WP(C)/24161/2010 of M/S.SREE RAMACHANDRAN ENTERPRISES Vs THE INTELLIGENCE OFFICER (IB). on 31 December 2012

JUDGMENT

The petitioner is a dealer under the KGST Act. On 09.08.2002, an inspection was conducted at an undeclaredgodown of the petitioner, an employee's residence andalso at a business place of the petitioner. Exts.P1 to P3are the shop inspection reports that were prepared. Onthe basis of Exts.P1 to P3, Ext.P4 notice under Section 28(8) of the KGST Act proposing penalty of 50% of the valueof the undeclared stock was proposed. The petitioner filedExt.P5 reply. Finally, Ext.P6 order was passed imposingpenalty of Rs.7,72,303/-.

2. The petitioner filed a revision to the DeputyCommissioner. By Ext.P7 order, the revision was allowedwith the following directions:

“I therefore, find that the case should go back to the Intelligence Officer for fresh disposal

after affording petitioner a fair and reasonableopportunity to prove their case. If the books ofaccounts and other records are available withthe Intelligence Officer, he should havearranged verification of the records seized byhim and arrived at a clear conclusion on theposition of the stock held in the undeclaredgodown, whether it is accounted orunaccounted. In the above circumstances, Iset aside the penalty proceedings and remit thecase back to the Intelligence Officer for freshdisposal in the light of my observations andfindings.”

3. On remand, notice was issued to the petitioner, proposing penalty to which the petitioner filed Ext.P8reply. The matter was finalised by Ext.P9 where the entirestock was treated as unaccounted and penalty imposed inExt.P6 was again imposed. The petitioner filed revision tothe Deputy Commissioner. That was rejected by Ext.P10order. Aggrieved by Ext.P10 order, the petitioner filedsecond revision to the Commissioner. That revision wasrejected by Ext.P13 order. It is in these circumstances, the writ petition is filed challenging Exts.P9, P10 and P13orders.

4. The first contention raised by the counsel for the petitioner is that the impugned orders were passedwithout complying with the directions in Ext.P7, therevisional order of the Deputy Commissioner. The secondcontention raised is that to levy the maximum penalty of50% of the value of the goods, no reasons have beengiven. To substantiate this contention, the counsel for thepetitioner relied on the judgment of this Court inSt.Michael's Oil Mills v. State of Kerala[(1988)68STC 360].

5. I heard the learned Government Pleader also.

6. It is true that in Ext.P7, the revisional order ofthe Deputy Commissioner, the matter was remanded forfresh disposal with a direction to the Intelligence Officerto verify the records seized and to arrive at a clearconclusion on the stock held in the undeclared godown, : 4 :

whether it is accounted or unaccounted. The complaint ofthe petitioner is that Ext.P9 order has been passedwithout verifying the records seized. However, thiscontention of the petitioner is seen answered in Ext.P10order thus:

“Moreover the copy of receipt recoveries nowproduced is not about any recoveries in connectionwith M/s. Sree Ramachandra Enterprises the godownwere the goods stocked was TC 37/694, House No.9Padma Nagar, Fort, Trivandrum. But the receipt ofrecoveries produced was a receipt for the recoveriesfrom TC-XXXVII/183(House No.20). This receipt hasno connection with the undeclared godown of M/s.Sree Ramachandran Enterprises, TC 37/694. So thecontention of the counsel to verify the records has norelevance. So the contention is overruled. I had alsoconducted enquiries with the Intelligence Officerconcerned. The Intelligence Officer had informed thatthe recoveries are related to the other shopInspection Reports prepared at the time oninspection of the petitioner other shops at the sameday. So I convinced that the petitioner hadcommitted an offence under Section 28(8) of the Act, but not proposed to settle the case departmentally.

Therefore, the penalty is confirmed.”

This finding in Ext.P10 is confirmed in Ext.P13 also.

7. Countering the finding in Ext.P10 order, the learned counsel for the petitioner invited my attention toExts.P2 and P3, the stop inspection reports. He madeparticular reference to the “stock inventory as on31.03.2002” which was recovered and mentioned inExt.P3 and contended not only that the finding in Ext.P10is incorrect, but also that Ext.P9 order was passed withoutreferring to these documents. However, learnedGovernment Pleader referred me to Exts.P1 to P3 andalso Ext.P9 and his specific contention was that thedocuments mentioned in Ext.P3 are not in relation to theundeclared godown mentioned in Ext.P1, in respect ofwhich alone penalty has been levied and that thedocuments recovered by Ext.P3 were in relation to thebusiness place of the petitioner.

8. If as stated by the learned Government Pleader, the documents mentioned in Ext.P3 including what isrelied on by the counsel for the petitioner are in relationto the business place of the petitioner and not undeclaredgodown with reference to which the penalty proceedingswere initiated,the finding in Ext.P10, the first revisionalorder, that thesedocuments are irrelevant, isunassailable. Therefore, one has to find out whether thereis any material before this Court to conclude that thestock inventory mentioned in Ext.P3 are in relation to theundeclared godown mentioned in Ext.P1.

9. Having gone through the materials available, Imust confess that there is absolutely no materialconnecting the documents mentioned in Ext.P3 with thestock found in the undeclared godown. If that be so, onfacts, I am unable to conclude that the finding in Ext.P10,which has been extracted above is erroneous. Therefore,there is no substance in the plea of the petitioner that in imposing penalty for the unaccounted stock found in theundeclared godown of the petitioner, the IntelligenceOfficer should have verified the documents mentioned inExt.P3. Consequently, the first contention raised by thepetitioner has to be rejected and I do so.

10. The second contention raised by the counsel isthat there is no reason stated in the impugned orders forlevying the maximum penalty of 50% of the value of thestock. Section 28(8) of the KGST Act authorizes theofficer to direct payment of the penalty not exceeding50% of the value of the goods not accounted for as maybe fixed by such officer. This provision has beenexplained by a Division Bench of this Court in thejudgment in St.Michael's Oil Mills v. State of Kerala[(1988)68 STC 360] and it has been held that theofficer should first be satisfied whether, on the facts andcircumstances of the case, penalty is exigible and if so,what quantum should be levied. It has also been held that the order levying penalty should show that boththese aspects were borne in mind while levying penalty.

11. In the impugned order, it has been clearly foundthat the stock found in the undeclared godown of thepetitioner was unaccounted. If that be so, there cannotbe any doubt that the penalty is found to be exigible.Insofar as the quantum is concerned, reading of theorders show that the petitioner is a habitual offender andthat on previous occasions also the cases have beenbooked against them and offences have beencompounded. It is for that reason that the officer haslevied 50% of the maximum penalty. Therefore, on facts,I am satisfied that both the aspects indicated in thejudgment referred to above were borne in mind by theofficer while imposing penalty on the petitioner.

Therefore, I do not find any merit in the writ petition.

Sd/-

ANTONY DOMINIC, JUDGE