AI Structured Summary
Not yet generated for this judgment
Judgment
C.K. Abdul Rehim, J.—Exhibit P1, P2 and P3 orders imposing penalty under Section 45A of the Kerala General Sales Tax Act (KGST Act) which is modified by the 1st revisional authority in Ext.P4, P5 and P6 and further confirmed by the 2nd revisional authority in Ext.P10 order, is under challenge in this writ petition.
The petitioner is running a Bar Hotel. The petitioner had failed to submit monthly returns and to make payment of the tax due with respect to the period from 4/2005 to 1/2006, 11/2006 and 12/2006. Accordingly penalty under Section 45A was imposed for the offences of non-filing of return and non-payment of tax due, to the tune of double the amount of tax due for the respective months. The petitioner had challenged the orders imposing penalty in revision before the 2nd respondent. It was mainly contended that the non-filing of return was due to various circumstances prevailed which had prevented the petitioner from filing the return within the due dates. It was further contended that the non-filing of returns was only a technical offence for which no penalty can be imposed on the basis of the tax amount due. But the 2nd respondent found that non- filing of return and non-payment of tax was not a technical offence. Further it was found that non-payment of tax was not a single instance for any particular month, but it continued and even after issuing notice proposing penalty the petitioner had failed to file returns and to pay the tax. However, taking a lenient view on the basis that the tax due has already been remitted subsequently, the penalty was directed to be reduced to an equal amount of the tax due.
In the 2nd revision filed before the 1st respondent the very same grounds were agitated. It was contended that no purposeful evasion of tax for imposing penalty at double the amount of tax was warranted, since the tax amount has already been remitted. The offence need be considered only as a technical one and the maximum penalty which can be imposed is only Rs10,000/-. But, repelling those contentions, the 1st respondent found that the tax due was not paid along with returns or even after issuing notice proposing imposition of penalty. Therefore it is not a technical offence, and under Section 45A the petitioner is liable to be imposed with penalty to the tune double the amount of tax.
Before this court it is contended that subsequently the petitioner had filed annual returns of the assessment years concerned, which was accepted by the assessing authority and the entire tax amount due has already been paid. Through additional documents produced as per Exts.P12 to P21 it is brought to notice of this court that during the relevant period the establishment was attached and taken over possession by the Kerala Financial Corporation and it was released only subsequently, on the basis of judgment passed by this court. It is contended that the Bar Hotel in question remains closed for considerable period during the relevant time. According to learned counsel for the petitioner those factors only led to the situation of non-filing of returns and non-payment of tax due. Therefore it is contended that the petitioner was virtually prevented from filing returns and from paying tax. It is also contended that the petitioner was facing acute financial stringency during the relevant time which need consideration for a reduction of the quantum of penalty imposed.
Learned Government Pleader appearing for the respondents stoutly opposed the above submissions. It is pointed out that no such ground was raised either before the original authority or before the revisional authorities. It is further contended that, financial stringency is not a ground to evade payment of tax and the petitioner had kept custody of tax amount collected from customers without paying the same to the Department.
The first question to be considered is as to whether the offence alleged is technical in nature. As per Section 45A, if the authority is satisfied that the assessee had failed to submit any return as required under the provisions of the Act or the Rules or and had failed to comply with provisions of the Act or the Rules to make payment of the tax amount due, a penalty not exceeding twice the amount of tax or other amount sought to be evaded can be imposed. In the case at hand the specific allegation is that the petitioner had failed in submitting monthly returns for the periods in question and failed to remit the tax due for the said periods. Non-remittance of tax due under the Act and Rules is an offence coming within the purview of Section 45A. In such case the authority is entitled to impose penalty to the tune of twice the amount of tax evaded or sought to be evaded. Therefore I am of the opinion that the view taken by the authorities that non- payment of tax due is not a technical offence and imposition of penalty at twice the amount of tax is sustainable.
Learned counsel placed reliance on a decision of this court in T.R. Ramachandran V. Sales Tax officer (1997) 106 STC 413 (Ker.). In the said ruling this court observed that, the assessee''s explanation that he was disabled from filing return and from remitting the tax due to certain specific circumstances, is not a valid excuse for not paying the collected tax. But on the facts of the case this court upheld the view taken by the authorities concerned in fixing the quantum of penalty considering the gravity of offence and other circumstances.
Learned Government Pleader had placed reliance on the decision in Zakir Hussain Vs. Addl. Sales Tax Officer and Others , wherein it is held that unauthorised retention of the collected tax payable to the State would amount to evasion as contemplated under Section 45A of the Act. Learned counsel for the petitioner had further pointed out decisions of this court under the Income Tax Act, Commissioner of Income Tax Vs. Chembara Peak Estates Ltd., , E.K. Varghese and Another Vs. Income Tax Officer and Others, and COMMISSIONER OF Income Tax, DELHI-I Vs. RAUNAQ and CO. (P.) LTD., . Referring to provisions contained in the Income Tax Act, it is held in those cases that, financial stringency of the assessee can be accepted as a good and sufficient reason for delayed payment of tax and such aspect can be taken as a reasonable cause while imposing penalty. But the provisions are distinct with respect to payment of tax under the KGST Act. Financial stringency cannot be pleaded as ground because the petitioner is keeping the tax amount collected from the customers without paying the same to the public exchequer. Therefore I am of the view that, contentions of the petitioner to the extent that it is technical offence as well as the contention that there was no purposeful evasion, cannot be countenanced.
Learned counsel for the petitioner made a further appeal to this court to consider reduction in the quantum of penalty imposed, on the basis that the establishment remained closed during considerable portion of the relevant period and the petitioner was not having possession of the establishment due to the attachment effected. It is pertinent to note that the first revisional authority had already taken a lenient view and reduced the quantum of penalty to equal the amount of tax. I do not think any further reduction of the quantum is warranted. However, considering the fact that the order imposing penalty was challenged all along and also considering the fact that this writ petition was pending adjudication before this court from the year 2008 onwards, I am inclined to order waiver of penal interest on the amount of penalty finalised, if the petitioner remits the amount of penalty determined by the assessing authority within a period of 3 months from the date of receipt of certified copy of this judgment.
Needless to say that if there is failure in remitting the amount within the time stipulated as above, the respondents will be free to proceed with recovery of the amount along with penal interest leviable under the statute by resorting to coercive steps of recovery.