Under That Sub-Section. The Only Substantial Differencein The Latter Sub-Section Was That The Explanationwhich Was Added To S. 5 (7A) Of The Indian Income-Taxac v. M/S.olam Exports (India) Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR.JUSTICE ASHOK MENON TUESDAY, THE 23RD DAY OF OCTOBER 2018 / 1ST KARTHIKA, 1940 S.T.Rev.No. 21 of 2016 AGAINST THE ORDER IN T.A.NO.89/2010 DATED 15.09.2015 OF THE KERALA VALUE ADDED TAX/AGRL. INCOME TAX & SALES TAXAPPELLATE TRIBUNAL, ADDL. BENCH, THIRUVANANTHAPURAM. REVISION PETITIONER/RESPONDENT/RESPONDENT/REVENUE: STATE OF KERALA,REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN RESPONDENT/S: M/S.OLAM EXPORTS (INDIA) LTD.,PADANTHALUMMODU, KANYAKUMARI DISTRICT. BY ADVS.SRI.M.GOPIKRISHNAN NAMBIARSRI.JOSON MANAVALANSRI.K.JOHN MATHAISRI.KURYAN THOMASSRI.PAULOSE C. ABRAHAMSRI.P.GOPINATH THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 23.10.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Vinod Chandran,J. ORDER The short issue raised in the revision is as towhether the Tribunal's order can be sustained which set asidethe proceedings for reason of the wrong quoting of aprovision.2. The respondent-assessee was proceeded against fornot surrendering transit passes in the exit check post. Thisgave rise to a presumption of sale of goods within the State,which entered the State through a check post and from where atransit pass was obtained. The proceedings were initiatedunder Section 30B of the Kerala General Sales Act, 1963 [forbrevity "KGST Act"] with respect to the transit passes notbeing surrendered during the assessment year 2006-07. TheKerala Value Added Tax Act, 2003 [for brevity "KVAT Act"]came into force from the assessment year 2005-06. In parimateria provisions are available in the KVAT Act, as seenfrom Section 48. The Assessing Officer [for brevity "A.O."],however, quoted Section 30B of the KGST Act, which, at thatpoint, was not in force. The first appellate authorityrejected the appeal. In second appeal, the Tribunal foundthat the wrong quoting of the provision is fatal to theproceedings. 3. The learned Government Pleader relied on the decision of the Hon'ble Supreme Court in L.Hazari Mal-Kuthialav.Incometax Officer, Special Circle, Ambala Cantt. and the learned Counsel for the respondentthe decision inC.S.T.v. Anoop Wines[1988 (Supp) SCC 731].4. We have to notice that in Anoop Wines(supra) thequestion was as to the specific sub-clause under which thepenalty proceedings could have been sustained, not havingbeen quoted and the assessee confronted with that specificallegation. Here, there is no doubt as to the proceedingsinitiated, being for the purpose of taxing such goods whichare presumed to be sold within the State for reason of thetransit passes not being surrendered in the exit check post.The provision under Section 30B of the KGST Act and Section48 of the KVAT Act also contemplates penalty on tax so soughtto be evaded. The mistake in quoting the provision in thiscase is not fatal to the prosecution. We are fortified infinding so by the Constitution Bench decision of the Hon'bleSupreme Court in L.Hazari Mal Kuthiala (supra) and weextract paragraph 5 of the same: "5. The Patiala Income-tax Act containedprovisions almost similar to Ss. 5 (5) and 5(7A) of theIndian Income-tax Act. Sub-section (5) differed in thisthat the Commissioner of Income-tax was required toconsult the Minister-in-charge before taking action "5. The Patiala Income-tax Act containedprovisions almost similar to Ss. 5 (5) and 5(7A) of theIndian Income-tax Act. Sub-section (5) differed in thisthat the Commissioner of Income-tax was required toconsult the Minister-in-charge before taking action under that sub-section. The only substantial differencein the latter sub-section was that the Explanationwhich was added to S. 5 (7A) of the Indian Income-taxAct as a result of the decision of this Court in BidiSupply Co. v. Union of India 1956 SCR 267 : ( (S) AIR1956 SC 479) did not find place in Patiala Act. TheCommissioner, when he transferred this case, referrednot to the Patiala Income-tax Act, but to the IndianIncome-tax Act, and it is contended that if the PatialaIncome-tax Act was in force for purposes ofreassessment, action should have been taken under thatAct and not the Indian Income-tax. This argument,however, loses point, because the exercise of a powerwill, be referable to a jurisdiction which confersvalidity upon it and not to a jurisdiction under whichit will be nugatory. This principle is well-settled.See Petamber Vajirshet v. Dhondu Navlapa ILR 12 Bom 486at p. 489". 5. The learned Counsel for the respondent alertlypoints out that the Constitution Bench decision was noticedin Anoop Wines(supra) and distinguished. We do not find anysuch distinguishable aspect from the facts in the presentcase. As we noticed there the provision had varioussub-clauses dealing with different types of assessees. Theappellant therein was all through proceeded under clause (d)which was not applicable to the assessee. Before the Supremecourt an attempt was made to justify the action under Clause (c); which allegation having never been put to the assessee,the same was not permitted. Here the allegation was explicitfrom the notice as to non surrendering of the transit pass.The same was never met before the original authority. Theprovisions are also in pari materia and there was a mistakenquoting of the provision as available in the KGST Act. Herethe issue is squarely covered by the decision in L.Hazari MalKuthiala(supra). In such circumstances, we are of theopinion that the Tribunal erred insofar as setting aside theproceedings for reason of wrong quoting of the provisionwhich is not applicable after the new KVAT Act came intoforce. Accordingly, we set aside the order of the Tribunaland remand the matter for consideration on the quantum onmerits. The revision would stand allowed. No costs. Sd/-K.VINOD CHANDRANJUDGE Sd/-ASHOK MENONJUDGE APPENDIX RESPONDENT'S ANNEXURES:NILVku/-[ true copy ]