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Judgment
C.K. Abdul Rehim, J.—Ext.P10 to P12 orders imposing penalty u/s 45A of the Kerala General Sales Tax Act, 1963 (KGST Act) are under challenge in this writ petition. Assessments of the petitioner, who is a registered dealer, with respect to the years 1999-2000, 2000-01 and 2001-02 were completed on 3.9.2003, 11.9.2003 and 11.9.2003 respectively, as evidenced from Ext.P1 to P3. Pursuant to a search conducted on 1.10.2004 by the intelligence squad of the Commercial Tax Department at the residence of one Sri Jimson George, who admittedly was working as Accountant in the petitioner''s concern, Ext.P4 to P6 notices were issued proposing to impose penalty on the petitioner, u/s 45A of the KGST Act, alleging that the Bank transactions unearthed from the Passbooks recovered pertains to purchases and sales suppressed by the petitioner. Penalty was proposed treating the amounts credited to the Bank accounts as income received from unaccounted sales and the amounts debited as unaccounted purchases.
Ext.P4 to P6 notices revealed that on the basis of the recovered records, summons was issued to the petitioner calling for production of Books of Accounts, which she had failed to produce. The petitioner objected the proposals through Ext.P7 to P9 replies, mainly contending that the penalty proceedings are initiated after a long lapse of about 7 to 9 years from the relevant periods of assessment, and it is after lapse of more than 5 years from the date of completion of the assessments. It is also contended that the records seized are actually Books of Accounts produced at the time of completing the assessments. The petitioner contended that there is no convincing proof obtained regarding any suppression of the turnover. Inspite of such objections Ext.P10 to P12 orders were issued imposing penalty as proposed.
In Ext.P10 to P12 orders it is stated that a further chance for production of Books of Accounts was afforded to the petitioner, but she failed to produce any records. However, the objections submitted as per Ext.P7 to P9 were considered in detail. Having found that the petitioner had failed to prove business transactions based on the entries revealed from the Bank passbooks and also observing that no time limit is prescribed for imposing penalty u/s 45A of the KGST Act, the proposals were confirmed. The orders imposing penalty are impugned in this writ petition, without resorting to the statutory remedy of revision/appeal available. Under such circumstances the very maintainability of this writ petition itself was questioned on behalf of the respondents.
Sri K.U. Vijayan, learned Counsel for the petitioner had emphasised on the aspect of inordinate and unreasonable delay caused in issuing the impugned orders, rather than contending merits on the factual aspects of the alleged offence based on which the penalty is imposed. On the factual matrix of the case, I do not find any special circumstance to examine correctness of the orders imposing penalty, in this writ petition filed under Article 226, bye-passing the effective and alternate statutory remedies available. Therefore I am not proposing to entertain this writ petition on merits of the orders. Since elaborate arguments were advanced on the aspect of delay caused in issuing the impugned orders of penalty, I am inclined to examine sustainability of the orders based on that limited extent.
Sri K.U. Vijayan, learned Counsel for the petitioner had brought to my notice that limitation prescribed u/s 19 of the KGST Act for completing escaped assessment is five years. He also points out that the period of limitation prescribed u/s 35 for suo moto revision of assessments once completed, is 4 years. In the case at hand the penalties were imposed after a period of 5 years and 4 months from the date of completion of the assessment. It is also pointed out that the orders imposing penalty are issued after a period of 4 years and 4 months from the date of alleged search and seizure of the records. Further, the impugned orders are issued after lapse of about 7 to 9 years from the expiry of the relevant assessment years. Hence it is contended that there is unreasonable and inordinate delay caused in imposing penalty and inspite of the fact that no time limit is prescribed under the statute, orders issued with unreasonable delay could not be sustained. It is contended that through the order of penalty the respondents are trying to impose tax, collection of which is forbidden under the statute, through an indirect method. Penalty proceedings being ancillary to the assessment, the same could not stand on a higher footing and that the period of limitation prescribed for making assessment will squarely apply to levy of penalty also. Therefore the limitation prescribed for assessment shall also be imported to the matter of penalty, is the contention. In other words it is argued that when the legislature did not want to put the assessee to peril beyond a particular time, with an indefinite apprehension regarding payment of tax, such assessee cannot be fastened with unprotected liability under the guise of imposing penalty after a long lapse of period. Therefore penalty imposed beyond a period of reasonable time or at least immediately after the alleged escapement was noticed could not be sustained, is the contention.
