per Section 67 of the Act. 2. Under the compelling circumstances, to obviate any coercive departmental proceedings, the appellant has opted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax, Amritsar v. Suresh Seth [AIR 1981 SC 1106 (para 11)], Mayarani Punj v Commissioner of Income Tax, Delhi (S.C.) [65 STC 416], P. D. Sudhi v. Intelligence Officer, Agricultural Income-Tax and Sales Tax, Mattancherry and others [85 STC 337], K.M. Pareeth v. Kerala State Electricity Board Ors.[ 2014(3) KLJ 106 (para 6)]. Revenue: 9. Smt. Shoba Annamma Eapen, the learned Government Pleader, on the other hand, has contended, with equal vehemence, that the appellant himself volunteered to compound the offence only to ward off graver penal consequences. According to her, the question of the appellant s paying the enhanced compounding fee under protest does not arise, for compounding is nothing but a voluntary offer by the assessee. She has likened the compounding to a compromise-voluntary and non-coercive-which is non-justiciable. 10. The learned Government Pleader, in further elaboration of her submissions, has submitted that the reckoning point for determining the quantum of compounding fee is the date when the appellant has volunteered to compound the offence. In the present instance, by the time the appellant volunteered, Section 74 stood amended. It is her specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued, i.e., 06.09.2009 and 13.06.2009 respectively, the fee was enhanced to be ₹ 4 lakh. 16. Indeed, the fee under Section 74 was ₹ 2 lakh till 31.03.2009, but with effect from 01.04.2009, it was raised to ₹ 4 lakh, as is evident from Finance Act, 2009. The question is whether the fee as prevailing during the assessing year of which evasion is complained should be paid. In the alternative, which fee should the assessee pay, the one prevailing when the evasion was detected or the one, when the assessee compounded the offence? In the former case it is ₹ 2 lakh; in the latter, ₹ 4 lakh. 17. Section 74 of the VAT Act as on 31.03.2009 read as follows: 74. Composition of offences. - (1) The assessing authority or other officer or authority authorized by the Government in this behalf may accept from any person who has committed or is reasonably suspected of having committed an offence against this Act, other than those specified under clause (e) of sub- section (1) or clauses (b), (c) or (d) of sub-section (2) of section 71, by way of compounding of such offence:- (a) where the offence consists of the evasion of any tax payable under this Act, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace before the commencement of the section. The observation goes further to the effect that the contravention is the one regarding which a criminal liability is attracted under Section 46 of the Act. That should make it particularly necessary that the contraventions are not viewed in the light of a provision not in force during its commission. 21. In Suresh Seth (supra) the issue is that the assessee defaulted in filing returns for certain years. The taxing authority levied penalty for the complete period of default as if it were a continuing offence. The question that fell for consideration before the Apex Court was whether omission to file a return is a continuing offence. 22. The contention of the Department is that the assessee, who had to file a return for the assessment year 1965-66 had not filed the same until March 13, 1971. Therefore, the penalty had to be computed for the period up to April 1, 1969, under Section 18 of the Income Tax Act, as it stood during that period. Repelling the Department s contentions, Suresh Seth (supra) has held as follows: 12. A liability in law ordinarily arises out of an act of commission or an act of omission. When a person does an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine whether either of these contingencies applies to the case on hand. 25. In K. M. Pareeth (supra) a learned Division Bench, to which one of us (Antony Dominic, J) is a party, has examined the interplay between a substantial statutory provision and Section 6 of the General Clauses Act. The proposition is that the visiting of a penalty upon an offender is determined based on the law that prevailed when the offence was committed. Therefore, even if there is a subsequent change of law, that cannot affect the proceedings against the offender. 26. The Revenue has, however, relied on an unreported judgment of a learned Single Judge in United Construction Co., (supra). While interpreting Section 74 of the Act under, we may say, identical circumstances, the learned Single Judge has held that Section 74 only provides a facility to the assessee for compounding any offence detected in lieu of prosecution. The law which was prevalent as on the date of exercising the option, observes the learned Single Judge, is the amended provision. Because the assessee knew of the amendment but exercised the option by paying the enhanced rate of compounding fee, he cannot be permitted to turn aro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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