Neptune Redymix Concrete (P) Ltd. vs State of Kerala

C.N. Ramachandran Nair, J.—Heard counsel for the petitioner and Government Pleader for the respondent. The order under challenge is the one issued by the VAT Appellate Tribunal reducing the penalty which was originally fixed at Rs. 96 lakhs, and partly reduced by the first appellate authority to Rs. 69 lakhs, to Rs. 5 lakhs for the attempted evasion of tax due under the VAT Act. The contention of the petitioner is that penalty levied is on account of mis-classification of goods from 12.5 per cent to 4 per cent and consequently delay in payment of tax. According to counsel, after assessment, entire tax arrears are paid in terms of instalments granted by the assessing officer along with interest. Since there is no attempt to evade payment of tax, penalty itself is unauthorised, is the contention of petitioner. However, after going through various orders and after hearing the parties on both sides, we are not convinced that petitioner has any case for total waiver of penalty because petitioner in the first place has no basis for returning the turnover at four per cent. Secondly, even after receipt of notice from the assessing officer pointing out short payment of tax, which happened sometime in July, 2005 itself, petitioner has not chosen to revise the return or remit tax on which there is no contest. This prompted the assessing officer to initiate penalty proceedings and the assessing officer levied huge penalty of Rs. 96 lakhs for two different periods of the same year. The Tribunal however sustained only Rs. 5 lakhs which is actually 5 per cent of the penalty initially levied by the assessing officer and only around 8 per cent of the penalty sustained by the first appellate authority. Even though petitioner did not make serious contest against assessment at higher rate of 12.5 per cent and the petitioner has in fact made payment, though with delay along with interest, we notice that all these were done by the petitioner only because of the prompt action taken by the assessing officer in making assessment. If petitioner voluntarily filed revised returns and remitted tax in response to the notice issued by the assessing officer, then certainly petitioner could have claimed total immunity from payment of penalty. However, in this case, tax was paid under compelling orders issued by the assessing officer. Therefore we see no reason to completely exonerate the petitioner from penalty. Considering the fact that penalty sustained by the Tribunal is only 5 per cent of the amount of penalty levied by the assessing officer, we do not find any ground for grant of quantum relief as well. Consequently, O.T. Rev. is dismissed.