Learned Counsel for the petitioner had relied on various precedents in order to support the above contentions. In a decision of the High Court of Bombay at Nagpur in Ramakrishna Ramnath v. Sales Tax Officer and Ors. (1960) 11 STC 811 it is observed that there is a palpable and recognizable distinction between a proceeding initiated by a taxing authority for collecting revenue on behalf of the public exchequer and one commenced for penalizing a person for failing to comply with some step which he was bound in law to take in an attempt to assess him. Therefore it is contended that the taxing authority cannot make use of the provision for penalising the assessee, alleging failure to comply with any required steps, cannot be utilised as a method for collecting tax. Learned Counsel also relied on another decision of the High Court of Bombay at Nagpur in Bisesar House v. State of Bombay and Ors. (1958) 9 STC 654. A Full Bench of the Bombay High Court analysing the provisions of Business Profit Tax Act, observed that looking into the scheme of the Act as a whole the limitation prescribed u/s 14 of that Act which deals with escaped assessment must be imported into Section 11 of the said Act which deals with issue of notice for furnishing return of business profits, eventhough the said Section did not prescribe any period of limitation. The principle that every Act must be construed as a whole and the duty of the court must be as far as possible to reconcile the various provisions contained in a statute. It is held that if income which had escaped assessment can only be taxed within 4 years by reason on Section 14, than it must inferentially follow that income must escape assessment by some period of time anterior to the period of 4 years mentioned in that section. Therefore the assessee could not be called upon to furnish return of business profits after the said period.
Sri Vijayan, learned Counsel for the petitioner would place much emphasis on a Division Bench decision of this Court in Agricultural Income Tax and Sales Tax Officer v. Tata Tea Limited (2002) 127 STC 210 in order to canvass the position that the order of penalty is not sustainable if there is inordinate delay which could not be explained by the Department. In the said decision it is held that, although there is no absolute proposition of law that delay would necessarily render the penalty proceedings bad in the absence of any limitation prescribed by statute, the orders will be invalid if there is no explanation forthcoming from the department for the delay and even in case where explanations are offered, such explanations are not satisfactory. In the said case the court found that the explanation for the delay offered as "want of direction" is not satisfactory and therefore the Division Bench found no difficulty in accepting the conclusions arrived by the Single Judge in holding the penalty proceedings as invalid.
But going by the dictum in the decisions cited above, I am not of the opinion that there is any binding legal precedent to hold that the limitation prescribed u/s 19 of the KGST Act can be imported into Section 45A, with respect to matters of penalty. Even the Full Bench decision of the High Court of Bombay (Bisesar House''s case - cited supra) it only deals with time limit for calling production of return of business profit, and not with a matter imposing penalty.
Heard, Sri V.K. Shamsudheen, learned senior Government Pleader on behalf of the respondents. In the counter affidavit filed on behalf of the 1st respondent it is specifically contended that the records seized at the time of search is not the documents produced before the assessing authority, as contended by the petitioner. It is pointed out that at the time of finalising the assessment, the petitioner had produced only the Day Book, Ledger and Bill Book. But the document recovered from the house of the Accountant includes the Bank Passbooks which are the crucial documents from which the undisclosed transactions are revealed. It is stated that subsequent to the search summons in Form-51 was issued to the petitioner calling for production of Books of Accounts on 24.5.2007 and on 14.11.2007. But in spite of receipt of such notice the petitioner had failed to appear. It is further stated that even after issuing notices proposing imposition of penalty the petitioner failed to produce any convincing evidence in order to prove that the alleged transactions does not form part of the turnover suppressed. Eventhough the petitioner filed objections to the proposal no such records were produced.
