Antony George vs Sales Tax Officer, Palai and Others

P. R. Ramachandra Menon J.

The correctness and the sustainability of the proceedings taken by the respondents in realising the sales tax at two different stages, that is at the first point of sale and the last point of sale, as provided under the Fifth Schedule to the Kerala General Sales Tax Act in respect of the commodity (rubber) when the maximum rate to be fully satisfied at the first stage itself, if the said sale is to an unregistered dealer, is the point involved. The case of the petitioner is that he purchased rubber from the third respondent in the year 1996-97 for a total sale consideration of Rs. 21,76,000. He had deposited a total sum of Rs. 27,56,190 which was inclusive of the stipulated income tax, sales tax, surcharge and such other charges. It is the case of the petitioner that he suffered a huge loss and had to sell the commodity for a lesser price. It is also admitted that the petitioner was not a registered dealer at the time of transaction and as such, by virtue of the mandate under the statute, he was made to pay the total tax payable at the two different stages, i.e., 10 per cent at the first point and two per cent at the last point, thus effecting the tax payment to the tune of 12 per cent as certified by the third respondent by exhibit P1/P1(a).

In the course of the proceedings, on coming across certain discrepancies with regard to the transaction and accounts, the concerned authority imposed a penalty to the tune of Rs. 1,65,370 being double the amount of tax evaded in respect of the transaction and a further penalty of Rs. 10,000 for not taking registration under the KGST Act, obviously for the reason that the admitted sale consideration was more than Rs. 2,00,000, for which registration was a must. However, on filing revision petition, the said order was set aside by the concerned authority as borne by exhibit P2. Later, the assessment was finalised by the concerned authority as per exhibit P3, imposing a tax liability to tune of Rs. 82,686. The petitioner approached this court challenging the same, by filing W. P.(Q No. 18152 of 2003, which was disposed of relegating the petitioner to avail of the statutory remedy. It was accordingly, that an appeal was preferred and the appellate authority, after considering the plus and minus points modified the exhibit P3 assessment by passing exhibit P4 order. As per exhibit P4, the assessing authority was directed to accept the books of accounts maintained by the petitioner, however sustaining the finding and reasoning in respect of the tax levied at the second point of sale, as assessed by the assessing authority. The fact remains that exhibit P4 passed by the appellate authority has not been subjected to challenge by the petitioner.

While so, the petitioner was served with exhibit P5 proceedings recomputing the actual tax liability, pursuant to exhibit P4 order passed by the appellate authority. As per the said proceedings, a total sum of Rs. 4,351 was shown as the balance tax payable at the rate of two per cent, with 10 per cent surcharge, i.e., Rs. 435 and thus for a total sum of Rs. 4,786. According to the petitioner, since the said amount was only a meagre one, he did not propose to have it challenged. But the said proceeding was sought to be revised by exhibit P6 notice issued u/s 45 of the KGST Act, whereby it was pointed out that the books of accounts actually revealed the admitted sale consideration of Rs. 21,76,000 and it was sold for a sale consideration of Rs. 21,75,753. As such, the taxable turnover was to be reckoned as Rs. 21,75,753 instead of Rs. 2,17,555 as per the books of accounts.

Exhibit P6 notice, though was issued inviting the objections if any, it is revealed from the materials on record that the petitioner did not file any objections in response to the said notice. There is no averment to the said effect in the writ petition as well. The assessing authority, in the said circumstances, passed the final order as borne by exhibit P7 dated May 3, 2004 accepting the figures as reflected from the books of accounts, as ordered by the appellate authority vide exhibit P4 and fixed the total tax liability at the rate of two per cent in respect of the second stage, i.e., the last sale of rubber in the State at Rs. 39,164 and surcharge at 10 per cent as Rs. 3,916.

The first respondent has filed a counter-affidavit seeking to sustain the impugned proceedings. It is asserted in the said counter-affidavit that no objection whatsoever was submitted by the petitioner, despite the service of exhibits P5 and P6, which were sent by the registered post. Exhibit P5 was in fact served on the petitioner on April 24, 2004 and exhibit P7 final order was also passed and the same along with the demand notice was served to the petitioner by registered post on May 19, 2004. In view of the fact that the assessment at the second stage is upheld by the appellate authority as per exhibit P4 and since the same admittedly has not been challenged, there cannot be any grievance for the petitioner with regard to the said instance. That apart, the specific direction given by the appellate authority was to accept the books of accounts and to reckon the figures given therein. Though in exhibit P5, there is a mistake with reference to the actual figure whereby one digit has been inadvertently omitted (showing the figure as Rs. 2,17,555 in place of Rs. 21,75,753) the same was sought to be corrected by issuing exhibit P6 with reference to actual figures. Inspite of granting an opportunity to file objection, the said opportunity was not availed of by the petitioner. It was accordingly that exhibit P7 order was finalised by the assessing authority which is not assailable under any circumstances, either on facts or in law. That apart, going by the facts and figures, exhibit P7 order was passed by the concerned authority as early as on May 3, 2004, whereas the petitioner chose to approach this court nearly after two years. On this count also, interference is not possible. Under such circumstances, this court finds that the writ petition is devoid of any merit and the same is dismissed accordingly. Considering the persuasive submissions made by the learned counsel for the petitioner, the petitioner is permitted to clear the outstanding liability by way of "three" equal monthly installments, the first of which shall be effected on or before March 20, 2012, to be followed by the remaining installments to be effected on or before the 20th of the succeeding months. Subject to this, the recovery proceedings, if any, shall be kept in abeyance for the time being. It is also made clear that, if any default is committed by the petitioner in satisfying the liability as above, it will be open for the respondents to proceed with further steps for realising the due amounts in a lump.