Drawing my attention to Section 12 of the KGST Act it is pointed out that the burden of proving that any transaction of a dealer is not liable to be taxed, lies upon such dealer. So also, it is pointed out that u/s 45A, the burden of proving that any person is not liable to be imposed with penalty, lies upon such person. It is contended that in the case at hand the petitioner had miserably failed to discharge the above said burden and therefore the order of penalty is perfectly sustainable.
With respect to the allegation of inordinate delay, it is contended by the respondents that the cause of action for imposition of penalty as arisen pursuant to seizure of records during the search conducted on 1.10.2004. It is pointed out that summons was issued to the petitioner calling for production of accounts, thereafter on 24.5.2007 and on 14.11.2007. The period taken in between is only for verification and processing of the recoveries of the search. But inspite of issuance of notice the petitioner has not co- operated with the proceedings. Therefore the proposals were issued on 10.12.2008. Inspite of opportunity afforded for production of accounts and for personal hearing on 21.1.2009, there was failure from the side of the petitioner to produce any records. Ultimately the orders imposing penalty were issued on 30.1.2009. Therefore it is contended that there is no inordinate or unreasonable delay caused in this regard.
On behalf of the respondents learned senior Govt. Pleader had placed reliance on the decision of the Hon''ble Apex Court in the Indian Aluminium Cables Ltd. and Anr. v. Excise and Taxation Officer and Anr. (1977) 39 STC 19. In the said decision repelling the contention that the period of 4 years limitation prescribed under Sub-section (2)(a) of Section 11 of the Bengal Finance (Sales Tax) Act, 1941 shall be incorporated into the revisional and appellate powers of the authorities, the Hon''ble Supreme Court held that the legislature has not provided any period within which an order was to be made by the appellate or revisional authority and therefore no such period should be imported in the exercise of the power of such authorities based on Section 11(2)(a). A Division Bench decision of this High Court of Orissa in Ramratan v. State of Orissa (1992) 87 STC 457 is pressed into service for canvassing the position that as long as there is no period of limitation prescribed for imposition of penalty, the orders issued even beyond the period of limitation prescribed for the assessment, is sustainable. Referring to the provisions contained in the Orissa Sales Tax Act, 1947, it is held by that court that since no time limit has been fixed by the legislature for imposition of penalty, it is not open to the court exercising advisory jurisdiction to read into the statute, a limitation which the legislation has not provided for. Lastly the learned Government Pleader had pointed out a decision of this Court in John v. Additional Sales Tax Officer (2002) 3 KLT 431 wherein a learned Judge of this Court referring to the provisions contained u/s 45 of the KGST Act held that the penal proceedings provided therein is not dependent on the assessment and that independent order can be passed dehors time limit prescribed u/s 19. It is held therein that the independent order can be passed u/s 45A without clubbing the same along with the assessment, whether original or revised. Eventhough the officer had not passed any order in exercise of powers u/s 19(1) the officer is still competent to levy penalty u/s 45A. The provision u/s 19(2) which enables imposition of penalty in such case where the escapement is due to willful non-disclosure from the side of the assessee, is also pointed out in this regard. It is held therein that in the absence of any limitation prescribed for levy of penalty u/s 45A, penalty can be levied within a reasonable time from assessment of the escaped turnover.
But, learned Counsel for the petitioner had also relied on the very same decision (John''s case) to canvass the position that such imposition of penalty should be made within a reasonable time, and in the case at hand there is unreasonable delay and therefore the order of penalty is unsustainable. But having considered the factual aspects of the case and also the aspects regarding non co-operation and failure from the part of the petitioner in producing any Books of Accounts or any other convincing proof, I am of the opinion that the orders are not liable to be quashed on the ground of inordinate and unreasonable delay.
Under the above circumstances without looking into the merits of the dispute regarding liability for payment of penalty u/s 45A, I am of the opinion that there is no ground substantiated by the petitioner warranting interference of this Court invoking jurisdiction under Article 226, in order to quash the impugned proceedings, permitting the petitioner to bye-pass the statutory remedies available to her against the impugned order.
In the result the writ petition fails and the same is dismissed without prejudice to rights if any available to the petitioner under law to challenge Ext.P10 to P12 proceedings before the appropriate statutory authorities.